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5 use cases of AI in retail

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Retail biggies are harnessing the power of AI in diverse areas such as logistics, inventory management, customer support, in-store experience, and fraud detection to reap immense benefits

Mumbai: Artificial Intelligence (AI) has rapidly transformed various industries, and the retail sector is no exception. In India, retail brands are harnessing AI’s power to streamline operations, enhance customer experiences, and stay competitive in a rapidly evolving market. From logistics optimization to personalized shopping experiences and fraud prevention, AI technologies are helping retailers stay ahead in a competitive market. As technology continues to advance, we can expect even more exciting AI use cases to emerge, further transforming the retail landscape in India.

In this article, we will delve into AI use cases employed by retail giants across different areas, such as logistics, inventory management, customer support, in-store experience, and fraud detection.

  1. Logistics

A McKinsey & Company study found that successfully implementing AI-enabled supply-chain management has enabled early adopters to improve logistics costs by 15%, inventory levels by 35%, and service levels by 65%, compared with slower-moving competitors.

“AI is transforming the landscape of Indian retail brands, presenting solutions to long-standing challenges like returns, high acquisition costs, and low loyalty, that have restricted their growth and profitability. Returns have always been a big burden for online stores. Thanks to AI-powered returns and exchange solutions that are now helping automate the entire process,” Sachin Garg, chief executive officer, of Saara, an e-commerce software using AI to empower online brands said.

E-commerce grocery delivery platform, Big Basket utilizes AI to improve last-mile deliveries. With the help of an AI tool, Locus Dispatcher, the brand can optimise routes using several algorithms. With this tool, the brand not only enhanced efficiency but also catered to customer preferences for convenient delivery times.

Other notable brands using AI in logistics include Amazon and Zara.

  1. Inventory Management

“AI-driven demand forecasting and inventory management solutions enable retailers to accurately predict customer demand, optimize stock levels, and reduce costs associated with overstocking or stock-outs,” it says in a report by Gartner. 

Bestseller India uses the platform Fabric.aI by the Indian Saas (software as a service) company Stylumia. Using the Garage Framework, Fabric.ai provides explainable sales forecasting models for new products at different stages of design and development and enables designers and buyers with AI-based interventions to achieve high sell-through rates and reduce environmental impact eventually.

“It brings overall efficiency in understanding which colours and trends have worked with the brand and competition, helps in identifying trends. E.g. Overall trending clicks from competition to a particular trend/category in search. All this helps in taking precise decisions or investment to be made in terms of product,” a spokesperson from Bestseller India said.

Reliance Retail deploys AI-powered demand forecasting to minimize overstocking and understocking issues. This technology helps ensure that stores are stocked with the right products at the right time, reducing inventory holding costs.

  1. Customer Support

According to a Forrester study, “AI-driven chatbots and virtual assistants enable businesses to offer tailored product recommendations, resolve customer queries promptly, and enhance overall customer satisfaction.”

Garg said, “AI-driven chatbots and sales assistants are bringing a personalized, human touch to online shopping experiences. Previously, online stores struggled to replicate the personal touch of in-person sales, but AI chatbots have bridged this gap.”

“Chatbots are enhancing the shopping experience and engaging in cross-selling and upselling, all while empathizing with customers,” he added.

Amazon India uses AI chatbots for customer support. These chatbots handle routine customer inquiries such as order tracking and product information, freeing up human customer support agents to focus on more complex issues.

Tata Group’s e-commerce venture Tata Cliq employs AI-driven personalization. By analyzing customer behaviour and purchase history, the platform recommends tailored products to individual shoppers, enhancing the shopping experience.

Titan launched a chatbot in collaboration with a leading bot platform called Gupshup. The Titan chatbot replicates the in-store conversational experience for customers and can answer queries phrased in natural language such as ‘show me men’s watches under Rs 5,000’ or ‘show me gold earrings’.

The quick-service restaurant chain Wow Momo adopted a chatbot integrated with WhatsApp to simplify how customers place orders. It utilized its existing IT team to develop and deploy the chatbot. It allocated resources towards training staff and integrating the chatbot with its existing operations, such as order management and delivery tracking systems.

Myntra, an online retail fashion platform, has introduced several innovations, driven by the transformative capabilities of AI. Among these are My Fashion GPT, My Stylist, AI hair and skin analyser, and product finder alongside cutting-edge assisted selling tools catering to the needs of fashion and beauty enthusiasts.

Speaking about the new additions, Raghu Krishnananda – chief product and technology officer, Myntra said, “My Fashion GPT, powered by ChatGPT, enhances the customer shopping journey and enables product discovery while My Stylist empowers fashion-forward customers by recommending complete shoppable looks.”

He added that Myntra’s suite of assisted selling tools, including the AI skin and hair analyser and a product finder, guide consumers in making well-informed choices. “We also use AI to customise the experience for customers with product recommendations and size and fit,” he added. 

  1. In-Store Experience

Not just in the back end, AI is also proving to be a great addition to improving the experience at the stores.

Eyewear retailer Lenskart utilizes AI for virtual try-ons at its stores as well as in its app. Customers can use their smartphones to see how different frames look on their faces, making the online shopping experience more interactive and convenient.

Leading footwear retailer Bata has implemented an AI-powered video analytics solution to boost in-store sales, operations, and customer happiness. Developed by Agrex.ai, the platform leverages the store’s video infrastructure to execute data collection and insight generation on smart conversion and audience segmentation.

  1. Fraud Detection

AI has proved to be a great assistant in fraud detection. Myntra employs AI algorithms for fraud detection with the help of an AI-based returns system, Sabre. These algorithms analyse transaction data and user behaviour to identify and prevent fraudulent activities, ensuring secure shopping for customers.

“The emergence of AI-powered customer acquisition and loyalty tools is changing the game. These tools allow sellers to lower their customer acquisition costs (CAC), foster loyalty, and encourage responsible shopping behaviour among their customers,” Garg concluded.

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