Digital transformation has revolutionised the retail industry, helping it to increase its speed, efficiency and accuracy. An increasing number of retailers are now implementing artificial intelligence (AI) solutions in order to further transform the way people shop and interact with products, while also leveraging it to increase profits and optimise operations.
AI offers the potential to genuinely transform the retail landscape, according to Caswell Mthembu, Business Development Manager at BlueStar. The company is a distributor of hardware and software integration technologies that enable retailers to effectively leverage AI.
“The first thing retailers need to understand is that AI provides the platform for businesses to get more bang from their business and customer data, allowing them to make more effective data-driven decisions. For example, it can offer a more defined and clearer understanding of which products sell and which don’t, ensuring effective stock levels and giving customers more of what they want,” he explains.
“Remember that a good customer experience (CX) is critical to a retailer’s competitive edge. AI can help to identify things like customer types or numbers, ensuring a more effective in-store service. Furthermore, it assists you to deliver a more personalised CX, as AI-powered chatbots can help customers to feel your business cares about them.”
He notes that AI can also improve the effectiveness of the business itself, by automating things like price adjustments, inventory management and supply chain and logistics management.
“When it comes to inventory management, it is always important to understand what products customers want, and when these need to be made available. AI is a boon to demand forecasting, as it can use historical data to understand aspects like the types of customers that frequent specific stores, and to better understand seasonal trends and current and future market conditions.
“When it comes to CX, loyalty programmes provide critical customer data, enabling the AI to undertake behavioural analyses of customers that allow the retailer to predict individual customer behaviour more effectively, and thus provide better service by, for example, specific discounts that are relevant to the individual client.”
Mthembu adds that AI can also improve fraud detection, because if an individual’s regular purchasing behaviour is understood, any major change in this behaviour may well indicate fraud.
“Of course, AI – like all technologies – is not without its challenges, and being a data-driven technology, the issues of security and privacy are key. AI handles a lot of sensitive information, so retailers adopting this technology need to be compliant with laws like the Protection of Personal Information (POPI) and the General Data Protection Rule (GDPR),” he states.
“They would also require strong cyber security to avoid bad actors stealing private information for malicious purposes. At the same time, retailers need to ensure they themselves use the data gathered ethically, and that the data integrity is guaranteed – because AI is only as good as the data it leverages. Nonetheless, with careful planning and robust security measures, it is sure to give you a competitive edge.”
According to Mthembu, when it comes to the logistics side, AI creates a clearer understanding of how and when fast moving consumer goods are transported, and which specific form of transport is best for which product types. This means retailers can optimise their supply chain.
“Similarly, when it comes to warehouse management, it can streamline operations and improve your efficiencies, because you are always maintaining the right levels of stock. The same goes for food safety. AI can make sure that older products are sold in time or otherwise removed from shelves, leading to waste reduction, and thus cost savings,” he continues.
“Looking at AI moving forward, it could ultimately create a platform where the CX will be such that the customer won’t need to leave their home at all. Complementary technologies like virtual reality mean customers buying – for example – furniture, can now virtually place the items in their home, to get a clear understanding of how well a particular product will suit their decor. Meanwhile, in some places, we are already seeing drone deliveries direct to the home.”
In closing, Mthembu points out that BlueStar doesn’t just talk the talk either. The company has already implemented AI solutions within its own business, to automate its logistics and customer orders, demonstrating that the organisation is fully on board with the benefits AI can offer.
“There is little doubt that AI is going to fundamentally change the way businesses operate, and the types of experiences customers demand. I like to say that with the advent of AI, we are moving out of the era of homo sapiens, and into the era of homo technologicus,” he concludes.
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