How Is Retail Evolving: Implementing AI in Brick-and-Mortar Stores

How Is Retail Evolving: Implementing AI in Brick-and-Mortar Stores

How Is Retail Evolving: Implementing AI in Brick-and-Mortar Stores


Is AI the face of the new Brick-and-Mortar market?

Artificial Intelligence’s business applications are undergoing unprecedented growth as a new evolving reality. Therefore, giving AI its due credit stands to reason on a two-fold basis.

Firstly – AI helps your retail business improve the bottom line and increase productivity. Secondly, customers are actively looking for a value-added experience from physical stores apart from a high-quality product. AI has proven to be a blessing in monitoring and personalizing experiences.

In light of the optimal AI-powered consumer shopping experiences leading to profitability, now is the time to jump on the bandwagon and let go of your hesitancy.

The post below will elaborate on implementing AI in your Brick-and-Mortar stores and staying on top of the latest trends.

How Is Retail Evolving: Implementing AI in Brick-and-Mortar Stores

In-Store Implementation of Artificial Intelligence

According to a recent International Data Corporation forecast, the global retail sector will grow at a compounded rate of 25.5% by 2025.

With a never-ending stream of user data generated, Brick-and-Mortar physical stores require intelligent, AI-powered software to make sense of it all. Google has highlighted 75 use cases for Artificial Intelligence in retail, ranging from personalized promotional offers to consumer trends analysis and digital shelf space management.

Consumers may not interact with every AI solution. However, they interact with many of them, whether they are aware of it or not. With evolving customized AI solutions to meet retail needs, there’s no limit to their usage in brick-and-mortar stores in the near future.

The AI-powered Amazon Go’s foray into traditional retail has proven market success. The company now hopes to grow its business to over 300 locations while staying on top of significant AI technology trends.

Prerequisites for Brick-and-Mortar Physical Stores

Before using any AI solutions, retail stores should prioritize the following areas:

  • Value: regardless of the trends, customers rarely choose value over money.
  • Value-Added Experience: Nowadays, consumers seek value-added experiences rather than merely going to a store to purchase.
  • Convenience in shopping experience: The goal of a store operator is to eliminate any barriers and roughness from the optimal shopping experience.

After you’ve built an operational model that solves these issues, using AI to help you iron out inconsistencies in your day-to-day activities might be a wise next step.

Using AI in Brick-and-Mortar Stores

In recent years, data science has grown in popularity due to the numerous insights about consumers and processes. The applications are not only limited to task automation or cost reduction through process efficiency.

Since it has become the foundation upon which the rest of the business operations depend, more and more established retail companies are speeding up their digital transformation. Furthermore, digitization had to be ramped up and prioritized because of the pandemic. Therefore, it is high time to use AI to understand processes better and assist businesses’ improvement.

Large retailers can invest in developing up-to-date solutions for their products. However, startups conceived digitally and with a very data-driven approach also emerge and use AI. Implementing AI algorithms helps businesses’ decision-making. It translates into more substantial growth and better positioning among their consumers – compensating for the understaffing through consumer orientation and positioning.

With significant AI evolving trends, here are five innovative ways physical retail stores are using to stay on top of the game:

  • Visual search
  • AI memory
  • Minus the cashier
  • Inventory management
  • Augmented reality

Using AI as a catalyst and facilitator of business activities carries various benefits, good margins being the major one. For example, according to a paper discussion by Mckinsey, adopting AI as a supply chain management strategy increases profit margins by over 5%.

How Is Retail Evolving: Implementing AI in Brick-and-Mortar Stores

How Artificial Intelligence Improves Productivity in Retail?

The artificial intelligence solutions in the supply chain, retail, and other similar sectors offer businesses high-level information and data. Also, the active inclusion of AI and machine learning alternatives has increased efficiency, speed, and accuracy across all retail branches. According to a study by Accenture, AI can improve productivity by more than 40%.

With numerous benefits for productivity and efficiency within retail, here are four primary pros for Brick-and-Mortar physical stores:

Attracting more Customers

Utilizing AI retail solutions can offer smooth customer support in various scenarios, from automated checkout processes to customer mood tracking. Moreover, personalized and engaging shopping experiences fueled by AI attract more customers and a better experience.

With Agile processes, personalization, and AI-powered solutions, retail businesses can use an explicit and intelligent experience engine to build more enduring and deeper brand loyalty.

Offering Engaging Experiences

With optimal AI solutions, physical retail stores can maintain interest by differentiating their products/services and offering engaging consumer experiences. In addition, AI empowers you to encourage brand loyalty, strengthen customer engagement, and improve retention. Retailers can also gain comprehensive market insights with innovation rather than predictive analytics.

Employing Practical Promotion and Merchandising

Artificial intelligence retail solutions aid in marketing and merchandise planning, customer segmentation, content generation, and execution of targeted advertising programs.

