5 Key Applications Of AI In Retail

Almost every industry has been in one way or another affected by the emergence of artificial intelligence technologies. The retail sector is no exception. AI provides an immense opportunity for retailers to leverage the customer data they possess and turn it into actionable insights that will end up boosting revenue. Plus, it can truly augment productivity and optimize business performance by reducing repetitive workload and unnecessary costs. In this post, we will discuss some of the key applications of AI in retail, including customer intelligence, personalized marketing, demand forecasting, price optimization, and reputation management.

Customer Intelligence

Accurate customer profiling lies at the core of any retail business and comes from obtaining deep customer intelligence that can keep the business leaders well-informed and enable effective decision-making. When leveraged correctly AI can not only enhance the gathered historical information about customer behavior but also make highly accurate predictions about what the customer will do next. Will the customers lifetime value increase or decrease? Is the customer going to churn soon? Will he respond well to your next marketing campaign? AI and predictive analytics can help retailers answer these questions and adjust strategy accordingly. Deep customer intelligence is the source of immense strength and can become a key differentiator for retailers as it maximizes the effectiveness of marketing actions, improves customer loyalty and retention programs, helps better manage customer relations and identifies where in the lifecycle stage customers are likely to churn.

Personalized Marketing

Another area of retail that can be enhanced by AI is marketing. A truly personalized marketing strategy and campaigns can only be achieved through accurate customer segmentation and behavior monitoring. If you want to integrate personalized recommendations based on users browsing history, past purchases, likes and dislikes or want to create highly targeted campaigns that increase ROI then accurate customer profiles are essential. How do you acquire correct profiles that allow you to segment customers well? The answer lies in your data and your ability to extract meaningful insights from it. Typically, this is where AI comes in to help. By leveraging customer data from various sources customer data platforms with the help of AI, can aggregate it all in one place and provide you with a 360° customer view and predictions about what your customer will do next.

Demand Forecasting

Predicting how much of a specific product or service customers may want to purchase during a certain time frame is one of the most critical capabilities for establishing a long-term growth model for your retail business. Demand forecasting leverages predictive analytics to help businesses determine how much stock to have on hand, gain insights about upcoming trends and decrease operational costs. AI technologies enhance demand forecasting and help organizations become more cost-efficient by reducing holding costs and capital tied up in unneeded inventory as well as to capitalize on every sales opportunity by reducing out of stocks.

Price Optimization

AI empowers price optimization strategies by analyzing large amounts of data that would take too long for humans. It also learns the interrelations between products and customer behavior, thus providing appropriate pricing recommendations. Essentially, AI helps retailers give shoppers prices they view as fair on the products they care most about which in turn, boosts consumer pricing perception and retailer profitability. A Gartner report has found that retailers who have integrated AI-powered price optimization have seen a revenue increase of up to 5%, illustrating that it is an area which must not be overlooked.

Reputation Management

Reputation monitoring and management are essential for any customer-centric business, especially a retailer. The ability to monitor brand perception, customer reviews and respond quickly and thoughtfully is what can set you apart in a highly competitive industry. Some primary ways in which AI can enhance your reputation management efforts is through social listening and customer feedback analytics. With social listening, you can monitor habits and trends to get informed on the best marketing actions. You can listen to consumer discussions on social media and review sites and learn what they like and dislike to then create better customer experiences. Similarly, customer feedback analytics help your managers quickly understand what is being said about the company – positive or negative. Natural language processing technologies look over comment forms, surveys, reviews and provide insights without a human having to read it. This allows retailers and businesses in other sectors to save a significant amount of time on information processing and instead focus on strategic decisions.


As you can see from eMarketer’s infographic – retailers are expecting AI to help them get closer to their target customers and provide the best experiences that increase loyalty. Customer intelligence, personalized marketing, demand forecasting, price optimization, and reputation management are key areas in any retail business that only get enhanced by the implementation of AI technologies and help get closer to the customer and create unique experiences.

If you are a retail business leader who wants to begin the digital transformation journey – reach out for a consultation on how AI and effective customer data management can boost your revenue.

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