Retail Automation with AI: Personalization in Supply Chain

AI uses algorithms and machine learning (ML) technology to mimic human-level intelligence. It’s set to completely change retail automation for the better by facilitating never-before-seen levels of effectiveness and personalization.

Researchers and industry experts speculate that 71% of retail tasks and processes will be fully automated by 2025[1]. Therefore, transitioning to AI automation in retail is not a luxury but more of a necessity. In doing so, retailers can maintain profit margins and market shares in an increasingly competitive, cut-throat business environment.

Today’s post is a deep dive into how AI is revolutionizing retail by facilitating enhanced personalization across the supply chain. Let’s go right in.

Automation in retail

Traditional retail is time-consuming since workers must perform tasks manually. This is not only stressful to workers but also heavy on retailers’ pockets. It also opens retail businesses to errors and other inefficiencies that need money.

Automation involves using tools and technologies to simplify and speed up operations. Common examples of automation technologies include:

• ERP billing systems
• Chatbots for customer services
• Self-check-out station
• Automated email campaigns
• POS software

Retail automation with AI incorporates different AI technologies into day-to-day retail activities. It takes a huge load off retail workers so they can focus on more important, high-value matters while specialized software and machines handle mundane, redundant tasks.

While automation requires considerable upfront investment in time and capital, the long-term benefits will more than make up for it.

Solutions of retail automation with AI

The first step in Implementing retail automation with AI is to build automated retail workflows. To do so, retailers use an automation platform that triggers specific actions, which, in turn, move processes forward.

Let’s say a customer sends a service ticket to customer support. Instead of customer service agents looking up the ticket themselves, automation technologies will fulfill the request and send a follow-up email confirming the same. This saves time and ensures the customer is fully satisfied.

That said, here are some notable solutions for automation with AI in retail:

• Internet of Things (IoT)

The interconnection of various devices in a network that allows data collection and sharing of resources is the underlying concept behind IoT. The connected devices can “talk” to each other with little or no human intervention.

A good example is sensors on store shelves that automatically update inventory when customers pick items from shelves. These sensors send the data to the inventory management system, which then updates the central database. Next, AI will analyze the customers’ purchasing patterns and outline stock requirements for the future.

• Augmented Reality (AR)

Combining Augmented Reality and AI has been a game changer for forward-thinking retailers. AR creates life-like, 3-D virtual overlays in the real world. Apple uses this technology through the ARKit, giving customers a picture of the actual sizes and dimensions of products in a real-world setting.

Given that 22.6% of sales will be conducted online by 2027[2], AR is one way for retailers to get an edge over the competition. AR enhances customers’ shopping experiences by letting them visualize their products before purchasing. Combining AI with AR means retailers can give personalized recommendations by looking through previous purchases and interactions.

• Robotic Process Automation (RPA)

RPA is one of the most impactful AI technologies in automation. The technology combines user interface interactions with various APIs, eliminating the need for human input in certain operations. The software interacts with business or productivity apps to perform repetitive, rule-based tasks like data entry or processing orders.

AI improves traditional RPA’s capabilities by improving RPA systems’ decision-making and supporting more complex tasks. Businesses in retail can use AI-powered RPA systems to not only perform routine tasks but also predict consumer demand or even identify previously unnoticed trends.

Read more: Robotic Process Automation (RPA) and Artificial Intelligence (AI)

• Blockchain

Cryptocurrencies, NFTs, smart contracts, and similar digital assets use blockchain technology. This is a technology that stores transaction data in immutable, interconnected ledgers. Users can only add to the blockchain but can’t delete or modify it.

Integrating AI technologies with blockchain in retail offers improved transparency and security over sensitive processes. AI can analyze copious amounts of data to identify abnormal patterns and inconsistent transactions on the blockchain. This is useful for detecting fraud and enhancing cybersecurity measures to meet data privacy and security regulations.

Examples of retail automation with AI

AI’s role in boosting automation in retail is widespread and profound. We’re talking everything from tailored customer recommendations to more complex stuff like supply chain optimization.

Below are some of the most notable use cases of process automation with AI:

• Simplifying  returns with automation

Returns are a serious headache for retail businesses, large and small. Customers expect fast and straightforward return processes, but manual returns are usually slow since they entail several steps, like verifying the items’ condition, processing refunds, and updating inventory. This slowness compromises the customer experience, resulting in negative reviews.

With AI, customers can request a return, and the AI will look into the database, process a payment reversal, and update the inventory in real time. This is much faster than having employees rummage through transactions and stock records and coordinate with different departments to verify the return.

AI can also use predefined rules and assess historical data to automate decisions on whether returns should go through. Image-capturing technology also allows automatic evaluations of the condition of returned items to determine their legibility for returns.

• Customer support using chatbots and virtual assistants

Salesforce Research surveyed 14,3000 customers and business buyers and found that about 88% of customers would buy from a business again if they offered good customer service [3]. Customer support is, therefore, a crucial touchpoint for retail companies looking to improve customer retention.

Nowadays, consumers are increasingly demanding faster, more efficient, and personalized customer support. There’s little room for generic response, long wait times, and disruptions across customer service channels.

Customer support is one of the most prevalent use cases of AI in business automation. That’s because its implementation is a breeze, usually requiring minimal capital investment and little infrastructural change.