Let’s take Walmart as an example – Walmart uses AI to analyze competitors’ offerings as a giant multinational retail corporation. In addition, it hopes to use robotics to examine its shelves to optimize the product mix in the near future.

Improving Operational Efficiency

With routine automation, artificial Intelligence also supports and improves increasingly challenging tasks. For example, AI effectively and efficiently optimize labor scheduling, order tracking, and delivery route planning, among other tasks.

Adopting AI solutions can enhance customer interactions and improve operational efficiency. With business process management (BPM), workflows, and process automation solutions such as Robotic Process Automation (RPA) and workforce scheduling in their vertical and horizontal operations, retailers can quickly improve their operational efficiencies.

AI can help You Address 3 Significant Retail Trends in 2022

Brick-and-Mortar physical stores can address three major retail trends in 2022 with an AI-powered digital workforce as follows:

Virtual Assistance to Hybrid Consumers

In the face of growing in-store traffic, 74% of consumers conduct online research before visiting a physical store, as per a 2021 Google Think study.

In the digital age, communication mainly occurs via digital channels such as chat and text. With more consumers exploring and purchasing online, calls and inbound inquiries to retailers’ contact centers also increase. Note that 54% of executives believe that Artificial Intelligence has already improved the productivity of their businesses.

In 2022, an AI-powered digital workforce can assist businesses in dealing with increasing demand and consumer engagement — wherever they choose to shop. Retailers, for example, can use workflow automation (WFA) solutions to engage customers proactively based on their online shopping experience, including items added to their virtual shopping carts.

Tackling Supply Chain Difficulties

Keeping up in the data-driven world is a must for any shopping experience. As a result, tech powerhouses like Amazon and Google implement Artificial Intelligence throughout their supply chains. While using AI’s predictive nature, Amazon effectively prepares for future demands.

Supply chain disruptions will continue to impact product availability and delivery times, prompting more customers to contact customer service.

Adopting an AI-powered digital workforce can assist retailers in mitigating the growing inbound interactions and offering more accurate and efficient status updates. An IVA can fully automate status notifications in many cases. IVAs and automation, when combined, can provide proactive shipping notifications to customers preferring texts or phone calls. Doing so will reduce the need for customers to “call in.”

Easier Returns and Smooth Pickup Experience

Instead of waiting for a delivery, more shoppers opt to buy online and pick up in-store (BOPIS). As a result, the number of online orders picked at physical stores increased by 208% during the pandemic.

Retailers can benefit from a digital workforce to offer a smoother pickup experience. For example, when customers arrive at the shop to pick up an order, they can interact with an IVA and provide the order number. The IVA will then notify a sales associate to bring the items directly to the customer’s car.

On the other hand, customers aren’t always pleased with their purchases. According to the National Retail Federation, in 2020, consumers returned an estimated $ 428 billion in merchandise, accounting for approximately 10.6%of total U.S. retail sales.

A seamless returns experience will be crucial to retaining hybrid customers in 2022, particularly during the early months of the post-holiday retail season. Retailers can use AI-powered self-service to help customers learn about return policies and eligibility. They can also find the nearest store to drop off merchandise.

Why is Retail Lagging in AI Adoption?

The reluctance of businesses to embrace new technologies, essentially the “if it ain’t broke, don’t fix it” approach, is one of the critical factors for low AI adoption rates. Although understandable if they were a guinea pig sector for AI, several businesses effectively implement AI and reap significant benefits.

Another factor to consider is the lack of professional development for workers, impeding the growth of the AI market. If retail is to evolve and implement new technologies, AI consumption must grow alongside it. As such, more investment in developing skills of current workforces with a technological approach is needed.

Last Thoughts: AI is the Face of New Brick-and-Mortar Frontier

AI is expected to grow from less than $ 5 billion to more than $ 31 billion in the global retail market by 2028.

Humans may be the most significant difference between brick and mortar and e-commerce. The credit is due to the in-store retail staples that have stood the test of time. They can be an informed salesperson, sociable cashier, or willing staffer to lug your items into the car. But, the critical point is that technology, especially AI, assists in mapping out the innovative brick and mortar frontier.

Customers find new and exciting reasons to visit your physical stores due to technological innovations. AI is offering far more sophisticated data than the restricted surveys and metrics of the past. Most importantly, cutting-edge technology assists retailers in satisfying customers with more of what they want and less of what they don’t.

So, all in all, expect retailers to continue embracing technology in 2022 to benefit the employees, customers, and shareholders alike. AI and other technological endeavors will keep charting the new brick-and-mortar frontier.

Image Credit: by Pixabay; Pexels; Thank you!

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Rob Press

Rob is a Senior Manager at Deputy, a robust scheduling software that can be used to manage your workforce in a wide variety of different industries. Aside from helping businesses reach operational efficiency, he keeps up to date with the latest trends in SaaS, B2B, and technology in general.