“A year spent in artificial intelligence is enough to make one believe in God”, stated the coveted computer scientist, Alan Perlis, and rightfully so, AI is reshaping the world, a click at a time. With Gen AI claiming center stage around the globe, unlocking potential and economic value across industries, it is expected to grow around USD 1005.07 billion by 2034.

The multi-faceted roles of Generative AI in retail enable companies to realize their potential within the areas of customer engagement, operational excellence, and sales through different models. Built and designed to mimic the way human brains function and process, Gen AI uses neural network-based models. To understand various data patterns and structures, these models are trained on large datasets using techniques like predictive sequencing and data reconstruction, which allows them to respond appropriately with new content, in the form of an answer or a story.

Experiencing the Unexperienced; A Glimpse of Top Generative AI Use Cases in the Retail Industry

While Gen AI is widely spreading its wings to multifarious industry segments, it has deeply permeated the world of retail, enhancing the personal touch that retail customers seek besides streamlining the internal value chain with informed and faster decision-making. As high as 92% of retailers are deepening their investments in AI and related technologies including tools that enable features such as personalized recommendations (66% adoption), product description automation (53%), product design and development (21%), inventory management and trend analysis (53%).

Let us take a quick look at the role of Gen AI in customer experience enhancement and driving the business value chain

• Customized Marketing Initiatives and User Recommendations

  Ditching the traditional marketing approaches that used standard practices and ‘one size fits all’ initiatives, Gen AI is enabling retailers to unlock the power of data to appease their customers with personalized marketing experiences. AI-powered retail analytics make use of customers’ social media, shopping history, buying preferences, and other key third-party data to identify buying patterns and deliver relevant messaging and recommendations.

  Tailored messages and advertisements allow for faster conversions, better brand recall, and customer loyalty while saving on traditional marketing costs as AI is capable of handling mammoth data and generating individualized experiences in significantly less time.

• Improved Content Generation and Product Handling

  Gen AI in the retail industry acts as a powerful enablement tool. A simplified and automated process of content creation allows retailers to address the lesser-emphasized areas of creating product features, descriptions, training material, and other related content. Additionally, with automated creation for store navigation content and product information, Gen AI assists new staff to efficiently handle customers at all times. Through customer content analysis (including customer reviews and market positioning), AI can generate compelling and consistent content for websites and product catalogs that strike a chord with the target customer due to its relatability.

  Leveraging the text content optimization feature from ChatGPT, popular retail brand Newegg has improved its email subject lines and SEO measures, enabling better reach and market positioning for the brand. Synchronizing multiple sources of feedback such as social media, call center transcripts and website reviews among others, AI assists retailers in devising better marketing strategies.

• Innovative Virtual Experiences

  Virtual interactions are quite the game-changer in the retail world. Allowing customers to experience and preview products virtually, helps them make an informed decision.

  Interactive applications even allow users to view everything from a furniture item to an outfit, as it would look real-time, without the need for a physical trial, thereby reducing the return rate by up to 30%.

  Renowned make-up brand Sephora leverages the Virtual Artists app (based on facial technology) to let consumers play with their different make-up ranges by trying every possible look on their faces.

  The level of customization through AI in retail customer experience has enabled retailers to broaden their offerings’ horizons. Gen AI apps help analyze changing trends, market strengths, individual preferences, and historic sales data to keep pace with the retail dynamics and better revenue.

• Enhanced Operational Excellence

  Task automation through AI is one of the smartest uses of technology. Gen AI allows for process improvements by automating any redundant tasks, saving time, cost, and manpower. From workforce management to store equipment and even predictive maintenance, automation can help retailers sail through the grind with just a tap, adding efficiency to overall operations. Some of the notable areas of intervention where Gen AI makes a remarkable difference are:

  1. New-hire Onboarding Standardized procedures and activities for new hires help the management save time on revenue-driving areas such as marketing and sales.
  2. Automated Customer Interaction Smart IVRs, designed to minimize the call load on customer care agents are a great add-on to the service segment for retailers. By categorizing the inquiry level, technology helps prioritize service offerings for a seamless customer experience.
  3. Training and Feedback Using call data, AI can create automated quality assurance programs and provide objective feedback to improve employee performance and better training designs. Additionally, it also assists with personalized coaching plans for customer care agents by using their recorded conversations and quality scores.




• Overcoming Procurement Challenges and Vendor Management

  Automation through the procurement processes and vendor negotiations is enabling retailers to invest their resources and time toward more critical and strategic initiatives while making the former seamless and swift. As a leading retail chain, Walmart works on numerous contracts with a large list of suppliers. Deploying AI for retail vendor management and procurement efficiency entails chatbot-powered Gen AI for cost and term negotiations with vendors. Making use of historical data, competitive pricing information, and changes in material costs, the system helps Walmart negotiate for small-sized contracts. This innovative technology has resulted in a deal closure rate of 68% since 2021 with a 3% cost savings on contracts, with as high as 75% of suppliers choosing chatbots over human interactions for negotiations.

  Another popular retail name, Carrefour also leverages technology for procurement processes that include quote analyzation and invitation drafting, exhibiting the versatility with which Gen AI efficiently transcends various areas of vendor management.

• Optimizing the Supply Chain

  With the capability to continuously analyze real-time data (social media sentiment, customer orders, market trends, changing market conditions, etc.), Gen AI is revolutionizing retail supply chain optimization. Using the available data, it generates dynamic forecasting, with real-time dashboards for better insights and decision-making, allowing businesses to withstand the demand and supply fluctuations and encourage better inventory management.

  It also facilitates pricing trend evaluation and supplier performance, enabling retailers to identify cost-effective suppliers and optimize their services to reduce transit times and shipping costs.

  All Gen AI systems evolve with the changing market conditions by continuous refinement of algorithms based on outcomes and feedback, enhancing operational efficiency and cost savings.