While today’s retail industry mainly consists of typical brick-and-mortar stores with required human interaction, smart stores, sometimes called “Just Walk Out” or “unmanned” stores, are popping up worldwide. These stores revolutionize the way customers purchase items while also analyzing their behavior, all through artificial intelligence (AI) and machine learning (ML). By solving inefficiencies, smart stores powered by AI and ML can alter retail dramatically.
Read on to learn the myriad ways ML and AI retail solutions will alter our shopping experiences forever.
9 Ways AI Will Change the Future of Retail
Artificial intelligence has already changed how we interact with online-only retailers; now, it’s starting to play a major role in our brick-and-mortar experiences. Here are nine ways in which AI will change the future of retail shopping.
1. No Need for Cashiers
AI-driven smart stores eliminate the need for cashiers.
For example, Amazon Go uses a pay-and-go method for its stores. First, customers scan the Amazon Go app when entering the store. Then, any item they pick up will automatically be added to their digital cart. (Don’t worry—it’s taken out of your cart if you put it back on the shelf.)
After the customer is done shopping, they leave the store, and all the items are billed to their Amazon account.
Another non-cashier method of payment is the Electronic Shelf Label model. Customers scan the items they want, scan their credit card (if not already registered), and check out.
These types of AI technology permit a contactless experience while increasing overall efficiency, as there are no frustrating wait times to get through lines.
Note: “No cashiers” doesn’t mean “no employees.” With some exceptions, people are generally still on-site to restock shelves, clean, and appease insurance companies.
2. Smaller Stores, Longer Shopping Hours
Without areas for checkouts and cashiers, you may be able to open small stores (or micro markets) and increase shopping hours. Traditionally, space needs to be made for the cashiers, checkouts, and lines; when these are eliminated, you remove the need for that space. Additionally, with fewer people to pay for the overnight shift, you could opt to stay open later—or 24/7—thanks to those lower operation costs.
Membership-based Farmhouse Market in New Prague, MN, is only 650 square feet; but, since they don’t need to worry about lines, they can focus on having fully stocked shelves rather having too much “empty” space.
Since access is membership-based, the family who owns the business keeps their store open overnight without any staff, giving them extra hours of potential revenue.
Farmhouse Market also proves this setup can work as well in rural areas as in urban areas.
3. Up-to-Date and Accurate Demographic Data
AI-driven POS can help determine who consumers are and which types of offers and deals they respond to, giving valuable insight into customer demographics, peak operation hours, and inventory. Customer data is compiled from previous shopping trips and purchase history to learn what influences their purchasing habits.
Demographic data and customer preferences can also tell business owners what is not working. For instance, AI cameras and sensors can detect when an item is placed back after a customer picks it up to inspect it. Based on this data, stores can decide if they should continue to carry the item or seek out an item that better appeals to their target demographic.
Ultimately, integrative automation from AI-driven POS systems connects multiple payment locations, such as online, in-store, and via apps. These connected channels update in real-time, providing the business with many touchpoints to help understand customers’ experiences. With all the data-backed insights it can provide, AI certainly has a strong future in retail.
4. Better Customer Personalization
Retail AI can track and analyze consumer behavior, then use that data to improve its services. This data is essential, as 80 percent of customers expect personalized experiences.
When you personalize directly to someone, you take information from customer surveys, previous purchases, returns, and demographic data to create ads and other experiences just for them.
For instance, if someone who has agreed to receive text messages (don’t do this without permission!) and comes within a certain distance of a store, they might receive a text with an exclusive in-store offer.
You could further use data collected via retail AI to send emails to customers regarding items they had in their cart but put back on the shelf.
5. Improved Security
AI-driven stores without legions of staff can be just as secure as other stores if set up well.
Firstly, when fewer staff members could be threatened with theft or by angry customers, there is less risk for their safety.
Secondly, theft can go down. Take Farmhouse Market: As entry is secured by keycards and the store is monitored by security cameras, they’ve never had any issues with theft. Note that the keycards are key. Without a way to track and charge customers as soon as they walk in the door, smart stores can be especially susceptible to theft.
AI-driven smart stores have benefits for customers’ financial security as well. For example, algorithms can recognize frequent customers and accept payments while detecting and preventing potential fraud.
6. Supply Chain Optimization
Supply chain optimization can occur with AI and ML in both the “front of house” and “back of house.”
For “front of house,” it can make ordering easier in the long run. Thanks to automatic sales monitoring—and monitoring what is returned to the shelf—you can see what is worth keeping in stock.
In the “back of house” category, customers aren’t directly involved. However, you can use automated systems to:
- Count inventory with smart sensors
- Monitor employee efficiency
- Track products built in-house to see where slowdowns occur
- Decrease reaction time when emergencies occur (e.g., product recalls) by stopping production and shipping and notifying customers of the issue automatically
- Push out updates and perform diagnostics remotely
This is just the tip of the iceberg for how AI and ML can help optimize your supply chain and potentially increase profits.
7. Make Online Shopping Easier and Reducing Returns
We’ve all been there: Shopping online and wishing we could get 100% of our purchases right the first time, whether we plan to pick up in-store or have items delivered. With AI retail solutions, this is becoming increasingly possible for shops, potentially lowering returns.
For example, makeup shops could use AI to allow people to upload their own photos and try on different makeup types. Sephora is one company engaging in this.
Let’s also look at clothing stores. Even companies with accurate size charts don’t give an idea of fit. Virtual fitting rooms allow customers to “try on” outfits before buying them.
A big player in retail, Walmart recently announced its plan to acquire Zeekit, a virtual fitting room company.
8. Less Re-Shelving
If you run any store, you’ve likely encountered people who check out, only to realize they went over budget and need you to put items back. This is a waste of time, which equals a waste of money.
When customers shop using smart stores’ technology, the apps they use almost always incorporate a running total.
In the case of Scan, Bag, Go from Kroger, customers can watch their running total and stop when they hit their limits. While this technology doesn’t monitor whether something is put back, it could make people more mindful about their choices. At the end of their shopping trip, they pay on their phone and show proof of payment to an employee as they leave.
Regarding Amazon Go, the customer must re-shelve the item themselves to take it off their total—making things even easier on retailers.
9. Grab and Go Meals Made Easy
In today’s busy world, people don’t have time to stand in line to get their workday lunches.
Amazon reported the most popular items Amazon Go has are those workers often want to grab before heading back to the office, like coffee, water, and prepared food (sandwiches, cookies, pre-cut fruit, etc.).
Setting up a grab-and-go section using AI technology can make it easier for people to run in, grab lunch, and exit without waiting in line. Amazon Go is already doing this, serving up everything from one person to fast dinners for two and more.
Turn Your Business Into a Smart Store
To keep up with the inevitable future AI in retail, you may want to consider automating your store now. While going entirely “smart” may not be feasible for every store right away, transitioning to more computerized options to shorten lines, better use employees’ skills, or personalize your customer experience could be well worth the investment.
For instance, you could begin by switching to automated checkout and ordering software. This may mean customers still shop in a traditional way (online or in-person) but don’t need to interact with cashiers.
Or, if your store offers freshly made food, you could add a self-ordering kiosk, which collects data on your patrons’ preferences while reducing the need for cashiers and wait staff.
GRUBBRR hopes to smooth out the sales process in a variety of industries, from retail to food service to special events. Our products integrate with most legacy systems and are here to help you run a smarter and faster business.