Gone are the days of mom-and-pop stores where the owner behind the counter knew what the customer wanted before he or she even spoke. Rather than having one-on-one relationships with regular customers at standard brick-and-mortar locations, eCommerce has globally widened the sales interaction.
With the advent of artificial intelligence (AI), retailers and merchants have the capability to reach a much larger array of consumers on an extremely tailored and personal level. As such, it should come as no surprise that many retailers are using AI to help boost both their products and services.
In an effort to raise the bar on the consumer experience, many in the retail industry have slowly begun integrating more aspects of AI, including machine learning and natural language processing. What AI essentially does for retailers is help them to improve customer service. AI enables retailers to learn more about consumer preferences by having technology perform tasks that would typically require some level of human intelligence.
While retailers and merchants began using AI to help deal with the massive scale of global consumers — and to help stay competitive with others in the space — consumer behavior, and subsequently consumer expectations, have started to see a shift toward a true digital transformation. In the past two years alone, there have been 650 venture capital investments for artificial intelligence technologies — totaling more than $5 billion — and PricewaterhouseCoopers (PwC) is predicting that figure will reach a market value of $70 billion by the year 2020.
From the way consumers shop for groceries to clothes, books and almost any other conceivable item, there does not seem to be an area of retail unimpacted by AI in some fashion. With PwC's projected significant increase in the AI market over the next two-and-a-half years — alongside Boston Retail Partners' research showing 45 percent of retailers ramping up AI use in the next three years — it's no wonder consumer behaviors have begun to change as well.
Now, more than ever, consumers expect a certain level of personalization when interacting with a brand. Through the use of AI, retailers have the ability to meet and exceed consumer expectations. Retailers are now using AI to pinpoint the most convenient time of day to reach out to consumers with products they would be willing to purchase based on past clicks and website visit data.
Earlier this year, the notion of AI-enabled websites moving from its current phase into cognitive websites was introduced by Finbarr Toesland, a writer and journalist for current affairs and special reports publisher Raconteur, in a post for IBM's blog. A cognitive website will allow retailers to provide consumers with more heightened, individualized experiences when visiting the site. This means that every consumer who visits a merchant or retailer's website would view the brand through his or her own personal lens rather than seeing what everyone else sees.
Artifical intelligence startup Fluid AI's CEO Abhinav Agarwal commented on how these new types of sites will help move the ball for consumers and retailers.
"Fully-cognitive websites will drastically change buying behavior and selection," said Agarwal. "We see the average spend of a buyer, per session, significantly increasing with these websites. Cognitive sites take consumers through a much smarter funnel, allowing them to buy before user fatigue starts to kick in or the user gets distracted."
Consumers' expectations for highly-personalized experiences has become the norm in nearly every aspect of today's retail interactions. With this aspect encouraging people to spend more with retailers, it may be safe to say that AI has not only transformed the retail experience for consumers but is also slowly revolutionizing the entire retail industry. Without pairing AI with customer experiences to improve customer service, retailers may not survive what many have started to call the "retail apocalypse."
In other retail AI news this week, global investment banking, securities and investment management firm Goldman Sachs shared its perspective on the retail industry. The finance company reported that brick-and-mortar stores are not dead, and that AI is what can help them make their transformations into more digitally-savvy places to shop.
Joint research from customer care automation platform Linc and Brand Garage, a firm working with large companies to bring startups to market, shows that 89 percent of consumers will ditch a retailer after a bad experience. As such, it should come as no shock that the research also showed 87 percent of retailers are increasing AI for customer service and 44 percent plan to start using AI in conversational commerce interfaces.