Here’s how artificial intelligence can benefit the retail sector World Economic Forum

This way, we can segment our customer base for different products and boost sales. If you buy a shirt is some online store, you will immediately be recommended with trousers that would go with it. By analyzing millions of data entries, AI can predict what sort of combinations of products a customer is likely to buy and make recommendations accordingly.

These risks don’t outweigh the potential benefits of GenAI, but they will lead organizations to train employees to develop judgment around not just information validity, but also how and when to use GenAI. Enthusiasm, hype, and a strong fear of missing out or being left behind are driving executives to push for the implementation of GenAI within their teams and will need to actively manage the risks of GenAI, including more rigorous access and file classification policies internally, and solid quality control and judgment when utilizing the outputs of GenAI tools.

AI-Powered Visual Search and Product Discovery

Using generative models, AI can suggest new or alternative products to customers that they might be interested in, based on their buying history and preferences. It can also anticipate their future needs and preferences, thereby improving the shopping experience. The range of AI applications in the retail business is incredibly broad and will most definitely continue to grow in the coming years. The introduction of technology is transforming businesses and providing additional opportunities to boost revenue. At the same time, it is important for a retailer to understand the way a particular technology fits into the short-term and long-term business strategy and the tasks and issues it is designed to solve.

The report states that 71% of the retailers insist than AI is creating jobs, while 75% of them pointed out that no jobs were taken away by AI. Moreover, the implementation of AI has led to lower customer complaints and higher sales. All these are positive signs for embracing AI in the retail industry, where it clearly has tremendous potential. While fuelling the profit for retailers, AI also makes customer’s life easier, facilitating purchases and providing them with bargain options. It brought online shopping to a new level, allowing brands to gain worldwide recognition without opening up a physical store in various locations and reach different targets that would otherwise remain unreachable.

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This technology can also be seen in areas like eBay’s image search and automated web page translations. While these trends are exciting, they also come with the responsibility of using data ethically and ensuring that technology enhances human interaction, not replace it. The future of retail, driven by AI, is not just about smart systems but also about fostering genuine connections and delivering unmatched value to the customer. At first glance, it may feel like AI benefits are limited to the digital retail realm. But as outlined in our 10 Structural Failings in the ‘Retail Renaissance’ report, the transition to multi-channel retailing and increasing convergence of online and physical stores will be a pivotal facet of the sector’s evolution. Increasingly, retailers are looking to artificial intelligence to gain advantages through cost management and learning more about how customers engage with their products.

Natural language processing is a branch of artificial intelligence that enables machines to comprehend human language – in a written, but also a spoken form. It has become a foundation of various tools commonly used today, including generative models like ChatGPT or Bard. In retail, natural language processing finds its application mainly in customer service. In the virtual fitting rooms, the customers can try on the clothes after the webcam scans their bodies to create the 3d 360 degrees models. That process involves computer-vision-based AR technology, a branch of AI providing immersive experiences.

What Are the Benefits of Artificial Intelligence in Retail?

This annual predictions process — collecting tons of information from various sources to arrive at projections for how the retail industry is likely to fare in the year ahead — could be upended if artificial intelligence keeps improving. Investors looking to capitalize on this trend should look for companies with a presence in out-of-town retail parks that make for shopping destinations. Omnichannel investment is a must — consumers should be able to blur the lines between shopping online and in person. Retail landlords have been worse for wear in the wake of the pandemic, but they could be a great turnaround play with a potential resurgence on the way. Having already discussed various branches of artificial intelligence in retail, let’s now move to real-life specific examples that can help you understand the potential of AI in this industry.

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