How Generative AI can transform the Retail Industry

Shopify Audiences, a retail media network for Shopify brands, helps retailers like you find high-intent buyers and optimize ads across platforms. But it’s not just about the price; 83% of shoppers now think private brands match or beat branded products in quality. Grocery stores are jumping on this trend, with 80% planning to grow their private label offerings, focusing on value and competitive pricing in the next two years. Today, grocers can automate parts of their operations, offer personalized customer experiences, and make more informed data-driven business decisions. The latest generation of smartphones include AI models that increase their processing power and have the ability to run LLMs (large language models).

Between rapidly-paced chatter on TikTok and the emergence of ultra-fast fashion players like Shein, figuring out how to capitalise on trends has never been more complicated. Social media influencers are shaping CPG trends, with grocers partnering with influencers to reach broader audiences. For example, Walmart teamed ChatGPT App up with @theautisticmumcafe on Instagram to spotlight the school supplies she loves buying for her neurodivergent child. Because grocery shopping remains something people prefer to do in-store, options such as radio ads, smart carts, interactive kiosks, and digital screens have become important display opportunities.

More targeted marketing campaigns

And while the worst seems to (hopefully) be over, we’re far from smooth sailing. Moving forward, shoppable video will continue to evolve—it is no longer simply another term for livestreaming. For example, this past holiday season, Walmart produced a holiday special featuring its products that was distributed in three-minute segments on TikTok, describing the event as “T-commerce” (“T” as in “TV”).

Artificial intelligence has emerged as a crucial force in this change, enabling retailers to reshape every aspect of their business, from managing inventory to enhancing customer experience. As retailers strive to remain competitive, AI tools ChatGPT and solutions offer many growth opportunities. In fact, the future of AI in retail is focused on creating more seamless operations for retail workers and increasing sales while reducing selling, general and administrative expenses.

Resilience Through Adversity: How Recent Turmoil Has Strengthened Supply Chains

Technology has transformed the shopping experience for consumers, changing everything from where we buy and how we pay to how we consider value in making purchasing decisions. Some smaller retailers already have, such as quick service restaurant chains Panera Bread and Jet’s Pizza recently launching delivery via Zipline drones in select markets. A potential hindrance to capitalizing on the full potential of a strong creative idea is the long, drawn-out creative cycles that agencies and brands tend to go through, says Chris Bellinger, chief creative officer of PepsiCo North America. “A lot of the problems we’ve had recently within creativity is that we work on projects for so long… we fall in love with it. And then, as we work on it for three, six, nine, 12 months, it’s easy to fall out of love with it. We can expect to see a true e-commerce revolution unfold on Western social media in 2021 and beyond.

Efficient returns management is vital for customer satisfaction and operational efficiency. This week’s news about AI didn’t apply specifically to retail, but it has lots of retail implications. We all need to keep in mind that we are living in the midst of a giant social experiment when it comes to GenAI. If you’re looking for a sign that consumers are trading down, ThredUp’s annual report on secondhand apparel found that resale grew faster than traditional retail in 2023. That’s not that surprising – there is a bit of law of large numbers going on there. The US secondhand market grew 11% in 2023, which ThredUp says is 7x faster than the broader retail market.

AI-driven personalization is a process of continuous learning, which guarantees increasingly accurate recommendations over time, resulting in a streamlined sales process and elevated conversion rates. Natural Language Processing (NLP) allows virtual assistants to interpret and respond to customer inquiries in a human-like manner, making interactions more intuitive and satisfying. Machine learning algorithms capture and analyze data to deliver personalized experiences, optimize pricing, and manage inventory. Generative AI, on the other hand, is revolutionizing content creation by generating personalized marketing materials and product descriptions.

Digital twins can be a disruptive AI trend for enterprises working on expanding into ESG modeling, drug design, smart cities, and other applications. NVIDIA, a leading GPU manufacturer, uses digital twin technology and has partnered with Siemens to create an industrial metaverse. For instance, using predictive analytics in the manufacturing industry, users can better predict unexpected machine failures and stay safe from costly breakdowns. The predictive maintenance algorithms deploy constant data collection to forecast equipment failures before they occur. Due to dropped sensor costs, edge computing, and edge AI, predictive maintenance is now more widely available for use.

