Home Science How Artificial Intelligence is Disrupting The Retail Industry

How Artificial Intelligence is Disrupting The Retail Industry

Artificial Intelligence is being used to redefine the role of humans across several industries. The retail industry is no behind in terms of leveraging technological advancements.

Artificial Intelligence And The Hype

Almost everyone has heard about Artificial Intelligence at least once. While some think that it’s just another sophisticated technology-related term, several others have dedicated their entire lives to this domain. Many questions pop up when we talk about Artificial Intelligence. What’s the hype about? Is it worth the risk? Is it applicable in real-time use-cases? If yes, is it feasible?

Let’s start with a very interesting quote by the co-founder of Robohub.org, Sabine Hauert:

Robots are not going to replace humans, they are going to make their jobs much more humane. Difficult, demeaning, demanding, dangerous, dull – these are the jobs robots will be taking.

AI and Machine learning can be used to drive automation. Intelligent automation can be used to make decisions to improve performance and reduce logistical costs.

We’ve learned a lot about our customer preferences from the rich data we’ve collected over the past several years. Now, we are in a position where we can use data science and machine learning to provide truly personalized experiences for our millions of customers.

If we start talking about AI, we can go on forever, but here, we will try keeping it exclusive to the retail landscape.

AI in Retail – Present and Future

Digital transformation is taking over the world. Retailers have also leveraged technological advancement to improve pace, productivity, and consistency across all retail chains. The retail industry is using a very powerful weapon to drive business decisions – data. Data allows us to build models and predict business insights that could not have even occurred to us in typical situations. So how are these insights derived? You guessed it right – Artificial Intelligence. AI along with the Internet of Things (IoT) has enabled companies to predict data insights, consequently paving the way for better business opportunities.

In 2019, Artificial Intelligence in retail was projected at $1.8 billion. By 2025, the market is estimated to hit $10.9 billion. IBM has reported that more than 40% of organizations are involved in some kind of intelligent automation. Many other companies are looking to leverage AI to avoid any shortcomings. A research conducted by IBM Institute for Business Value and National Retail Federation revealed that by 2021 more than 80% of the organizations from the retail and consumer goods sector plans to incorporate intelligent automation in their businesses.

Enough about the figures, let’s have a look at some real-world applications of AI in the retail sector.

Real-World Use-Cases

  • Supply Chain – AI algorithms are being used to extract market insights from broad supply chain databases which in-turn enables rational decision making in the retail landscape. The technology can be used to estimate the demand for a specific product by taking the market trends, sales, and other factors into account. There are many machine learning algorithms that can be used to make decisions based on millions of parameters – something which seems unrealistic without technology.
  • AI automation and robotisation – Deploying robots in stores can reduce operational costs considerably. Amazon Go and Just Walk Out technology use AI automation to eliminate check-out lines. How this works is when a customer takes something from the rack, the product is automatically added to the virtual cart. When they keep it back onto the shelf, the product is deleted from the virtual cart. So basically, customers walk in, grab the products, and walk out without any hassle.
  • Setting prices for a product – As discussed, data insights can be very powerful to set the pricing strategy for a product depending on the market trends and location. Pricing strategies can be set in line with the company’s goals and competitions. Systems can compile information from competitors’ products, revenue statistics, and marketing activities to set optimal pricing strategies. However, the true icing on the cake is that AI can also be used to make future price predictions. The price projection for a newer version of a product depends on seasonal trends, demand, the performance of the current product, and the estimated date of release of the new product.
  • Virtual fitting rooms – A large number of retailers (especially fashion) are switching to virtual fitting rooms to optimize the consumer experience. Warby Parker, an American company, unveiled its groundbreaking approach in April 2019. Customers could use virtual try-on to see if the frames actually suited their faces. Sujayath Ali, CEO and co-founder of Voonik, stated:

It’s not like a choice. You will be going down if you aren’t competent on the visual experience.

  • Sorting products – Machine learning algorithms can be used to categorize products in an automated manner. To give an idea about the efficiency, certain algorithms can process up to 900 requests in a second.
  • Searching products – Image recognition technology is useful in allowing customers to select products based on color, shape, pattern, etcetera. This also enhances customer experience as they do not have to go through the tedious process of iterating through the products one by one.

These are just some of the applications of AI in the retail industry. The scope for technology has no bounds.

Time and again, Artificial Intelligence has proven to be a messiah in the retail and consumer goods industry. However, as promising as the use-cases look, the investment required in the technology is of a fairly large scale. Some companies shell millions of dollars on certain projects. Although, there’s still hope. At the rate with which the research is advancing, perhaps sometime in future, even small retail stores will be able to leverage technology without getting buried under the initial investment costs.


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Muskan Bagrecha
Muskan is an undergraduate student pursuing a Bachelor's in Technology. With a zealous spirit for writing, she finds herself open to the vast realm of learning. She is an avid programmer with a keen interest in technology and science.

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