Industry News Retail Trends

How Artificial Intelligence is Powering the Retail Experience

Written by amanda peterson

Brick-and-mortar sales aren’t fading anytime soon— it’s projected that 83% of goods purchased globally in 2022 will still be bought in-store according to Euromonitor International . As brick-and-mortar stores are making a comeback with millennials and Generation Z, updating in-store technology is the optimal way to improve the real-world shopping experience.

Artificial Intelligence (AI) has become a key element in the digitalization of in-store retail by personalizing the customer experience and creating a more engaged business-to-consumer interaction. For retail companies, AI creates an opportunity to bridge the gap between virtual and physical sales channels.

Digitally connected retail locations are facilitating unique customer experiences and can sustain competitiveness over time. But, to make the reinvention of in-store shopping worthwhile, “brick-and-mortar 2.0” simply won’t cut it. Brands need to reimagine the total in-store experience, and technology is key. In-store technologies must be able to solve business processes and incorporate planning and strategy, rather than just implementing flashy, PR-driven technology. It’s crucial that retailers effectively merge technology and function, which is why AI is at the forefront of in-store tech.

  • All about AI

Artificial intelligence, at its core, focuses on making machines intelligent or capable of solving problems as well as people can. Today, AI is able to make machines learn from experience, adjust to new inputs, and perform human-like tasks. It quickly combines large sets of data with fast, iterative processing and detailed algorithms, which allow the program to learn automatically from patterns in the data.

But what does AI mean for retailers? No matter how big or small the retail location, many businesses can benefit from integrating AI into their daily functions. From daily task management to gaining customer insights, AI is the foundation of technology in a retail setting. Utilizing artificial intelligence can free up time for business owners by completing daily tasks, which allows them to dedicate more time to advancing their overall business strategy. In addition, AI can even gather detailed customer patterns and preferences, which make for more informed business decisions in the long run. When customer and sales data is processed through these algorithms, the AI model discovers actionable information about a business and its customers and inventory.

  • AI in today’s retail

AI-equipped technology will soon be popping up everywhere in the retail environment, and many in-store experiences will be shaped by data crunching and AI.

Photo: Business of Fashion

Luxury fashion e-tailer Farfetch has come up with a solution to change the in-store experience for fashion retailers with its Store of the Future platform, which will “link online and offline channels, using data to enhance the retail experience,” says founder Jose Neves to Business of Fashion. Like e-commerce, the Store of the Future will allow businesses to collect customer data while browsing in-store. In the fitting room, smart mirror technology allows shoppers to request different sizes, colors, or items. The customer’s information and shopping habits is then stored in Farfetch’s database so that the company can later access information about that customer’s personal style, previous purchases and browsing history. Not only does this create a better relationship between customer and sales associate, but it also allows the business to garner a wide collection of customer insights.

Photo: Business of Fashion

Petah Marian, senior editor of retail intelligence at WGSN explains to Fast Company, “Understanding which products are being tried on and not bought, what’s being sized up or down, or being styled together, is the physical equivalent to knowing what was put into an online shopper’s cart and not bought.” Physical stores have lacked the ability to retrieve essential customer contact information. A retail location equipped with AI technology is a clever way to gain insight on shoppers’ habits and preferences.

  • Experiential retail

As e-commerce disrupts the traditional brick-and-mortar sales channel, retail has transformed into an “experiential retail” model. Just as e-commerce sites are providing a revolutionized customer experience, in-store retailers must follow suit. Environments that attract and excite customers are supported by technological components, which are beneficial to both business and consumer. Moving forward, retailers will continue to employ cutting-edge technology, like artificial intelligence, in order to provide personalized offerings and engaging environments.


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Last updated: March 16, 2019

About the author

amanda peterson