21 Benefits of Using AI in Your Retail Business

21 Benefits of Using AI in Your Retail Business

Sep 23, 2023 · 3 minutes read
21 Benefits of Using AI in Your Retail Business

In the fast-paced world of retail, staying ahead of the competition is essential. One of the most effective ways to do so is by integrating Artificial Intelligence (AI) into your retail business operations. As many AI use cases, the technology has revolutionized the way businesses operate, and the retail sector is no exception. 

From enhancing customer experiences to optimizing inventory management, here are 21 compelling benefits of using AI in retail.

Personalized shopping experience.

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1. Improved Customer Personalization

A game-changing benefit of utilizing AI technologies in retail is improved customer personalization. Various AI tools can analyze customer data to offer personalized shopping experiences. By understanding things, like individual preferences and purchase history, retailers can recommend products tailored to each customer, increasing the likelihood of conversion.

For example, retail brands like ThredUp and Uniqlo have created AI experiences for customers to increase personalization. ThredUp is an online consignment store that uses AI to remember customers’ orders and preferences and send them personalized ‘Goody Boxes’ with surprise second-hand items. Uniqlo took AI even further to offer a personalized in-store experience that measures customers’ brain signals to determine their reactions to various products and recommends certain products and colorways based on their reactions.

Improved Customer Personalization

The future of retail is personal, and more customers are expecting these unique, tailored experiences when shopping. Perfect Corp.’s extensive suite of AI technologies can provide exactly what businesses need in this technologically advancing retail space. The leading beauty and fashion tech solution provider offers personalized AI experiences that integrate seamlessly with ecommerce platforms, such as virtual jewelry and makeup try-on tools.

2. Virtual Try-On Experiences

Another beneficial AI tool retailers should consider using is virtual try-on. AI-powered virtual try-on solutions enable customers to visualize how products will look on them before purchasing, reducing returns and boosting customer confidence.

Retailers using Perfect Corp.’s virtual try-on tools have had great success in reducing bounce rates, increasing conversions, and improving customer satisfaction. For example, Estée Lauder experienced a 2.5 times higher conversion rate after implementing Perfect Corp. YouCam-powered virtual try-on kiosks in various store locations across the world. These high-tech kiosks allow customers to try on different makeup products and shades virtually, creating a fun experience while demonstrating which products suit them best.

Virtual try on experiences.

Similarly, Sally Hansen saw a 120% increase in intent to buy after incorporating Perfect Corp.’s AgileHand technology on their site, allowing customers to try nail polish shades. Perfect Corp.’s customizable AR try-on tools are revolutionizing the retail space, helping consumers visualize online products and be satisfied with their purchases.

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3. Efficient Inventory Management

Using AI in retail can also aid in efficient inventory management. AI can optimize inventory levels by analyzing sales trends and predicting demand. This prevents overstocking or understocking, leading to improved profitability and customer satisfaction. As an example, major retailer H&M uses AI to analyze purchases and returns to determine which items stock more or less in specific stores.

Efficient Inventory Management

4. Streamlined Supply Chain Management

Not only can AI help businesses manage inventory, but it can also help to streamline the entire supply chain. AI algorithms can streamline supply chains by tracking inventory movement, predicting delays, and optimizing routes. This helps retailers reduce operational inefficiencies and increase profit margins.

5. Accurate Demand Forecasting

AI also allows retailers to analyze historical data and predict future demand accurately. Such demand forecasting can include trend and color palette forecasting to the demand of specific products based on customer data. This prevents stockouts and ensures products are available when customers want them.

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6. Effective Product Recommendations

Effective Product Recommendations

AI-driven recommendation engines can also suggest complementary products to customers based on their browsing and purchasing behavior. This usage can increase the average order value, conversions, and customer satisfaction. 

For example, The North Face uses AI algorithms to give customers coat recommendations based on their planned activities and locations. Similarly, the high-end department store Neiman Marcus uses its AI-powered ‘Snap. Find. Shop.’ app to help customers upload a photo and find the same or similar items in store.

Furthermore, AI-powered virtual try-on experiences can enhance effective product recommendations by allowing customers to digitally visualize how a product will look on them before making a purchase. This personalized experience enhances the customer's engagement and confidence in their purchasing decisions, leading to more accurate and tailored product recommendations based on their preferences and style.

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7. Employee Productivity and Training

AI can also assist in employee training and productivity by providing real-time guidance and insights, leading to a more knowledgeable and efficient workforce.

8. Real-time Analytics and Insights

Another powerful benefit of AI is that it provides real-time data analysis and insights. This offers retailers valuable information on sales trends, customer behavior, and inventory levels. 

Make informed investment decisions with news-driven insights from Newsgenie. By receiving these automated, real-time data sets, retailers can make informed decisions. See how AI can give you an edge in the market.

9. Sustainable Practices

Sustainable Practices

More consumers, particularlywithin the Gen Z market, are expecting more sustainable initiatives from retail businesses. AI helps retailers adopt sustainable practices by optimizing energy consumption, reducing waste, and implementing eco-friendly initiatives. For example, companies can use AI tools to run tests for wasteful inefficiencies or to generate new ideas for sustainable initiatives.

