How AI and IoT are Transforming the Retail Experience

By: Madhuvanthi Ananth, Head – Consumer Business Unit, Sasken Technologies

Artificial Intelligence (AI) is the key to unlock the customers of tomorrow in today’s ‘digital-first’ market. With many enterprises adopting Artificial Intelligence (AI) to deliver contextual, conversational, seamless and personalized services, the time is now to be intuitive and proactive about how customers will experience it. When Artificial Intelligence gets enriched with the power of Big data and Predictive Analytics, it offers unique and differentiated customer experiences; and the good news is that the customers love it!

According to Gartner, by 2020, 85% of customer-enterprise relations will exclude human interaction.  J.Walter Thompson in one of his reports mentions that 70% of US millennials appreciate a brand using AI while 72% believe that “as technology develops, brands using AI will be able to accurately predict what they want.” Consumers undisputedly get a better purchasing guidance with AI and this is why J. Walter Thompson, in the same report, also mentions that 79% of the Gen Z shoppers are more likely to visit stores with interactive experiences.

IBM Watson represents a new era in cognitive computing and Artificial Intelligence. The system perceives the world similar to the way humans do; it senses and learns continuously gaining knowledge over a period of time. Back in December 2015, The North Face announced the launch of an interactive online shopping experience powered by IBM’s Watson; the retail industry’s first ever artificially intelligent system. The customers used natural conversation while shopping through an intuitive dialogue-based recommendation engine and received recommendations as per their needs. The idea was to implement technology solutions to transform the customer’s retail experience into something more engaging and personalized.

The newest player in the game is visual listening. It deploys image recognition Artificial Intelligence to track products, assets, and logos in images and videos posted on social media. It helps analyze what the customers are sharing about a brand. The brands can build patterns and analyze consumer behavior to take relevant actions.

Google recently announced an AI powered visual search tool, Google Lens. Sundar Pichai, the company’s CEO describes it as “a set of vision-based computing capabilities that can understand what you’re looking at and help you take action.”

Artificial Intelligence is capable of benefiting both retailers and shoppers with applications such as in-store advertising and gesture walls. While it is tedious to walk around stores and find the perfect outfit, these walls help customers search merchandize, offers, and buy products with simple gestures. Virtual mirrors and dressing rooms help customers virtually try an outfit, make quick decisions, and speed up their purchase process.

Brands use AI based matching algorithms for product recommendations to personalize customers’ shopping experiences.  The process involves real time analysis of buying history, demography, season, age group, and other such parameters. Predictive and prescriptive models based on past sales, campaigns, and competitor’s events can help identify what worked and what didn’t. As a result, the subsequent campaigns can be tweaked effectively to help a brand engage, grow, and convert.

The Internet of Things is dramatically enhancing customer experience providing retailers with exceptional business insights to improve their marketing strategies. From allowing customers to pre-book a parking slot to seeing what attracts them and how long they spend in each area; know exactly how the customer traffic flows through your store.

Apple’s iBeacon enables devices to alert apps and websites about customer whereabouts. Retailers can then send promotional contextual messages, discount coupons directly on the customer’s phone whenever they are in the store’s vicinity. IoT enabled sensors allow retailers to extract insights about the most popular areas people pass by and where they stop to see the merchandize.

Intel’s “Smart Shelf" concept addresses problems experienced by shoppers providing them with more valuable services. The shelf uses Intel's Real Sense technology and camera to provide real-time object recognition. An appropriate content linked to stock sensors is displayed on product recognition. For instance, a customer selects a drink; the solution would suggest food to go with it and where to find the ingredients for it within the store. The in-store data is accessible to associates via web browsers and wearables.

IoT technologies play a vital role in retail supply chains and delivery operations. Allowing better visibility, IoT driven technologies can automate and optimize the entire supply chain process. It enables effective management in demand surge due to unexpected events. A highly responsive IoT enabled supply chain system can automatically reorder products when inventories reach a predefined lower limit.

Imagine the amount of changes you can bring into your marketing strategy if you have access to all this information every second! However, the real challenge is how to manage and act on the enormous data pouring in from all the connected devices.

The present day technologies can connect retail businesses in ways we could never imagine with results we never knew were achievable. To quickly interpret shopper behavior and devise dynamic marketing strategies is the key to transforming data into usable information. The future of retail is based more on interacting with machines, therefore brands must channel all their energies into making sense out of IoT data and implementing analytics to improve customer experiences through new age technologies.