This holiday season, retailers face a great opportunity to enhance customer experiences using Artificial Intelligence (AI) technology. Over the years, AI has proven its value across industries. Now, it’s making its way into the retail sector. So, what can retailers gain by implementing AI solutions during this holiday period, and set themselves up for even greater success next year?
How AI is revolutionizing retail
AI in retail is undeniable. It has become a part of retail businesses due to the multitude of advantages it brings. According to a study conducted by IBM the use of intelligence among brands is expected to grow from 40% to an astonishing 80% within the next three years.
Why is this happening? The answer is quite simple; AI saves time and resources while providing benefits for companies. By incorporating AI solutions into their operations retailers can generate revenue without breaking the bank as these technologies often outperform human driven alternatives.
Some examples of AI in retail on the clients’ end include personalized recommendations and, on the company’s end, various tools that support internal processes, such as stocking, staff allocation and more. Personalization, in particular, helps close the loop with the customer in a meaningful way with data collected directly from the customer instead of 3rd parties.
Why retailers are incorporating AI in their operations
One key factor is the range of applications that this technology offers. Regardless of business goals they can all reap the rewards by utilizing AI solutions.
The advantages are numerous. Firstly, AI has the capability to streamline business processes by handling tasks. These tasks involve managing stock, organizing the workforce, improving upselling opportunities and measuring customer satisfaction.
Understanding your customers on a personal level is another reason. While many stories acknowledge this fact and use it for their marketing campaigns, it’s necessary to go beyond that and use the data at hand to maximize conversion and in-store spend with the most profitable segments
Leveraging AI during the holiday season
The Holiday season presents an opportunity for retailers to implement solutions and capitalize on business prospects due to the increase in footfall, which reached 12.7% last year and is projected to be even higher in 2023. Whether it's in stores or online, providing customer service has always been a challenge during this time.
Consider the data that you can capture about the demographics. Use your Thanksgiving baseline for Christmas and engage more with your target growth demographic and build loyalty in that group for increased long term profit.
With the assistance of AI and the influx of customers there are opportunities to gather data and make decisions based on that data which would typically take months in a slower paced environment. This can significantly enhance business outcomes.
What customer data can you collect with AI?
When retailers consider implementing AI solutions, they often focus on the metrics that can be tracked with software. In terms of customer experiences one crucial metric is the satisfaction that customers have with the products or services they receive. However, this is the beginning.
Each data point is linked to information, such as where and when feedback was collected. Moreover, there are also data points related to customers themselves including demographics and their past interactions with the business. This additional context helps create an image that enables companies to better understand what actions they should take next to optimize the use of this data. If collected in one dashboard, it allows retailers to discover the link between operational strategy and sales performance to develop actionable plans for improvement.
"During the holiday season, retailers can expect an uptick in traffic and many new customers to sample their services. This serves as a unique opportunity to capture demand and secure customers whom you can serve well and convert to profitable customers over the coming 12 months." - Tim Waterton, CRO at HappyOrNot
How HappyOrNot® works
HappyOrNot instant feedback terminals are strategically placed in areas of stores to enable companies to measure satisfaction levels with real time capture with in-moment integrity. Smart correlation with existing operational data further provides insights and smart analysis which companies can use to uncover actionable insights based on areas of interest.
5 advantages of AI in enhancing customer experience for retailers during the holiday season
Leveraging AI in the industry brings benefits particularly during holiday seasons. Some key advantages include:
1. People: Brands can learn more about the people their shop with their, their behavior patterns and more to better respond to their needs.
2. Product: Improved product assortment tailored to customer preferences increases loyalty and promotes positive word of mouth online and offline.
3. Presentation: Greater satisfaction achieved through proper store presentation encourages shoppers to come back for more and allows the company to stay on top of shoppers’ minds.
4. Operations: Customer experience data provides insights into business operations and facilitates informed decision making for long term strategies.
5. Gaining a competitive edge: Companies which possess data that their competitors lack, such as layering customer satisfaction data on top of other key operational retail metrics like SPS and STAR, gain a significant competitive advantage. By being better equipped to address customer needs, this widens the gap between competitors and solidifies the company's position as a leader in the industry.
Additional benefits of AI in retail
Many retail businesses are now recognizing the hidden benefits that come with these solutions. One such benefit is that AI enables businesses to generate revenue not in the short term but also by increasing customer lifetime value through higher satisfaction. This means that once an AI solution is implemented it continues to provide value for a long period.
Another benefit is in increasing sales and keeping customers on the books longer. One of HappyOrNot’s clients, for example, was able to achieve a loyal customer rate 15% higher than the industry average through collecting and analyzing shopper feedback.
While most retail managers are aware of the presence of AI in retail, there is still some hesitation among businesses when it comes to implementing it into their operations, including fear of change, the need to train staff and more.
However, the benefits we've highlighted clearly demonstrate how technology can bring advantages to companies operating within the industry. From increased customer satisfaction to higher bottom line, all at a relatively low cost, the adoption rate of AI in retail will only increase as we enter 2024, and businesses that stay behind now might have a hard time catching up later.