Also, AI-powered virtual try-on technology can assist retailers in promoting sustainable practices by reducing the need for physical product samples and in-store trials. For instance, by allowing customers to digitally visualize how makeup and accessories look and fit, retailers can minimize product returns and the associated carbon footprint, ultimately leading to lower waste and resource consumption.

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10. Customer Behavior Analysis

As mentioned, AI can be used to generate insight into customer behavior. Not only can this identify trends, demand, and preferences, but it can also be used to tailor marketing campaigns. This way, retailers can generate higher returns on investment in ad campaigns.

11. AI-Assisted Visual Merchandising

Visual merchandising for in-store — and even online — retailers is a crucial step in the retail world for maximizing sales and cementing brand identity. AI can assist this process by analyzing visual merchandising effectiveness. This analysis can then help retailers create appealing product displays that capture customer attention and drive sales.

12. Optimized Store Layouts

Optimized Store Layouts

In addition to optimizing visual merchandising, AI can optimize store layouts. AI technology can analyze foot traffic patterns and sales data to optimize the layout of walkways, shelves, displays, and products, enhancing customer flow and increasing the visibility of high-demand products.

13. Fraud Detection and Prevention

AI also brings the important benefit of detecting and preventing fraud. AI-powered fraud detection tools can detect unusual patterns in transactions and identify potential fraudulent activities. This safeguards both the business and customers from financial losses and identity theft.

14. Enhanced Customer Service with Chatbots

To accommodate the demand of consumers expecting increased personalization and improved customer service, try using AI chatbots. AI-powered chatbots provide 24/7 customer support, answering queries and resolving issues promptly. This round-the-clock availability enhances customer satisfaction and frees up human resources for more complex tasks. Top department store Macy’s even uses an AI-powered ‘On Call’ app that helps answer customer questions and give directions in-store, reducing the need for excess sales associates.

Enhanced Customer Service with Chatbots

15. Localized Marketing Campaigns

AI can also help tailor marketing campaigns based on local trends and preferences, increasing relevance and engagement. For example, retailers can use AI to analyze trends at each specific store location to assess what marketing strategies resonate most with that audience.

16. Market Trend Analysis

In addition to helping predict fashion and product trends, AI can analyze and predict overall market trends. This is done by analyzing past and current market trends, competitor activities, and customer sentiment and then providing predictions based on this analysis. This helps businesses stay ahead of competitors in the rapidly evolving retail market.

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17. Optimized Pricing Strategies

Dynamic pricing, powered by AI, allows retailers to adjust prices in real-time based on demand, competition, and other variables, maximizing revenue and competitiveness. For example, retailers can use AI-powered tools to automatically launch seasonal sales and price items according to market data.

18. Intelligent Staff Scheduling

AI's predictive capabilities empower retailers to create optimized staff schedules based on historical sales data, foot traffic trends, and even external factors like weather conditions and local events.

19. Accurate Sizing

AI algorithms can also help accurately measure customers and recommend the right sizes, reducing the need for returns due to sizing issues. AI sizing tools currently exist for clothing, footwear, and jewelry products. Perfect Corp.’s jewelry sizing tool is an excellent example of this usage. The tool allows customers to accurately measure wrist and finger measurements for accurate bracelet and ring sizing. Plus, the augmented reality feature allows customers to virtually see the product on their body, increasing confidence in their purchases.

Online Jewelry Sizing Tools

20. Secure Transactions

Artificial intelligence can also enhance payment security by incorporating biometric authentication and behavioral analysis, reducing the chances of unauthorized transactions.

21. Enhanced Security Measures

For enhanced in-person security measures, retailers can equip surveillance systems with AI technology. This technology can use facial recognition and/or behavior analysis to identify and prevent theft, ensuring a secure shopping environment.

Embrace AI with Perfect Corp.

It’s clear that the future of retail involves powerful technologies, like AI, to enhance the customer experience, increase conversions, improve security measures, and more. Perfect Corp. offers a wide range of revolutionary AI technologies suited for any in-person or online retailer.

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Get expert advice from Perfect Corp. and be part of the beauty tech trend. Contact us for details on beauty tech solutions trusted by 600+ brands globally.


How is AI used in retail?

AI is used in a variety of ways to enhance the retail experience. This includes personalized recommendations, virtual try-on kiosks, optimized store layouts, inventory management, and increased security.

What is the impact of AI on the retail industry?

AI is revolutionizing the retail industry, with new technologies providing personalized and enhanced shopping experiences that will soon become the norm. This means that with the increase of AI technologies in retail, more customers, particularly in the Gen Z audience, will expect these high-tech experiences in online and in-store spaces.

How can AI change retail? 

AI has the potential to greatly change retail for the better. AI tools make for improved customer satisfaction by analyzing user data, giving personal recommendations, offering assistance, and more. AI also improves business for retailers by streamlining production, optimizing inventory and supply chains, predicting trends and demand, and increasing conversions while decreasing return rates.

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