Retailers are betting big on the future of artificial intelligence (AI), with92% investing in the technology. Using AI inretail isn’t new — 59% of retailers use it to help store associates make product recommendations while 55% use digital assistants to help online shoppers.

But AI use is gaining momentum as the technology quickly continues to evolve, and retailers are already reaping the benefits. During the 2023 holiday season, $199 billion of sales were influenced by AI.

In this guide:

• What is retail AI?
• What are the benefits of using AI in retail?
• How businesses are using retail AI to improve customer experiences
• Get ready for more AI in retail

How are you using AI to create awesome retail experiences? Let’s look at some of the ways retailers are putting AI to work.

First things first: You probably know what AI is, but you might still have questions about generative AI and what it means for your business.Generative AI is artificial intelligence that, in response to questions or prompts, uses a wide range of data sources to create new content, including text, video, and images.

Retailers can use AI with their CRM data to generate recommendations and content for marketing, commerce, and service functions. They can also use it to automate tasks and streamline processes across the organization.

With retail AI you can create detailedcustomer profiles that serve as strategic planning tools. They help you understand the customer journey at every touchpoint, so you can reach out to customers with relevant communications, targeted promotions, and efficient service. Using the profile data, AI can help you identify when a shopper’s engagement declines so you can reach out with offers that bring them back into the fold.

AI helps marketing teams createpersonalized and targeted marketing messages faster and more efficiently. Already,58% of retailers use generative AI to create assets for ads, emails, social media, and websites.

They’re also using the technology to write personalized marketing emails (56%), create personalized promotional offers (54%), and auto-generate personalized product descriptions (53%). By applying AI to customer profiles, shopping histories, service queries, and loyalty program data, marketers also can automate segments and map content journeys for unique audiences.

Making it easier for shoppers to find and buy what they want (or what they might like) is critical for improving conversion rates. AI can reduce friction from the shopping process with conversational site search so shoppers can use their natural language to find what they need. Or you can use AI-powered voice recognition so customers can talk to your site like they would a store associate. And, to optimize transactions, you can use AI to recommend and automate adynamic pricing strategy, offer one-click checkout, and even set up automatic renewals for products they buy often.

Retail shrinkage, or inventory loss as a percentage of sales, is on the rise. In 2022, retailerslost $122.1 billion in shrink, with 65% of that loss due to external and employee theft. AI can help here, too.

AI can analyze surveillance footage in real time to detect suspicious behavior and alert in-store personnel to abnormal events. You can also use AI in retail to monitor transaction logs, inventory levels, and employee access, then be alerted to irregular activity such as multiple high-value transactions in a short period of time. AI assists with your radio frequency identification (RFID) efforts to track inventory in real time. And, if it detects discrepancies between actual and recorded inventory, it can alert you to possible external or internal theft.

Today, great customer service can make or break a retailer. Service plays a significant role in building shopper loyalty –48% of customers say they’ve switched brands for better customer service. AI can help you increase the productivity of agents along with the satisfaction of shoppers. Use it to power chatbots and virtual assistants that understand natural language to better communicate with customers.

It can also power self-service options including initiating returns. AI can save agents time by drafting email and text responses in your brand voice. And, it can predict potential service issues based on call histories, so you can proactively address problems before they impact customers. Automating these tasks with AI frees up your live agents to handle more complex problems that require an empathetic touch.