The traditional retail experience has mostly stayed the same over the years, wherein a customer visits a store, finds the right product, and makes a purchase. But with the launch of ChatGPT more than a year ago, artificial intelligence (AI) has been transforming businesses, and notable changes are happening for AI in retail. Explore real-world examples of companies using cutting-edge AI to revolutionize the shopping experience.

ai for retail, woman shopping

Table of Contents 

AI in Customer Journey

Most online retailers use recommendations AI to enhance the customer journey and sell more products and services. A recommendation system is an AI algorithm, usually linked with machine learning, that uses Big Data to suggest additional products to users. These can be based on search history, past purchases, demographics, and other factors. AI-powered recommendations are highly beneficial because they help users discover products they might not have found independently.

man on his phone looking at apps

Amazon and Spotify are two popular companies that leverage AI to create personalized user recommendations. 

1. Amazon’s Rufus

Amazon has been using AI for over two decades to improve customer experiences. When you buy something on Amazon, the website will suggest other things to buy. The recommendations are based on your order history, profile, and other details that AI algorithms process and combine to give the best answer. 

Amazon unveiled a shopping chatbot called Rufus. It is a generative AI-powered shopping assistant trained on Amazon’s comprehensive product catalog, reviews, and web information to answer customer questions. The platform also provides product comparisons and makes recommendations based on user and chatbot conversations. 

With Rufus, customers can:

  • Conduct more general product research on Amazon by asking questions like “What are the factors to consider when buying headphones?” or “What are sustainable beauty products?” 
  • Search for products based on occasion or purpose. 
  • Customers can ask for assistance in comparing product categories. For instance, they can ask, “What’s the difference between lip balm and lip oil?”
  • Find the best recommendations. 
  • Ask questions about a product while on a product detail/description page. 

2. Spotify’s AI DJ

Spotify has revolutionized the way people listen to music. The company uses AI to recommend music, playlists, podcasts, and other content to users. 

Spotify launched the AI DJ in February 2023. AI DJ is a personalized guide that understands you and your music taste so that it can choose what song to play. AI models utilize your behavior and preferences data to guess what you want to listen to next. That data comprises what you listen to, how long you listen to, what playlists you create, etc. AI DJ can even sort the latest music and find some of your old favorites, discovering that song you haven’t listened to for several years. 

AI In-Store Operations

Smart inventory management is another application of AI in retail. Some businesses deploy robots to keep things organized, like having a reliable personal shopping assistant for the entire store. 

3. Walmart Robots for Scanning Shelves 

Did you hear about Walmart’s new helpers? They’re bringing in robots to zoom around the aisles, keeping an eye on things. Imagine never having to search for a missing item or wait for a price check again! These robots are like super-powered stock checkers, making sure shelves are always stocked and ready for you. That means more time for friendly faces from Walmart to answer your questions and help you find what you need.

AI for Marketing and Sales

 Dynamic pricing, or surge pricing, is a real-time strategy where brands adjust their prices based on various factors, including customer data. This pricing strategy helps them maximize profits and, at the same time, cater to customer preferences. Here’s how it works with customer data in the context of airlines.

4. Virgin Atlantic AI-Driven Dynamic Pricing 

Virgin Atlantic partnered with Fetcher to adopt its AI-driven solution that can move prices up or down based on predicted market variables to optimize operations and revenues.

With the system live and used to price selected routes, Virgin Atlantic became the first airline to use Fetcherr’s “generative pricing engine” and fully automate processes from pricing to publishing. 

Fetcherr is a company that revolutionizes the travel industry with its proprietary algorithm to make real-time, market-responsive pricing decisions. The tech startup is committed to helping Virgin Atlantic automate and improve its operations and revenue using generative AI technology. 

AI for a More Engaging Experience 

Attention, shoppers. You won’t struggle to describe a desired item with keywords anymore. Just take a picture and let the AI do the work.

neiman marcus ai shopping app

5. Neiman Marcus “Snap. Find. Shop.” Feature

Luxury department store Neiman Marcus uses artificial intelligence to make it easier for customers to find items. Instead of using vague search terms to find an item, the company uses photos to help customers find a similar match. To do this, Neiman Marcus partnered with Slyce, a product discovery platform specializing in AI-powered visual recognition.

What it Does:

  • Customers can take a photo of a clothing item, accessory, or even a scene from a magazine (imagine a celebrity sporting a designer bag).
  • The “Snap. Find. Shop.” feature uses Slyce’s AI to analyze the photo, identifying up to 25 characteristics like color, pattern, material, and brand.
  • It then searches Neiman Marcus’s vast online catalog for similar or matching products.

The feature works across various departments. Customers can use it to find the perfect clothing, shoes, handbags, jewelry, and even homeware, making it a one-stop shop for a visual shopping experience.

AI in Retail Opportunities

AI in retail offers plenty of benefits for businesses and customers by improving inventory management, marketing and sales, pricing, and the whole customer journey. While physical stores remain king in retail, they must thrive in a highly competitive environment. AI drives innovation in digital store operations where competitors are a click away. Are you raving for more AI-powered transformations? Explore Penji Learning Center to learn more.