AI chatbots, for instance, can respond to customer queries and operate round-the-clock without taking breaks. Thanks to technological advancements in AI, these chatbots now gauge customer sentiment and provide contextual and relevant responses. These chatbots pull information from the central database to curate responses based on the customer’s:

• Purchase history
• Browsing history
• Previous engagements
• Buying patterns

Aside from AI chatbots, retailers can also utilize virtual assistants to help customers in various aspects of their purchasing journeys. Unlike chatbots, virtual assistants provide specialized services tailored to specific customer news. For instance, they can help customers choose between different brands of the same product or help them track shipments.

Inventor management with predictive analytics

Spreadsheets and paper checklists are outdated. They’re typically prone to error and involve unnecessary, time-consuming processes. Automating retail with AI is an effective way to ensure efficient and error-free inventory management.

While spreadsheets let you keep detailed records of your stock, their integration with other applications and ability to update in real time is limited. AI gives retailers better visibility over their inventory with real-time updates and predictive analytics. Instead of retailers manually restocking, the AI will automatically generate purchase orders after evaluating inventory thresholds and demand forecasts.

As such, retailers can maintain optimal stock levels without the risk of overstocking or running out of popular items. They can also make better decisions on when to restock or cut down on overstocking.

• Behavior analysis 

Retailers that offer services tailored to unique customer tastes or adapt to seasonal purchasing trends stay ahead of the curve.

Integrating AI technology with automation technologies, for instance, gives retailers better insights into customer behaviors and buying patterns. An example is AI technology coupled with automated email campaigns, which automatically send marketing emails to segmented customer groups so retailers can push relevant products to the right customers at the right time.

Of course, retailers can do this the old-school way, but gathering enough data is expensive and takes time. Instead, they can let AI do the heavy lifting and examine internal data in the central database and external data from the internet so they can adapt marketing efforts based on these insights. This targeted approach is great for engagement and also improves conversion.

• Streamline workflows with sensors and autonomous robots

Workflow in retail is the sequence of tasks and operations necessary to complete a particular process. Employees are integral to any workflow, but you don’t have to bog them down with repetitive tasks. AI-driven technologies can help take the burden away from employees to streamline workflows.

For example, retailers can install sensors on shelves to automatically update inventory. The sensors will tell when a customer picks an item up from the shelf and update the inventory database accordingly. Retailers can also use sensors in their warehouses to keep a close eye on inventory levels and track the movement of goods. This not only enhances inventory management but helps keep internal theft at bay.

That said, larger retail companies can consider investing in autonomous robots to help restock shelves and transport goods within the warehouse or manage deliveries. While the technology is still in its early stages, stores like Lowe’s already use robots to guide customers to specific items. Walmart also uses scanner robots to scan out-of-stock items on shelves and transmit the information to unloader robots that unload these items from trucks and replenish stock [4].

However, it’s worth noting that the term “autonomous” is somewhat of a monomer. These robots aren’t fully autonomous and can’t replace employees completely. Human intervention is still necessary to verify actions and address unexpected issues. These robots work hand-in-hand with employees, relieving them of physically exerting tasks so they can focus on complex and value-adding ones.

• Store layout and planning

Did you know that store layout influences customers’ purchasing behavior and directly affects customer satisfaction? Customers will likely abandon retail stores with inconsistent layouts for competitors with cleaner, more consistent layouts [5].

With that in mind, retailers need to put a lot of thought into their store layouts and shelf placement to optimize traffic flow and improve customer experience. This requires a comprehensive understanding of customer preferences, priorities, and purchasing sequences.

Retailers can for instance automatically analyze in-store movement patterns using AI technology like sensors and cameras to know what aisles customers spend most time on. AI software can also give them clues into the most sought-after products by customers so they can place them strategically in their layouts to not only boost sales but also increase customer satisfaction.

Benefits of implementing retail automation with AI

There are many benefits of integrating AI with automation tools. Some of these benefits include:

• Cost savings
  Retail companies can save a bundle in operating costs by automating processes with AI. Sure, the initial costs may be steep, but automation technologies will save a lot of money in the long run by reducing inefficiencies and labor costs.
  Minimizes errors: Switching to process automation helps mitigate human errors in the workplace. The less human input is needed during critical operations, the less likely errors can occur. By reducing errors, AI automation improves the overall efficiency of processes.
• Easier Scalability
  Retailers that automate processes with AI can scale effortlessly, handle wavering demand, and grow into emerging markets without expanding their workforce

Final thoughts

The retail industry is undergoing a fundamental transformation, switching from inefficient conventional methods to more efficient automated processes with AI integration. We’re currently entering a new age of automation, and only retail companies that embrace these advancements will thrive in tomorrow’s market.

Still, it’s wise to take a calculated, step-by-step approach to automation to ensure proper integration with current setups and a seamless transition into full-scale automation. Retailers should consult IT, robotics, and other tech experts for the best results.

References

[1] retailcustomerexperience.com. Reasons Why Retailers Are Marching Fast Toward Automation. URL: http://surl.li/qtyiqh. Accessed on July 9, 2024
[2] forbes.com, 35 E-Commerce Statistics of 2024. URL:
https://www.forbes.com/advisor/business/ecommerce-statistics/. Accessed on July 9, 2024
[3] salesforce.com. State of the Connected Customer Report. URL:
https://www.salesforce.com/resources/research-reports/state-of-the-connected-customer. Accessed on July 9, 2024
[4] forbes.com, Robot Take Retail. URL:
https://www.forbes.com/sites/gregpetro/2020/01/10/robots-take-retail. Accessed on July 9, 2024
[5] researchgate.com. The Impact of Store Layout on Consumer Buying Behaviour: A Case of Convenience Stores from a Selected Township in Kwazulu Natal. URL:https://t.ly/E61bR, Accessed on July 9, 2024