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July 18, 2023
Generative AI is the latest buzzword that is dominating conversations in the retail industry. Tools like GPT-4, Copy.AI, LimeChat, DALL-E, Google Bard and more have become the best bet for brands and retailers — grappling with issues of escalating customer expectations, increased competition and hyper-price sensitivity.
Curious how retail companies are leveraging the power of generative AI to improve efficiency, build and automate processes, and understand their consumers? Read on for a primer on generative AI and how it is revolutionizing the retail industry with its smart solutions.
What is generative AI? It is a branch of artificial intelligence that can be used to generate new and diverse content such as images, audio, code, videos, audio, simulation and more — based on patterns in the data they are trained on.
Why has it picked up steam? Data suggests that the global generative AI market is forecasted to reach $53.9 billion by 2028, growing at a whopping rate of 32.2% CAGR during the forecast period. This comes as no surprise considering the potential of this technology to revolutionize how businesses operate.
Generative AI tools have been able to automate a wide range of tasks and optimize business processes, thereby boosting productivity and profitability. Additionally, the rise of these tools breeds innovation — paving the way for entirely new products, services and business models.
What does generative AI mean for retail? As Forbes rightly puts it, “for retailers, generative AI is a once-in-a-generation opportunity. Embedded into the enterprise digital core, generative AI will transform their ability to optimize tasks, manage data, create faster insights, innovate with new experiences, augment front-line workers, and connect and communicate with customers.”
Generative AI has revolutionized retail, impacting both the demand and supply sides of the industry. On the demand side, it is helping retailers better understand their consumers and stakeholder, and anticipate customer behavior and needs. And, on the supply side, AI is enabling retailers to build more efficient and responsive supply chains; improve inventory management and logistics. Plus, it is assisting shoppers and consumers in making better purchase decisions.
Below is a more comprehensive look at how retailers are harnessing the power of generative AI to unlock growth and innovation.
Inflation and recession concerns have made consumers more price sensitive. They are now hunting for the best prices before making a purchase decision. In fact, 95% of consumers check and compare prices of similar products online whilst shopping in-store, according to a recent Intelligence Node survey.
This makes it imperative for retail companies to stay on top of their pricing game. AI algorithms enable brands and retailers to get insights into their competitor prices as well as market trends and make informed pricing decisions in real time — helping attract customers and maximize revenue simultaneously.
Managing inventory has been one of the most daunting tasks for retailers. Stockouts, shortages, overstocking and shrinkage are common inventory management challenges persistent in the industry. This is where generative AI comes into play.
Automated inventory management solutions enable retailers to run stores more efficiently. AI-powered smart shelves help retailers quickly identify out-of-stock items and pricing errors; inventory robots assist in restocking shelves.
Additionally, AI helps retailers forecast trends by analyzing historical sales data, consumer sentiment and competitive data to predict upcoming trends, and make informed ordering and manufacturing decisions.
Wild fluctuations in demand, particularly in the last couple of years owing to the economic headwinds have destabilized the retail supply chains. Issues of massive delays in deliveries, and excess and dead inventory have been prevalent in the industry.
Generative AI equips retailers with the power to forecast, anticipate and respond quickly to risks as well as opportunities that the future brings. Plus, AI-enabled supply-chain management help brands and retailers double down on efficiency, improve service levels and reduce logistics costs.
Customer service is crucial, but adding more well-trained employees to deliver great customer service isn’t a viable option for retailers who are already facing the problem of shrinking revenues.
Retail companies are therefore turning to generative AI to deliver the proactive and personalized service that new-age customers want. AI-powered live chat agents, aka retail chatbots, offer first-line help — assisting customers. Thus, reducing the workload on human customer service representatives and enabling retailers unlock significant value for their business.
Succeeding in today’s digital world requires higher rankings on search engines — this needs more than just good products or established brands. The key to getting higher rankings on search engine result pages is SEO-optimized product description pages and high-quality, responsive images.
Generative AI helps retailers to level up their SEO game. It automates the process of creating and optimizing product description pages, and creates product descriptions and copies that are tailored to the needs and preferences of the target audience. In addition, AI helps create and optimize images for product pages, that users can easily understand and view on the website.
Want more? Escalon has helped over 5,000 companies across a range of industries to optimize routine business functions, like taxes, accounting, insurance HR and payroll, and operate more efficiently. Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
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