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Win, Serve, and Retain: 6 Ways Retailers Should Leverage AI and Analytics
For more than a year now, consumers have flocked to online retail as a result of COVID-19. In fact, consumer purchasing habits from 2020 are expected to linger throughout 2021, with retail eCommerce sales in the U.S. projected to increase by nearly 14% to $908.73 billion. This exceeds pre-pandemic estimates of 12.8%.
This huge growth is creating more competition in the eCommerce space than ever before, forcing brands to rethink how they engage with customers. Every brand interaction offers an opportunity to differentiate and ultimately enhance the customer journey. This means retailers need to invest in the processes and technology that will set them up for success in the months and years ahead — but knowing when and where to invest can be a real challenge.
New report sheds light on emerging AI opportunity in retail
Fortunately, industry analyst firm Forrester recently launched The Forrester Tech Tide™: AI And Analytics For Retail, Q2 2021. This report looks at both the maturity and business value of the top technology categories that support AI and analytics for retail. To help you understand which technologies are worth investing in on your quest to create the ultimate customer experience, consider the following key takeaways.
#1: Leverage AI and analytics for retail success
According to Forrester, AI and automation technologies “promise to reduce retailer costs and improve sales and customer experiences,” and are “increasingly critical to retailers’ ability to win, serve, and retain their customers.”
As online shopping continues to grow, AI helps retail brands optimize and enhance crucial business processes at scale. Technologies like conversational AI-powered chatbots offer the best of both worlds: they’re “always-on” to automate complex tasks and are also smart enough to know when human intervention is needed, ensuring you never miss an opportunity to provide support or make a sale. Often the frontline of brand interactions, chatbots are one of many tools retailers will increasingly rely on for success.
#2: Invest in and maintain retail AI and analytics technologies with high business value
AI can sometimes feel like an over-hyped trend. And with so many AI-centered or AI-powered solutions on the market, it can seem overwhelming to know which options might best fit your brand. The Forrester report focuses on the “degree to which AI and analytics deliver value for retailers and their customers'' and indicates that retailers should seek out solutions that offer clear-cut ROI and noticeable efficiency gains.
Many different aspects of retail brands stand to benefit from AI—from merchandising to supply chain, store operations, marketing, and customer support. And while there’s definitely “shiny object syndrome” around things like delivery robots and stores without cashiers, Forrester suggests that some of the best solutions out there make retailers better and more efficient at everyday business processes.
#3: Experiment with autonomous stores, autonomous vehicles, and others
The technologies that fall into the “Experiment” quadrant of the Tech Tide are “early-stage solutions with promising business value.” Things like autonomous stores and vehicles have that “Jetsons-esque” appeal — the future is now! Forrester also places chatbots in this category, highlighting the “new generations of vendors…leveraging machine learning and natural language understanding to improve and scale high-touch, high-service models.”
When evaluating new technologies, it’s important to keep your eye on the bottom line: how is this helping me drive concrete business value, whether through increased revenue or reduced cost? Some of these “experimental” technologies have more clearly established ROI than others, so it’s important to do your homework before investing.
#4: Invest in anomaly detection, returns optimization, and others
In addition to up-and-coming technologies, the Tech Tide also highlights solutions that have “ripened to the point where enterprises can confidently invest.” These technologies include anomaly detection, fraud mitigation and loss prevention, fulfillment analytics, intelligent automation tools, IoT and sensors, returns optimization, and store labor optimization.
Each of these technologies offer opportunities for sophisticated retailers to improve operations, increase insights into business performance, and avoid unnecessary costs.
#5: Maintain customer analytics, pricing optimization, and others
Forrester defines “maintain” technologies as “the bread-and-butter technologies that most enterprises rely on to run their business.” These are solutions that have been around for a while and are increasing in sophistication with the addition of machine learning and AI. They include customer analytics, digital experience optimization, inventory optimization, marketing and adtech optimization, pricing optimization, store analytics and monitoring, and trend analysis and competitive intelligence.
Continue investing in this category as the solutions you know and love improve with increased AI under the hood.
#6: Divest from standalone product recommendation engines
As technology becomes more sophisticated, it may be time to say goodbye to some legacy tools. Forrester defines the “divest” category as “older technology categories that have reached a point where their business value has dropped.” Retailers should drop standalone product recommendation engines, investing in broader digital experience optimization solutions instead that take into account “shopper needs, touchpoints, and even inventory availability for a more relevant customer experience across a variety of touchpoints.”
As retailers explore adding more AI and automation to their technology stacks, it’s important to seek out solutions that allow for deep integrations and empower more personalized customer experiences. An advanced AI platform that puts the customer at the center of every interaction ultimately creates lasting loyalty and ROI.
Lynn’s career has spanned across different kinds of content, from copywriting, to journalism, to marketing, and even mystery puzzle games. She brings facets from all these disciplines into her work at Ada. Outside of that, Lynn loves playing games, hiking, and reading about trees.