How AI Can Help your Retail Business - Retail Council of Canada
Digital Retail & Technology

How AI Can Help your Retail Business

February 10, 2022

Note: This article is provided by Reshift Media, a Canadian-based digital marketing and development organization specializing in retail businesses.

Artificial Intelligence (AI) is helping lead a digital transformation in the retail industry, with  recent reports forecasting that global spending on AI systems will soar from $85.3 billion in 2021 to greater than $204 billion by 2025. That’s a 24.5% compound annual growth rate!

These funds are allocated to a number of areas in AI development, but for most retailers, improving customer experience is at the forefront. With everything that the retail industry has faced throughout the pandemic, such as changes in consumer buying behaviour, the implementation of new technologies and BOPIS strategies, and the substantial rise of e-commerce, improving the customer experience has become essential.  AI can help streamline that process for retailers in a variety of ways.

This article outlines several ways AI can help your retail business, both for the retailer and customer. It is important to keep in mind that improving efficiency is the backbone of AI solutions, specifically in retail, and incorporating AI in your business can help you remain ahead of the curve as the industry hits the fast-forward button in digital retail technology.

Enhance Customer Support with an AI Chatbot

Chatbots are a great way to provide constant customer support on your website. While some retailers choose to have a chatbot with a live agent during operating business hours, others choose to go the automated route, which has many benefits, such as providing 24/7 support.

The goal of a chatbot is to provide fast and accurate support, which is what customers have come to expect. A great way to ensure this occurs on your website is to incorporate an AI chatbot that continuously learns and improves based on your customers’ inquiries.

A retail chatbot backed by AI is quite an advanced tool, as it uses a variety of technology to mimic a real conversation between a customer and a customer support agent. Not only can an AI chatbot provide customer support, but it can also (if effectively designed) collect information from a customer who is using the technology, such location information or repeated comments and complaints, which can also be useful.

What differentiates a traditional chatbot from an AI chatbot is the range of answers it can provide. For example, a traditional chatbot may answer customer questions such as a store address or hours of operation, but this is based on a script inputted by the business. This means that if a customer uses unique language or asks more complex questions, the traditional chatbot won’t cut it. An AI chatbot, on the other hand, can offer more detailed answers as it learns from the expansive questions it receives. This makes it much more of an effective tool to improve the customer experience.

Research conducted in 2020 shows that 43% of consumers who engage with brands online find it difficult to get answers to simple questions. This major frustration, along with the feeling that services are impersonal, are two major pain points for consumers. AI chatbots address these frustrations by providing quick, accurate information that is communicated in a way that feels conversational.

With reports that consumer retail spend on chatbots will reach $142 billion in 2024 worldwide, which is an average annual growth of 400%, it is a good idea to consider your current chatbot situation.

Improve Demand Forecasting and Supply Chain Management

Demand forecasting is all about analyzing future demand, which is traditionally determined by analyzing historical demand and other internal and external factors. Maintaining accuracy is essential, but many retailers can find it difficult to do so, and relying on past sales does not always reflect the changes that styles and trends face year after year.

If retailers cannot manage their supply chain effectively, while at the same time accurately determining the behaviour and trends among their customers, it can lead to either leftover merchandise (loss of profit) or out-of-stock situations, which can leave the customer looking elsewhere.

AI can significantly help with demand planning, as the technology can help retailers determine the right amount of merchandise that they need based on current customer data and behaviour. As well, AI-enabled supply chains can increase the effectiveness of supply chain management and can reduce risk while lowering overall costs by over 65%.

AI can create more efficiency for a retailer’s supply chain because when you estimate internal and external expenses at every level of the process, deliveries can be completed faster and with more accuracy, and you can improve the upstream portion of the supply chain (i.e., sourcing and supplying materials) as well as the downstream portion (i.e., distributing the product).

Better Inventory Management

When retailers can better manage their supply chain, it also helps ensure that there is effective inventory control. AI-powered inventory management can provide consumers with real-time data on whether a product is in stock. A lack of stock not only means a retailer can lose out on a sale, but it can also lower the customer experience, which ultimately impacts the brand as a whole. That is why enforcing more transparency with the customer is key. 

An inventory database powered by AI technology also ensures that external merchandise partners can better plan their production in real-time by determining how much inventory is still in-stock with the retailer. AI can help automate the process in real-time, which can help ensure that there is enough information to forecast future demand. It also provides an optimal, accurate flow of items going in and out of the warehouse. An optimized warehouse system is necessary when it comes to the supply chain, and AI can help ensure the journey of your merchandise from the warehouse to the customer is smooth.

AI uses data and statistics, such as changes to customer buying habits, to base demand forecasts, which translates into maintaining appropriate levels of inventory. Essentially, AI helps in the decision-making that would typically be made by the retailer but uses real-time, accurate measures to do so, while also recognizing patterns in your data that are not always visible to retailers. It is no wonder that the global AI supply chain market is forecasted to reach USD $10,110.2 million by 2025, which is a significant jump from the USD $730.6 million reported in 2018.

It is also worth noting that AI can help ensure that there is an automated “conversation” between the warehouse and the store(s) (either e-commerce or brick-and-mortar) which ensures that factors like stocking and tracking items, which are very routine-based, is left to the technology and not humans. For example, automating truck routes and deliveries, order management and tracking, and automating invoices can increase efficiency, reduce time, and ensure accuracy.

Visual Search

Many retailers have started to include better customer search options, including visual search. Essentially, a customer can take a picture of a product and upload it to the retailer’s website or app, and based on that information, a variety of similar products will appear. AI uses image recognition software, which when synched with the merchandise, can allow the technology to quickly find identical or similar products for customers.

An example of this AI technology is what the retailer ASOS is doing with their Style Match tool. Customers on the ASOS app can take a picture or upload an image or screenshot, and then search from ASOS’ products.

Having this option not only improves the customer experience but can also improve sales as it increases the likelihood of more products being viewed by the customer. This translates to an in-store environment as well, as research by Pinterest has found that 61% of consumers say utilizing visual search improves their experience while they are browsing in-store.

While AI might seem intimidating in some ways, especially if it is a brand new concept to you, implementing the advanced technology within your retail business can be a great way to better meet the needs of your customers, improve the efficiency of the backend to your business, and help you stand out from competitors.

About Reshift Media

Reshift Media is a long-time partner of the Retail Council of Canada. The company is a Toronto-based digital marketing and development organization that provides leading-edge social media, search and website/mobile development services to retailers around the world. Please visit to learn more.