Digital Acceleration Editorial

The annual retail conference focuses on the trends, business models and technologies that are shaping the future of retail. That makes retail one of the industries racing fastest to adopt generative AI to ramp up productivity, transform customer experiences and improve efficiency. According to one consumer survey, 78% of U.S. shoppers experienced out-of-stock items when shopping in-store over the last year, and 73% of online shoppers said they encountered this problem. Being one of the latest trends in AI, explainable artificial intelligence enables businesses to interpret and communicate AI outcomes more effectively, fostering trust and transparency among users and stakeholders. In 2023, there was a significant push to address the issue of the AI “Black Box” problem, where AI decisions are often opaque and difficult to understand.

• Retailers aren’t at that level yet, but personalized marketing is already impacting costs and revenue for brands.
• But they’re less inclined to crave physical ownership; downloading something digitally — a book, a game, a movie — meshes with both their digital proficiency and proclivity for a more sustainable culture.
• But in 2024, estimates show the market will grow just 4%-6%, barely enough to cover the rising costs of doing business.
• Machine learning adds the ability to select, operate, maintain and monitor the optimal AI model for any given job.
• Ian Hunt, Director of Customer Services at Liberty London, sees AI as a key tool for delivering a curated and personalized service.

46% of shoppers in the U.S. have used BNPL and many of them, especially consumers under the age of 40, are now relying on this payment method. Makeup sales rose 15%, skincare sales were up 14%, and fragrance sales were up 12%. Hudson’s Bay Co., which owns brands like Saks Fifth Avenue, was reportedly months behind on vendor payments in late 2023. On the other hand, dollar stores are seeing growth in both traffic and revenue. The company added 11 brands in Q2 of 2023 alone and now operates more than 50 branded resale platforms.

Major Tech Trends That Will Shape Retail in 2022 (and Beyond)

Salesforce, for example, predicts year-over-year global sales growth of 2% for November and December, totaling US$1.19 trillion, and 2% growth in the United States, reaching $277 billion. Try Shopify for free, and explore all the tools you need to start, run, and grow your business. About 95% of US consumers, especially millennials and Gen Z, aim to incorporate sustainable living. However, economic uncertainties have led to a growing tension between consumers’ desire to support their principles and their need to make cost-effective purchases. When scanned with a smartphone camera, the person’s face on the label comes to life and talks to the customer. Successful phygital strategies include smart shelves, interactive product displays, automated checkouts, and smart carts.

In recent years, retail media has emerged as one of the fastest-growing sectors in digital marketing, fueled by a convergence of e-commerce growth, data-driven marketing, and retailers’ need to diversify revenue streams. Moreover, AI tools help companies monitor equipment and schedule maintenance to prevent breakdowns. With data analytics and machine learning, drivers can find the best delivery routes that minimize transportation costs and ensure products are dropped off in a timely manner. Causal AI can also be applied to loyalty programs in various ways, including assigning specific rewards to each customer, real-time analysis of marketing campaigns, and optimizing individual customer journeys.

You can foun additiona information about ai customer service and artificial intelligence and NLP. Since they retailers’ first-party data and expansive reach, RMNs are an ideal choice at a time when collecting third-party data is becoming increasingly restricted. These networks createan additional revenue stream for grocers by helping them reach wider audiences through more ad channels. They also offer an opportunity for more tailored interactions, which 86% of buyers desire today. It can offer tailored promotions and product recommendations, making the shopping journey more personalized.

We present our top insights from the event as whole, covering topics such as artificial intelligence (AI), the China retail market and retail media. Consumers increasingly expect seamless shopping experiences across multiple channels, compelling retailers ai in retail trends to integrate their online and offline operations. According to industry experts, 73% of consumers use many channels, and retailers using three or more channels see a 251% increase in customer engagement compared to single-channel retailers.

According to VentureBeat, customers can now buy some of the same items for their actual homes that they can buy for their virtual homes in House Flip, a mobile game that lets players renovate and sell virtual homes. For example, Walmart leverages AI-driven demand forecasting to efficiently manage inventory across its global supply chain. According to McKinsey, AI-based demand forecasting can reduce inventory costs by 10% to 40%. Walmart reported saving billions of dollars annually through improved supply chain optimization, inventory management, and reduced waste.

• Coresight Research is an official research partner of Shoptalk 2024, which took place March 17–20 in Las Vegas, Nevada, US.
• For instance, the use of Gen AI-powered chatbots can ensure a better customer experience through removal of the language constraints while enabling users to converse with these chat assistants in a very human way.
• Deloitte LLP is the United Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”).
• Thanks to real-time stock management, retailers are better prepared to predict demand, lower product waste (i.e. monitor expiration dates), and boost productivity.
• Given these advancements, it’s a good time for consumer brands to deepen their focus on social media sales’ potential.