The Stack Archive Feature

How AI is improving customer experience and loyalty in retail

Fri 9 Jun 2017 | Jennifer Roubaud

AI retail

Jennifer Roubaud of Dataiku discusses how AI technologies can transform customer experience in retail, both on and offline…

The use of artificial intelligence (AI) is expanding across all industries. Forrester predicts that this year alone there will be a 300% increase in investment in artificial intelligence. Companies worldwide are starting to use the power of AI to enhance their capabilities and deliver improved experiences to customers.

Retail is an industry where AI use is relatively new, but it is gaining speed due to customer interest. JWT Intelligence research shows that 62% of millennials in the UK say they would appreciate a brand or retailer using AI technology to show more interesting products. And as the AI technology develops, 64% of millennials in the UK believe that brands using AI will be able to accurately predict what they want.

It is evident shoppers are interested in using this technology during their shopping experience, so now it’s up to retailers to provide it. Implementing new technologies can seem daunting and expensive, but AI software can actually save retailers time and resources. Here’s how both shoppers and retailers can benefit from AI technology.

Online customer service

Human employees will not have to work on mundane and repetitive tasks; instead, they can work on higher level issues

Online retail sales in the UK grew 14.9 % in 2016, meaning more and more internet users are shopping online. That means online retailers must find a way to offer excellent customer service in order to make the customer happy. Enter: AI technology. 

AI chatbots can help shoppers find the information they need in real-time. And by 2018, digital customer assistants will be able to ‘mimic human conversations‘, and interact with customers as if they are a friend, rather than a computer. AI bots will power 85 % of all customer service interactions by the year 2020. 

For the retailer, this will save time and resources. Instead of hiring an entire customer service team, retailers can use this technology instead. These AI chatbots will also have machine learning capabilities, meaning they will get ‘smarter’ with each ticket. They also do not need to take a break and can work 24/7. Human employees will not have to work on mundane and repetitive tasks; instead, they can work on higher level issues.

Personalisation and user experience

Consumers want personalisation. 74% of online consumers get frustrated with websites when content (e.g. offers, ads, promotions) appears that has nothing to do with their interests. Retailers have the challenge to create personalised campaigns for buyers, which means they need technology to do so.

Retailers that can mine this data will no longer have to use guesswork to anticipate what buyers want

Online virtual assistants or in-store virtual clerks can help customise the shopping experience. The customer can enjoy an omnichannel experience as they browse through a store in their brick-and-mortar shop, talking to the virtual clerk and then order online using a virtual assistant, who has all of their information. This personalised experience is only available through AI technology. 

For retailers that invest in this technology, they will reap the reward of a loyal customer base. Loyal customers are seven times as likely to test an offering, five times as likely to buy again, and four times as likely to refer, so retaining customers and keeping them as loyal followers is ever more important.

Furthermore, retailers will have access to a host of data from users, which can be used to predict future buying trends. Retailers that can mine this data will no longer have to use guesswork to anticipate what buyers want.

Blending online and offline experiences

The use of virtual reality (VR) is the future, according to the UK government and many others. Virtual and augmented reality (AR) devices will be a $4bn market in 2018. VR and AR use AI technology to bring together the online and offline experience for retailers. VR and AR are often mentioned in the same breath but are different in what they deliver. VR blocks off the user’s perception of the outside world, while AR enhances the user’s view of the world using digital overlays. 

62% of shoppers are interested in trying virtual reality shopping. Certain retailers are already experimenting with VR experiences for shoppers. Lowe’s created a Holoroom app, where customers can design a kitchen or bathroom, which is then turned into a YouTube 360 video. In certain stores, customers can use Oculus Rift or Google Cardboard to experience their room through virtual reality. 

Retailers that invest in VR and AR technologies are sure to edge out the competition in the near future

35% of customers say they would shop online more if they were able to try on a product virtually using a product like Oculus Rift, and 63% said they expect it to impact their shopping experience in the future.

 Augmented reality (the most successful example of this technology being the PokemonGo app) has taken shape in the retail world as well. Converse, for instance, created a Sampler app, where users snap a picture of their leg and can see what different shoes look like on them. 

Through these technologies, customers have an omnichannel experience, as their online and offline worlds blend. Retailers that invest in VR and AR technologies are sure to edge out the competition in the near future.

AI in the retail space

Customers are looking for a unique experience when it comes to shopping, both online and offline. Retailers that use AI technology to deliver these experiences will thrive, beating out the competition. And it’s not only big businesses that are using this technology. Often, larger companies are stuck in legacy systems and in red tape that blocks innovation, which means smaller retailers can use AI technology to take more of the market.

Customers are beginning to demand better, faster customer service and a personalised experience, which means retailers need to scramble to meet this demand. AI technology can help. While VR and AR are not quite yet mainstream, this trend is gaining traction and delighting users in the meantime. Now is the time to invest in AI technology to meet customers demands, create unique experiences, and put your brand ahead of the rest.

Experts featured:

Jennifer Roubaud

UK Country Manager

Companies featured:


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