By: Jayaprakash Nair, Head of Analytics, Altimetrik
The retail industry today is in its most dynamic avatar, with omnichannel operations demanding a non-trivial chunk of its time and attention. This industry has always been the torchbearer of technological advancements, continuously evolving to meet the ever-changing needs of consumers while balancing unstable market conditions.
The advent of GenAI has recently elevated retail operations to a new paradigm, offering newer promises of creating stronger bonds with customers while equally ensuring increased business value, riding the omnichannel bull of opportunities.
GenAI’s rise in the retail domain
GenAI, with its unparalleled ability to extract value from unstructured data, has streamlined various facets of retail business operations. GenAI can play its part in transforming traditional retail models into more dynamic, data-driven entities by leveraging advanced algorithms and extensive datasets to generate actionable insights.
GenAI can enhance the overall customer experience significantly, from product design and customer service to automating routine tasks. However, for this transformation to be effective, retailers must view the technology as a critical enabler rather than a standalone solution. It’s no silver bullet. Integrating GenAI’s capabilities within a broader strategic vision is essential to address the real-world challenges currently facing the industry.
Here are some dynamic ways in which GenAI stands ready to innovate fundamental aspects of the retail landscape:
Personalised shopping
GenAI can summarise and quantify huge volumes of unstructured data from social media, call center logs, etc. This quantified output, when fed into a Predictive/Pattern-detection AI engine, can predict shoppers’ behaviours, preferences, and current market trends. These insights can help retailers tailor their offerings for every customer, making experiences more personalised and customers heard. This personalisation can extend to product recommendations, marketing communications, and even in-store merchandising, ensuring customers have an enjoyable shopping experience and instilling brand loyalty.
Streamlining operations
GenAI is not only valuable on the front; it is adept at enhancing background processes as well, such as supply chain and inventory management. GenAI, in combination with Predictive AI, can improve demand forecast, preparing retailers to maintain adequate inventory levels based on market conditions and reducing wastage and losses. This eventually ensures that stores limit instances of stockouts or overstocking.
For example, a leading fashion brand wanted to enhance its inventory management. By bringing AI to their process and embracing a cloud-native architecture with tools like AWS SageMaker and Snowflake, they achieved a 40 percent efficiency boost in their model portfolio through automated monthly retraining of 20 ML models.
GenAI also helps break through technological silos, improving processes like procurement, supply chain transparency, and quality assurance. Overall, with GenAI in the mix, operations become more resilient, responsive, and capable of adapting to market fluctuations and disruptions.
Revolutionising marketing and sales
GenAI makes advertising and marketing efforts more effective. GenAI models can help craft compelling marketing campaigns based on insights derived from other types of AI models from consumer behaviour and preferences. This further strengthens the impact of advertising strategies, translating to higher engagement rates and an overall improved return on investment, all the while improving their user experience.
Augmented in-store experiences
AI can help shoppers make more informed decisions when making purchases. In a fashion store, for example, tools like smart mirrors and virtual try-ons can allow consumers to experience an elevated shopping experience.
With AI-powered automation, stores can adopt a cashier-less checkout system, offering a frictionless payment experience. Ultimately, such innovations set a new standard for convenience and efficiency in retail.
Addressing challenges and ethical considerations
Even though GenAI has significant advantages, companies must consider the difficulties and ethical concerns accompanying it. To begin with, the majority of AI’s capabilities rely on customer data. Retailers must be open about using a customer’s data and ensure they have obtained the necessary consent.
Additionally, given customer data’s sensitive nature, retailers are responsible for ensuring they have robust security protocols to protect it from potential threats and malicious actors.
Lastly, processes are bound to become more autonomous by leveraging GenAI. This raises the considerable risk of biases surfacing in the decision-making process. Retailers must maintain tight scrutiny in monitoring and mitigating these biases to ensure that every customer is treated fairly.
GenAI in retail: Strategies for success
GenAI has the potential to be truly revolutionary for a traditional retail business. However, at times, integration issues can occur. To overcome this, they must partner with tech vendors that offer solution accelerators that reduce the “Time to Value”, while at the same time developing solutions that are customised for the specific data semantics and business context of the retailer. This approach can help improve high-impact areas such as customer journey optimisation and contract process automation.
Additionally, set up an in-house team adept at AI technologies. This will help businesses create bespoke solutions that would work specifically with their needs while ensuring tight control over the development and execution. Moreover, it is crucial to balance external and internal strategies. With this dual approach, businesses can harness the full potential of GenAI, eventually driving strategic success and sustainable growth overall.
Again, GenAI is not a panacea. It works best in collaboration with other forms of AI like Predictive AI. It is critical to bear this in mind when formulating the AI strategy.
Future of GenAI in retail
GenAI is giving the retail industry a significant boost – transforming everything from customer experiences to backend operations. Retailers must take decisive action to harness GenAI’s full capabilities, in tandem with other forms of AI, ensuring they are not left behind in this rapidly evolving landscape.
Investing in robust technology partnerships and developing in-house expertise will be critical to survive and thrive in this new era. Retailers who effectively leverage GenAI will navigate these changes successfully and set new benchmarks for the industry, reshaping the shopping experience and leading the way in modern retail innovation.