The pros and cons of adopting AI in retail
Artificial intelligence (AI) has taken over the world, it seems -- from IT and technology to education and other sectors, this modern technology is everywhere and in everything. The retail Industry is no exception; modern retailing now relies on AI more than ever.
The introduction of innovative tools and technologies not only enhances the customer experience but also boosts profitability through streamlined operations and dynamic strategies. It doesn’t matter if it's an e-commerce or a physical retail point, the impact of AI on the retail industry is undeniable
According to research by the retail giant Hitachi, it is estimated that $40 billion of additional revenue was driven by AI in retail in a three-year span. And it is projected to be over $45 billion in 2032. AI isn’t a new business trend in the new decade; this transformative technology is a vital component of success in modern retailing. In some way or the other, you have to implement AI in your retail business to climb to the top of your game.
Eight benefits of AI In modern retailing
Even though businesses were running just fine without it, the introduction and rapid growth of AI have made daily business operations much easier. But “making business operations easier” doesn’t fully explain how AI helps retailers. Below is an outline of how AI can help modern businesses.
● Personalization and customer insights: Customers feel “listened to” and “taken care of” when they receive personalized attention from retailers, and modern AI technologies provide just that, for both online and in-store shopping. AI technologies are also used to find out which type of customer is buying and when. This information helps businesses to tailor their marketing campaigns to increase sales.
● Enhancing the in-store experience: Besides making online shopping smooth and enjoyable, AI software is also used extensively to enhance in-store shopping experiences for customers. While AI technologies can enhance the in-store shopping experience for customers, they can be a nightmare for some. Many stores now use digital sensors, object detection, and motion analytics in the checkout system to catch shoplifters in real time. If any product is carried out without scanning, these systems will alert the security system to prevent any potential loss
● Precise inventory management: The benefits of AI technologies are “oh so amazing!” Previously, it was quite difficult to determine which products and services would be in demand in the near future. AI algorithms examine past sales data, current market conditions, and trends and predict future demand for products precisely. This demand forecasting not only helps the retailers manage the supply chain but also refrains them from overproducing and overstocking unnecessary items. As these technologies can forecast demand, they help retailers to stock up the products beforehand so that buyers can buy exactly what they are looking for
● Fraud detection and prevention: Facing fraudulent is a norm for businesses. From transaction fraud and theft to bigger incidents like data piracy, retailers are always at risk. However, with AI, fraud detection and prevention become much easier. As these technologies come with updated security and safety features, they can analyze your transaction in real time and detect any abnormality in transactions almost immediately
● Marketing and advertising: To keep up with the competitive market and increase sales, adopting newer and more intelligent marketing strategies is a must. Even though limited data was enough to make a killer advertising campaign in the past, with technological advancement, you cannot keep up with the competition without the help of AI. AI-powered modern technologies can analyze customer data, purchase history, and browsing habits, taking into account buyer’s behaviours and demographics. This information helps businesses plan better marketing and advertising strategies to reach targeted customers quickly and increase sales significantly
● Pricing strategies: Pricing affects sales and revenue significantly. Retailers constantly need to adjust their pricing strategies to be profitable in the business. Even though pricing can be determined manually, AI does the work better and quicker. AI technologies analyze market trends, buyer behaviour, competitor pricing, demand, supply, and internal costs to adjust prices in real time while maintaining profitability. Many modern retailers, including Delta Air Lines and Amazon, have adopted AI technologies for dynamic pricing
● Customer feedback and sentiment analysis: Knowing how a customer feels about a product was time-consuming in the past. However, with the revolution of modern technologies, finding out the opinions of buyers has become rather easier. AI algorithms can quickly analyze customer sentiment, such as customer feedback, social media posts, and online reviews about a product, and help retailers respond to the findings quickly. This not only helps to solve any issues with the product, if any, but also contributes to building better relations with the customers
● Workforce management: AI not only helps with customers and pricing but also assists in managing the workforce more efficiently, especially for larger retailers. Businesses can use various AI technologies to help with the employee scheduling process. This allows them to use the workforce effectively depending on demand trends, associate availability, and store needs
The drawbacks of AI in modern retailing
Despite offering numerous benefits to the modern retail industry, AI still has some drawbacks that concern the users, as well as the developers. Some of the prominent concerns of AI in retailing are:
● Data Privacy Concerns
● Security Risks
● Loss of Creativity
● High Implementation Costs
The first and foremost step retailers must take is to ensure data privacy. As businesses collect huge amounts of customer data, storing them securely is their responsibility. Adopting strict data protection policies and following GDPR regulations will help them maintain security.
Moreover, how the data is collected and whether customers have given consent should also be considered. Job displacement is another risk that retailers should consider before implementing AI vastly. As there are chances that a certain segment of workers can lose their jobs, businesses should make an effort to reskill and upskill them for an easy job switch.
Indubitably, AI offers some amazing benefits for modern retailers. Whether it is increasing sales, surveillance, inventory management, or personalized recommendations, AI benefits almost every sector of a retail business. And that’s why modern retailers are relying on AI technologies in the new decade more than ever before.
However, even though AI contributes to efficiency and profitability, businesses need to be careful when using these technologies. They must find a balance between innovation and ethical responsibility to ensure transparency, and fairness both to themselves, their employees, and their customers alike.
Source: dhakatribune.com
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