The promise of the approaching peak season is an exciting time for many retailers, who are eager to capitalise with a surge in holiday sales and customer engagement. It’s true that in recent months, increased operational costs and softened consumer spending are creating more challenging conditions, but there is still plenty of optimism for the future – especially with inflation recently hitting a three-year low.
As retailers face tighter margins, it encourages them to explore new ways to create efficiencies and boost performance. Enter AI, which has been heralded by some as the single biggest driver of growth since the inception of the internet.
Recent research shows AI adoption in retail is expected to surpass 80% in the next three years, with predictive and prescriptive analysis investments expected to double over the same period of time. We have seen this happen globally from a number of major retailers who have already made substantial investments, for example Amazon’s new AI shopping guides or Google Shopping transforming its platform.
But for retailers, particularly those on a smaller scale, how can this tech be leveraged to ensure success with peak season fast approaching?
Enhancing customer experiences
As the most important period on the retail calendar approaches, customer experience is key – and not to mention one of the biggest drivers of loyalty. When a shopper has a positive experience, this incentivizes customer loyalty, which in turn can increase customer retention and repeat sales. In fact, research has shown that 75% of people are likely to make repeat purchases after having a more personable experience with a brand.
Previously, personalising experiences for customers would be a time-consuming, daunting task for many retailers. With AI, however, personalisation can become a completely automated process. By collecting in-depth data across a variety of categories, such as shopping habits, browsing behaviour and purchase history, retailers can use AI to provide a completely tailored experience for everyone who interacts with their business.
For example, AI can analyse this data and segment customers into different audience groups for targeted messaging and ad campaigns. At the same time, forecasting analytics can look at previous behaviour and track pain points for customers – and offer solutions to resolve them – increasing the chances of conversion. When retailers can use AI to automate much of the personalisation, it frees up their time to provide more personal touches and human interactions in-store.
Data analysis and reporting
Data collection and analysis has so many uses beyond customer experience purposes, though. Having a robust data set to analyse can help retailers make informed and strategic decisions about their business, and allow them to continually optimise their operations, which is crucial when navigating the demands of peak season.
This can include processes like inventory management and cash flow management. Take inventory management, for example. AI can provide recommendations on what products might be popular, so retailers can understand what stock to carry. Otherwise, this could result in not enough products to fulfil demand, or excess stock that it can only shift with extreme discounting. It can also provide recommendations on where to hold the stock, too, based on historic sales patterns.
For example, if certain products sell better in store than online, a retailer can keep more of it in their stores rather than their warehouses, and vice versa for popular online products.
How to implement AI effectively
When it comes to implementing AI, it doesn’t have to be expensive or daunting. Through platforms like Lightspeed, retailers can benefit from AI capabilities built-in to mission critical technologies, from payments and point of sale, to inventory management and marketing. Through it, retailers can reduce manual work, optimise inventory allocation, identify challenges and opportunities, and make informed decisions.
Once these tools are set up and automatically collecting and analysing data, and starting to produce results, retailers should regularly evaluate AI performance and refine their processes, which is crucial for ensuring continuous improvement and adaptation.
With peak season – as important this year as ever before – just weeks away, there is no better time for retailers to move ahead of the curve and invest in AI to power success, not just during peak season, but long after it.
Simon Le Grand is senior director of marketing for APAC at Lightspeed.