Explore - Experience - Excel

Impact of AI on Retailing: A Short Essay

Dr. S Shyam Prasad

Organised retailing, which accounts for 10% of India’s GDP, is relatively new to our country. It is only after 2011 when Government of India opened retail industry to FDI, this sector has come into being in a big way. Organised retailing has changed the way we used to do shopping and purchases. It is continuously evolving and had undergone vast transformations. With the advent of new technologies and their convergence, E-retailing is making its presence felt in a big way. One of the factors that is promoting this evolution is Artificial Intelligence (AI).  AI is a prominent and key element in the business technologies that is enabling this revolution. According to a 2017 survey by Boston, the retailers say use of AI by 2020 will rise to 46% in order to augment customer experience (CX). Though AI is being applied in many aspects of our daily life (see exhibit 1), for the purpose of this essay, we restrict its discussion to retailing.

Artificial intelligence is ushering in changes in the ways the businesses are done.  AI from the perspective of this work, is a computer application that can do work that would normally require human thought processes. AI “learns” from the vast data it processes through machine learning without being explicitly told by humans. In fact, they can emerge smarter and perform better than humans. AI specialists speculate that the possibilities are plenty and many forms of AI are presently being used in retail. According to market firm Tractica, global revenue from AI will see a huge increase from $643.7 million in 2016 to $36.8 billion by the year 2025. In this write-up, we look at how this technology of AI is being applied by retailers and its impact on the retail industry. Further Virtual Reality (VR) is enabling customers to try out the products they wish to purchase without physically having to wear them.  
Globally, more than thousand patents were filed between 2012 and 2017 in AI-related activities in retail and, eBay Inc. and Google are among the top patent filers (netscribes, 2017). With cases of its usage in retailing coming forward, one can expect only increase in its acceptance and adoption by the retailers. Let us have a look at the present usage of AI by them.
AI in Retailing
AI is employed by the retailers in their web site search and merchandising. It is used to direct the potential consumers to the products or services that best fits into their needs and wants. For example, if one searches for bus routes from a place X to Y in a web site, besides showing up the results matching the search criteria, it will also show up the hotel in place Y.
Digital Catalog
AI has made it possible that enables the customers to browse and locate the right product for them in a fraction of time it would take otherwise. Consumers can go through hundreds of products more easily and comfortably than going through physical products based on their preferences. The digital catalog which is AI enabled will show items that would best match their need and have the potential of being bought.     
Gesture Recognition
Digital catalogs are very basic thing for retailers. Now they can monitor people closely, observe their heights, facial expressions, and hand gestures too. The reactions of the shoppers are caught by the robot sales assistants and AI therein makes a better recommendation that has more possibilities of matching their requirements.  < /div>

Virtual Mirrors
It is well known that the chances of a customer making a purchase once they try on a garment is much higher than when they don’t – that is the reason for the existence of trial rooms. However, one has to put up with the crowed trial rooms and sometimes might drop the purchase altogether if the crowd is large. AI has enabled companies to develop a solution to this problem. Instead of visiting the crowded trial room with a bunch of clothes, one can use virtual mirrors to see how it looks on that person. This concept is not very new though in India only few retailers use virtual mirrors.  Additionally, virtual reality (VR) is making it easier for customers to try out items without actually putting them on. This concept of virtual mirror or VR is also known as digital trial rooms.  
Coimbatore-based Coitor IT Tech has two such products, WearIT, a 2D virtual dressing room, and a 3D mirror, which shows how the outfit can look from various angles. Coitor, which describes itself as an augmented reality company, has installed WearIT in stores of Chennai Silks, Palam Silks and Jealous 21, among other clients’, in some cities. The experience at Jealous 21 bears out the belief that those who try on clothes are more likely to buy than those who do not, says Mahendra Vellingiri, co-founder, Coitor. Textronics is the other firm to note in the business in India. Shoppers Stop uses its product TryON (but calls it the Magic Mirror) in one of its Mumbai stores (Challapalli, 2018).
Video Analytics in Customer Engagement
It is public knowledge that retailers have cameras in their stores. These cameras are mainly intended for use in security and safety within the stores; they are also now being used for customer service and compliance. With developments in technology and improvements in computer vision, retailers are using them to provide better CX. This surveillance also helps retailers to understand customers’ product exposure level, their engagement and the path followed by them in the store, which is important in deciding where to place different products.
The situation is different in online stores. Here, as is elsewhere, CX is a key differentiator. The definition of good shopping experience is changing very quickly with today’s online shoppers demanding 24/7 personalized service. This is where AI is playing a key role. Exhibit 2 shows how retailers use AI. “By adding AI across both self-service and agent-assisted channels, companies can deliver more human, personal and consistent experiences throughout the customer journey,” says Ryan Lester, director of customer engagement technologies at LogMeIn, a provider of technology for customer engagement (Internet Retailer, 2018).

Fraud detection
Besides the uses discussed above, AI is also employed in many more activities in retail. One such activity is fraud detection. Retailers capture millions of events every minute as customers navigate their websites and apps. These data points are fed into fraud detection and prevention machine-learning algorithm built using Google’s TensorFlow, an open-source software library for building machine-learning frameworks. This model collects data from retailers’ order-management system, payments, customer relationship management system and e-commerce teams to predict if an order is fraudulent or not.
According to a survey of 500 marketers by SEO firm BrightEdge, about one third of the digital marketers agree that AI helps them to understand their customers better and provide improved CX with convenience and customization. One fourth of them are also of the opinion that AI drives more productivity. By providing, a high degree of CX the retailers will create a satisfied customer, which in turn will result in a higher profit margin in the long run.
Looking at the success that some retailers have had in adopting AI in their businesses it is likely to spread across far and wide. AI has now come to be an integral part of retail business.

Works Cited

Challapalli, S. (2018). Mirror, mirror on the wall … Business Line (The Hindu). Retrieved June 14, 2018, from
Internet Retailer. (2018). How Artificial Intelligence is Changing Retailing. Internet Retailer.

netscribes. (2017, November 27). Top companies with the most retail AI patents. Retrieved May 31, 2018, from netscribes web site: