AI in Retail: A 2023 Perspective
The retail industry is enjoying unparalleled efficiency and personalization thanks to AI
By Yousuf Khan, Partner at Ridge Ventures
Artificial Intelligence (AI), once an intangible concept, has become an unignorable reality, transforming industries and operations worldwide. This disruption is profoundly evident in the retail sector.
Here are some ways in which AI is propelling the retail industry toward a future replete with unparalleled efficiency and personalized experiences.
Walmart’s AI Evolution
Global retail giant, Walmart, exemplifies how forward-thinking businesses harness AI’s power. Their comprehensive incorporation of AI, including the establishment of an in-house AI Labs team, underscores their dedication to innovation.
In-store AI solutions like the voice assistant ‘Ask Sam’ free up employees for more meaningful customer interactions. On the consumer end, AI-driven algorithms recommend alternative items when a product is out of stock, enriching the online grocery shopping experience since 2021.
In 2023, Walmart’s AI strides remain impressive, with their autonomous cube-shaped floor scrubber taking center stage. This unassuming AI-powered tool, which cleans the floor while scanning store shelves and snapping over 20 million photos daily, provides invaluable insights to prevent stock-outs, a problem that used to cost US retailers trillions annually.
The New Era of ‘Just Walk Out’ Tech
The popularity of self-checkout models continues to rise in 2023, and Amazon’s ‘Just Walk Out’ technology is at the heart of this trend. This AI-enabled system deployed in Amazon Go stores tracks the items customers select and charges them as they leave the store, bypassing traditional checkouts.
Grabango also significantly expedites checkout. Whereas Amazon Go functions within a small-store setting, Grabango serves large-format retail customers and works with their existing operation, product mix and shopping environment.
Although this technology may not replace all conventional shopping experiences, its value in convenience-driven settings is clear. By seamlessly blending AI with retail, businesses can improve operational efficiency while enhancing customer experiences.
Predicting Demand: The AI Advantage
AI-powered demand forecasting is a cornerstone of modern, customer-centric retail. Brands can now predict customers’ wants in an accurate and timely fashion, enabling unprecedented personalization.
Nike’s acquisition of AI startup Celect in 2019 spotlighted the value of real-time consumer demand understanding. With AI insights, Nike continues to optimize inventory management, reduce markdowns, and recognize selling patterns effectively, even in 2023.
Sama, another company using AI to keep up with customer demand, powers computer vision technology that monitors store inventory in real time. As new products, brands, and styles flood shelves and racks, this ensures stores don’t run out of stock or carry excess product. Sama’s focus on effective data labeling — crucial for AI and training models — was and is ahead of the curve. 25% of the Fortune 50, including Walmart, uses Sama to curate, annotate, and validate data.
In addition to these operational benefits, AI tools can now deliver a highly personalized shopping experience. By analyzing customer purchase history, AI can alert consumers about the availability of preferred items or newly released products that match their preferences, cementing customer loyalty.
AI: The Silent Architect of Retail Success
The AI-driven revolution in retail is not just a futuristic concept; it’s the reality of 2023 (and beyond).
Subtle yet significant changes orchestrated by AI — stocked store shelves, on-demand online item availability, streamlined checkouts — may not be evident to consumers. Still, collectively, they represent a substantial shift in retail operations and the customer experience.
