Of all the industries that artificial intelligence is changing, retail has the potential to experience one of the biggest shifts. Digital transformation has already been revolutionizing the sector in recent years, with faster, more efficient and more customer-friendly processes becoming commonplace thanks to data and analytics. But AI is only serving to accelerate this trend.
Savvy retailers are quickly getting on board with the AI phenomenon, and that’s fuelling a major increase in IT spending across the industry. Gartner is forecasting that over the next two years, global retail IT spend will increase by 7.3% a year to more than $240 billion. Meanwhile, CommerceNext has found that more than 40% of online retailers are planning to expand their tech investment in 2024.
Much of this spending will be focused towards the integration of AI with the Internet of Things (IoT), which is providing unprecedented opportunities to generate a new level of data, and make even more informed and reliable decisions. If you haven’t already started exploring the combination of AI and IoT, then now is the time to get on board.
Why AI-driven insights are now essential in retail
The retail landscape has become so competitive that retailers have to perform at their maximum on many fronts. For example, customers have come to expect hyper-personalized experiences and seamless, intuitive buying journeys from end-to-end - and will readily switch to a competitor if they’re not getting the experiences they want. Additionally, operations and the supply chain have to run at optimum efficiency, without any loss of speed or costly disruption.
All this means that there is no longer any room for errors, with retailers needing to make the right decisions, all the time. The best way to do this is through data and analytics, and while retailers have been able to leverage this for a number of years now, they have been relatively limited in scope. The sheer volume of data, both structured and unstructured, that retailers generate has often been too much to analyze, report on, and make decisions from.
Retail AI and Big Data analytics are changing all that, by allowing a practically limitless amount of data, and an even more detailed level of data, to be collected and analyzed to inform decision-making. The granularity of the information and processing involved means that retailers can innovate and make changes with far more confidence.
How IoT changes the game for retail AI
IoT has such transformative potential for retail AI because of the breadth and depth of the data that it can collect from its sensors and devices. IoT can gather the detailed data that AI can then turn into the detailed, reliable insights that retailers are looking for - and as AI continues to ‘learn’ over time, the scale of the insights possible will only increase.
Selected use cases for IoT and retail AI include:
- In-store environment and navigation: retail environments can be transformed by IoT sensors, RFID tags, beacons and other points that collect real-time data. They can collect real-time information on footfall, product interactions, environmental conditions and inventory, helping the store environment be optimized with the right stock in the right places. It can also support mobile app-based store navigation for customers, guiding them to the products they’re most likely to be interested in.
- Supply chain management: IoT sensors can provide real-time data on the status, condition and location of stock at every single point of the supply chain. This can be used to iron out any inefficiencies caused by suboptimal delivery routes, cases of loss or damage, or any gaps in inventory caused by sales fluctuations. That way, products are always available to every customer, every time they want to make a purchase.
- Price optimization: data can be instrumental in helping price products correctly, and ensure that a competitive price point is balanced with profitability. IoT and AI can collectively work through patterns on demand and availability, and pinpoint the right time to make price reductions or introduce special offers.
- Personalization: learning more about the patterns and behaviors of each individual customer means that experiences can be tailored to their preferences at a far more detailed level. This includes tailored recommendations and promotions, in-store designs and signage that can adapt in the presence of specific customers, and interactive kiosks with personalized content. This is a major reason why over 71% of American retailers are investing in data and AI-enabled content for personalization.
Integrating IoT and AI with Ciklum
If you aren’t bringing AI and IoT together for your retail operation now, you can be sure that your competitors will be taking full advantage instead. That’s why we at Ciklum work with retailers like you to develop tailored solutions that weave AI and IoT into the retail fabric.
Through AI-driven analytics, advanced algorithms and machine learning techniques, we empower retailers to extract valuable intelligence, interpret it correctly and drive strategic decision making. From optimized inventory management to personalized marketing campaigns, we’re enabling better customer experiences, better growth and better profitability in a highly competitive sector.
To find out more on Ciklum’s innovation in retail AI and IoT, explore our library of case studies and AI insights, or contact our team for a personalized consultation.
