The Role of AI in Personalizing Retail Experience in 2024

Imagine entering a store and getting recognized by your name! Or getting all the items categorized and curated especially as per your preferences. Or having someone assist you all the while to make shopping a memorable experience. Sounds futuristic and dreamy right!? but not anymore this is taking shape rapidly in today’s reality.

With the perfect blend of marketing and technologies like Artificial Intelligence. This amalgamation and infusion of technology flood the retail sector with utmost personalization, which is the master key to plunging the soaring high sales revenues. Later on that part but first understand that nobody enjoys being targeted to boring and generic promotional marketing campaigns where no uniqueness and specification is tapped on.

Customers love getting valued and appreciated by the retail brands they are associated with.

Plus who doesn’t like to get some special attention, discounts, and personalized messages on their birthdays and anniversaries? This brings us to a stirred-up question of whether or not personalization is important or not at all! Let’s dive deep and find out some mind-boggling answers.

Why is Personalization Important?

In today’s day and age retailers cannot just stick to the tried and tested “one-size-fits-all” formula in marketing and promotions for their products and stores. In the technical revolution era, they must buck up their marketing game by adding a hint of personalization.

According to a report by McKinsey & Company, almost 71% of customers look forward to getting personalized recommendations and interacting with retail brands. Still, looking for reasons why personalization is important at all for your retail business? Here’s why;

Understanding Customers at the Core:

Personalization paves the way to understanding your customers’ needs, behavior, and buying patterns accordingly. If your business strikes the right chord with the customers then half of your job is done! Somewhat similar to what Zara does best in terms of analyzing and acting as per their customers’ requirements and feedback when it comes to fashion and its ever-changing trends.

Tailoring Pricing and Discounts:

Personalization helps in building a healthy, ethical, and transparent relationship with your customers. This eventually helps you as a retail business owner understand and identify the price sensitivity of your customers according to which you can exercise dynamic pricing, demand-based pricing, bundling of products, and upselling.

Along with giving special birthday discounts and offers, similar to the fantastic engagement strategy of Nykaa, the makeup e-commerce giant, sends curated gifts for its premium members to pamper them on their special day.

The Boost for High-strung Recommendations:

When retail brands consider adopting the practices of creating personalized marketing and branding routines they get to know their customers better and strategically classify them into various categories.

This indeed helps in boosting high-strung products and services based on their purchase history, and recent internet searches. For example, actively recommending hotel rooms to someone who has recently browsed the web for airplane tickets. It not only enhances the customer experience but results in better brand representation and sales.

Ways in Which Infusing AI Technology Can Be Beneficial for Retailers

How would you react if you got to know that as a retail business owner, reduce your operational costs by up to 72% or boost your sales revenues by up to 69% (Nvidia)? Wondering how? Here’s your cue, make the best use of advanced technologies like Artificial Intelligence.

Want to know some amazing ways through which this technology can be beneficial to your retail business? And how can it help in personalizing the retail experience? Continue reading;

Forecasting for Inventory Management:

Gone are the days when retail owners had to worry about stock-out or overstock situations. Smart and advanced technologies have made inventory management an easy breezy job.

Artificial Intelligence helps in forecasting and maintenance of the inventory like never before. The executives can now strategically place and shelve their products as per their classifications and rank in order of preference for the customer’s display.

Kroger, one of the biggest supermarket chains in the States, has been using the Smart EDGE AI technology to predict and manage inventory efficiently. (Wall Street Journal)

Decreases Over Dependence on Labor:

Retail businesses all over the world lately have been facing huge losses due to a shortage of labor. Let’s face it, the retail sector has an exceedingly high dependence on blue-collar workers which has led to such a situation.

But did you know? Some of the most prominent QSR chains across the globe like McDonald’s, Taco Bell, and Domino’s Pizza have been going all out with implementing AI-powered and operated lanes for cheaper and faster service deliveries. This helps them reduce their over-dependencies on labor significantly. (Business Insider)

Monitoring of the Supply Chain:

There are multiple difficulties that retail owners face as there can be so many factors that can lead to disruption of the supply chain. But is there any solution to this endless problem? Yes, certainly. Using the capabilities of Artificial Intelligence to monitor every nook and corner of the supply chain.

With AI business owners can get real-time updates and all the necessary information required to make informed decisions.

Do you know which retail brand has been utilizing the capabilities of artificial intelligence to improve their supply chain management significantly? It is none other than Zara. Its revenue rose from €14 Billion in 2020 to a whopping € 23 Billion in 2023. Because of its timely follow-ups and updates received from the AI prompts. (Bluestone PIM)

Enhances the Customer Experience:

Artificial Intelligence significantly improves the in-store experience of the customers and adds a hint of personalization. Imagine having a hassle-free check-out at the billing counters where standing in long queues has become a yesteryear thing!? Won’t that just make your customers glued to your brand? Heard of Amazon-Go stores? These are futuristic stores launched by Amazon that are automated and cashierless.

These stores have elevated the customer’s experience tenfold as they can log into their personal Amazon web accounts and continue to shop through the stores.

Bonus Tip: You know what also intrigues and excites the retail customers? The Midas touch of technology! Confused? Don’t be! Just simply let technology take the front seat to add seven starts of wonders to your customer’s experience.

By incorporating AR/VR, AI-powered size-fit trial rooms, and voice assistance for a great shopping experience! Remember Bata? The Shoe brand is synonymous with most of our childhood. They have marvelously used a video analytics solution that has come up with an “Emotions Chart” (India Ai) that helps the customers with meticulous product selection.

Also, read out blog on How AI is Changing These 5 Industries

Seamless Omnichannel Experiences:

Today the lines of online and offline market spaces are blurring with the speed of jet rockets. And as a retail owner, if you still undermine the power of omnichannel marketing then you’re surely missing out.

Transitioning from brick and stone stores to the e-commerce space is the new normal. So switching to the new normal of retail business is to expand online retail presence. As it not only defies the geographical boundaries but also allows you to cater to a wider selection of customers. This is also where the use of AI can help you see the big picture. Seamlessly elevating the omnichannel experiences with more personalized inputs.

You would be surprised to see how beautifully the makeup brand Sephora has infused new and advanced technologies to uplift their omnichannel experiences. They provide specific and unique product recommendations, have try-on features, and are the best of a lot of customized skin diagnoses and solutions. All these things make sure that Sephora remains popular among both real-time and virtual shoppers.

End Note:

There is no certainty about what’s stored in the future, but AI’s usage and prominence in the retail sector are here to stay. So to stay way ahead of the competitors, retail brand owners should not neglect the power of personalization with a blend of advanced technologies like Artificial intelligence. This combination of marketing and science can take your business to new heights!