Guest Column | April 13, 2022

How AI Is Used In Retail: What You Need To Know

By Melanie Johnson

AI-Artificial Intelligence GettyImages-1244482898

You might be surprised to learn that the retail industry has already embraced artificial intelligence. It is a powerful technology that can help retailers improve their marketing and sales strategies. This is why many retailers are already incorporating AI into their business operations.

Role Of AI In Retail

In recent times, Artificial intelligence (AI) is reinventing the retail industry leading it to more business insights. The acceleration of dramatic shifts as a result of recent technological developments has created disruptions. Generally, AI refers to a system or machine that improves the intelligence of a product or service with data prediction analytics. With the help of artificial intelligence, a new world of opportunities has opened to retailers that leveraged accurate data-driven business decisions. Following the outbreak of the COVID-19 pandemic, the importance of technology in retailing has increased dramatically. Many brick-and-mortar retailers had been forced to close the retail stores as a result of a lockdown enacted to stop the spread of the coronavirus. They turned to technology-based solutions like online ordering and fulfillment and robot-assisted operations. In fact, by 2025, AI in retail will be able to relinquish over 95% of online and telephone communication.

Why Is It Important?

To deal with inefficiencies that make traditional retailers vulnerable to new companies entering the market, companies must become leaner and more dynamic by adopting technologies that are affecting the retail industry to survive and remain competitive in a diversified customer market. To maintain clients, gain more market knowledge, and provide appealing services and experiences retailers need to manage with innovation that is possible with the integration of predictive analysis, computer vision techniques, such as image segmentation, and more. Adaptable and flexible AI-based ecosystems are required to meet a wider range of customer demands. In short, an AI-based ecosystem in retail is playing an important role in setting up successful businesses.

How AI Is Used In Retail

AI's advanced analytical capabilities made technologies function independently. Data collected from IoT devices and other sources are processed, labeled, and converted into meaningful insights. This process guides behaviors that lead to better company profitability. Many retailers are already implementing AI in some aspects of their business. There are several examples; let's take a closer look at the major benefits of AI in retail.

Fashion Retail

AI makes decisions based on user preferences. It also can be used for personalized products such as clothing or shoes based on your shopping history. Customers who like what the product is or what it looks like should have the option of a different style and color. Nowadays, retailers use online analytics and customer data for making decisions on how to sell items that they actually want. An example would be how Alibaba uses machine learning and predictive algorithms, which enables them to provide customers with products on sale at lower prices.

Customer Engagement And Retention

AI tools can help improve the customer engagement process using various techniques such as chatbots, mobile apps, virtual assistants, video games, etc. Artificial Intelligence has been found to increase brand recall when compared to traditional methods, as well as giving consumers more value for money, AI-based platforms can drive increased profits for retailers by creating new ways to engage with customers across channels. For instance, Shopify offers customized suggestions to shoppers based on customer behavior and browsing histories to promote the shopping experience and make purchases easier.

Consumer Behavior Studies

Customer behavior studies is a technique to learn about consumer behavior. One thing about customer behavior studies is they can cover the whole shopping cycle from beginning to end, from initial contact with the retailer (initial inquiry) through payment, to the final transaction. A few companies use these studies to identify specific features of their customers’ behavior such as interest in the item being purchased, previous order history, etc.). They use past information to design their future marketing strategies to improve their business. For instance, if Target’s research showed people tend to shop around once when a certain brand was mentioned, then the company started offering free delivery when a customer purchases a specific brand at least three times per year. Consumers who were previously shown the brand name often bought that particular brand to try out, so the company’s research suggested they could benefit from those trials.

Mobile Apps

Mobile app developers use advances in Artificial Intelligence to create apps that target customers based on things like interests, shopping history, weather conditions, and others. Companies such as McDonald’s use this technology in several areas of operation. In this case, the focus is on how mobile apps can be integrated into existing retail and omni-channel capabilities. Mobile apps can collect information about consumers and put this data to use in developing and improving the platform. Some smartphone apps contain advanced analytics that is available for both retailers and marketers. Additionally, apps allow consumers to see how the products that they are about to purchase are performing, including how much revenue they are bringing to the table. With apps, marketers and retailers can work together to increase their ability to reach a wider audience. That leads to an overall increase in conversion rates for sellers.

Virtual Assistants

A virtual assistant is another area where the usage of AI has become popular. Virtual assistants are software programs that connect users to a live person who responds to queries while answering questions using chatbots and voice commands. Many virtual assistants require no programming or coding skills. Although there is still relatively limited adoption of virtual assistants in the market, this is expected to increase soon as people turn to online resources to find information about products and how to shop. When researching products online, people typically rely on search engines to find answers easily. However, when searching for specific products, web browsers may not immediately return results. This leaves shoppers looking for virtual assistants that can act as a stand-in for the difficulty of finding out what a certain product is and how to place orders for that item. Because Amazon’s e-commerce site contains all sorts of information about every product that sells on the site, it makes sense to include virtual assistants such as Alexa or Siri that can be used during transactions. Virtual assistants also can assist shoppers with picking up small packages by directing them to the appropriate box.


Artificial intelligence is rapidly changing the way we do things. From customer service and finance to entertainment and education, everyone has benefited due to innovations in AI. Organizations such as Microsoft and Disney, two world-famous companies, rely on the power of AI. It helps improve efficiencies, creates more creative jobs, cuts costs, improves customer experience, increases revenue, etc. With all these opportunities, the next step is to consider a strategy for implementing AI. Business leaders must decide who will benefit most from AI implementation. If you are working for an organization that doesn’t yet implement AI, now might be a great time to look back and assess your current strategy and plan to develop an agile approach. Also, it’s important to keep up with emerging trends or technologies that are leading the industry. It is easy for people who haven’t seen AI to believe that it doesn’t exist, but it does. So before taking the leap and investing in AI, do your research about whether AI is truly necessary.

About The Author

Melanie Johnson is an AI and computer vision enthusiast with a wealth of experience in technical writing. Passionate about innovation and AI-powered solutions. Loves sharing expert insights and educating individuals on tech.