5 AI Use Cases Revolutionizing the Retail Industry 

Retail store window

Imagine effortlessly discovering the perfect pair of jeans using an image or making a purchase through a simple voice command. Or what about virtually trying on an entire wardrobe without ever stepping foot in a store? Better yet, imagine a retail industry that knows what you need before you do and a supply chain that runs with clockwork precision, efficiency, and sustainability. If this sounds like a glimpse into a far-off future, you might be surprised that this reality is closer than you think.  

Welcome to the future of retail, powered by Artificial Intelligence (AI). AI has grown from a futuristic concept to a business-critical technology, and the retail industry is at the forefront of this transformation. In 2022, AI in the retail market accounted for a whopping USD 8.41 billion, and by 2030, it is set to skyrocket to an astounding USD 45.74 billion, growing at a compound annual growth rate (CAGR) of 18.45%.  

AI is redefining the retail industry in unimaginable ways. From enhancing customer experiences to optimizing supply chain management, AI is making an indelible impact on every facet of retail. In this blog, we will embark on an exciting journey into the heart of this transformation, unveiling five major use cases where AI is reshaping and revolutionizing the retail industry. Buckle up and prepare to witness a retail revolution in action. 

1. Visual search

Visual search technology, powered by AI, allows customers to upload images and find similar products, is increasingly being adopted by retailers like Farfetch and tech giants like Google. Visual Search is growing rapidly, with over eight billion visual searches conducted monthly, particularly among younger consumers who shop with mobile devices. 

AI and machine vision has transformed the search engine experience, making it more natural and visual. They help extract meaningful information from digital images and videos, allowing for more precise search results and personalized recommendations. An example of this technology is Google’s “multisearch” functionality combines text and visual search through Google Lens. 

Computer vision is powering visual search 

The combination of computer vision (CV) and natural language processing (NLP) enhances visual search by overcoming the limitations of traditional keyword searches. This pairing can extract properties of an image or video and adds more descriptive metadata to them for improved search results.  

This combination of images and text enables users to find what they’re looking for by describing it in natural language as well as using the image on its own as a method of search. 

2. Voice search

Voice artificial intelligence (AI) is playing a pivotal role in e-commerce. Major brands offer voice search capabilities to allow customers to inquire about products and delivery statuses without typing. This technology is not only driven by tech giants but also by new players in the market, and its use is increasingly preferred by both younger demographics, and those who may have difficulty typing, such as older adults. 

Voice AI offers numerous benefits. It is convenient and accessible, providing 24/7 customer support. It streamlines various processes, like order tracking and payment procedures, enhancing the shopping experience. Moreover, conversational AI can boost sales significantly by engaging in personalized, human-like conversations and making data-informed product recommendations. 

However, there are challenges. The unpredictability of voice interactions, potential misinterpretation by voicebots due to speech recognition flaws, and the need to ensure customer data security and privacy are some of the obstacles that need to be addressed for the full potential of this technology to be realized. 

Despite these challenges, conversational voice AI holds promise for retailers, offering potential cost savings, improved customer experience, and increased sales revenue. However, continually monitoring the latest developments in this rapidly evolving field is crucial. 

3. Virtual fitting rooms

Virtual fitting rooms have become more prominent in recent years, particularly during the COVID-19 pandemic. This technology utilizes augmented reality (AR) and virtual reality (VR) and has been adopted by major retailers. Companies like Macy’s, Adidas, and ASOS have joined forces with technology firms to offer these capabilities to their customers. 

Despite the growth, there’s a challenge in educating consumers and maintaining their interest in the technology. Trying clothing via an avatar on a mobile phone has not been a common practice. Zeekit is among the companies aiming to mainstream virtual fitting rooms. They allow users to upload a full-body photo and try on clothing from various brands. They also report that their service has helped reduce return rates by 36%. 

The future of virtual try-ons is still being determined, with differing opinions on whether the trend will continue post-pandemic. Some experts believe younger generations will continue using virtual fitting rooms, while others emphasize the need for retailers to optimize the technology to retain customers after the pandemic. 

4. Customer behavior prediction

Artificial intelligence (AI) platforms significantly influence the retail industry by curating tailored promotions, deals, and product purchase reminders based on customer behavior. Most consumers trust AI to enhance their shopping experiences, and many are comfortable using it despite a general lack of deep understanding of the technology.

However, concerns about data privacy and trust persist. Many consumers hesitate to share personal information and need more trust in online retailers. This necessitates a shift in strategy for retailers, who must provide value beyond just product availability and price.

Retailers who prioritize AI investments are better positioned to redefine customer loyalty. They’re exploring areas like Generative AI to drive productivity in stores, thereby freeing up resources for more innovative applications of AI. 

Moreover, retailers are learning from how celebrities and creators engage with their fans. They’re leveraging AI to personalize experiences based on fan preferences, behaviors, and interests and using gamification and interactive campaigns to foster a sense of community. However, challenges related to fake profiles, spam accounts, and balancing personal and professional boundaries need careful management. Transparent privacy policies and responsible data-handling practices are essential for cultivating trust and ensuring safe environments for customer engagement. 

5. Retail supply chain

Artificial Intelligence (AI) is significantly transforming the retail supply chain and is projected to push the market to over $20 billion by 2028. AI applications include autonomous transport, improving delivery route efficiency, enhancing loading processes, and managing warehouse supply and demand. This allows businesses to boost operations and make data-driven decisions.

AI helps plan capacity, forecast demand, and identify trends that can reduce costs and generate revenue, giving businesses a competitive edge. Future applications include predicting unexpected events that could disrupt supplies and improving decision-making and automation technologies​.

AI also aids supply chain sustainability by reducing carbon footprints through efficient production and delivery processes. For example, it can suggest optimal product storage locations to reduce delivery distances and fuel usage. It can also facilitate coordination between organizations, enhancing supply chain efficiency​. 

Retail AI is a game-changer 

From improving e-commerce product search and discovery with visual and voice searches to reducing the hassle of physical fitting rooms, AI and computer vision are redefining the customer’s journey. They not only are improving predicting consumer behavior with uncanny precision but also driving operational efficiency throughout the supply chain.

However, the journey has its challenges. As we’ve seen, data privacy concerns, user adaptation, and technological nuances must be meticulously navigated. It is crucial for retailers to not only stay updated with the latest developments but also adopt responsible, transparent data privacy practices to gain consumer trust. 

As retailers adopt and implement these intelligent solutions, the shopping experience continues to become increasingly seamless, personalized, and efficient. The future of the retail industry is undeniably intertwined with AI, promising to transform it in ways we are only beginning to comprehend. 

So, the next time you’re scrolling through your favorite online store, using voice commands to order groceries, or admiring an outfit on a virtual avatar, remember – you are part of the AI revolution in retail. Welcome to the future of shopping. Learn more about Chooch’s AI Vision solutions for retailers.

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