Artificial Intelligence is once again changing the way we shop. After disrupting the world of digital commerce, AI has seeped into the grassroots of consumerism and overhauled its next target — retail stores. 

A study from Juniper Research predicts the adoption of AI in the retail industry will amount to a staggering figure of US$ 7.3 billion per year by 2022. In retail operations alone, AI has the potential to drive savings of about US$ 340 billion. Such striking figures paint a compelling picture of the prowess of AI in the retail backdrop. 

How AI is Overhauling Retail Stores 

Let’s take a deep dive into the various use cases of AI that are helping to revamp the modern retail store. 

1. Customer Experience and Intelligence 

Loyal customers serve as a means of sustenance for all retail stores. AI is enabling stores today to collect data about the shopping patterns of their customers and leverage it to bring them back to the stores. Machine learning (ML) algorithms can even predict future purchasing patterns of customers and recommend products that they are most likely to buy. 

Companies such as Uniqlo, a Japanese clothing brand, use neuroscience to “read the minds” of retail shoppers. The associated technology deploys five metrics — interest, like, concentration, stress, and drowsiness — to map the mood of customers and match them to the right apparel. 

Even after these game-changing use cases, we are far from the transformation frontier. With AI-powered chatbots, retail brands are able to simultaneously handle thousands of customer queries. With instant and personalized attention, customer queries can now be addressed through channels such as in-store tablets and websites. 

2. Smart Product Layouts and Inventory Management 

Capabilities such as prescriptive analytics analyze raw data to automatically identify in-store opportunities to enhance processes. For instance, the system can identify that a particular product has not been sold for a week despite being ample in inventory. The system then prescribes a relevant action for the store manager to check the product’s shelving strategy. 

For instance, smart shelving and cloud-based signage technology for Kroger EDGE has helped retailers save more than 1.7 billion kilowatt-hours worth of energy since its inception.

3. Real-time In-store Shopping Assistance 

Powered by AI, retail apparel stores are now deploying virtual trial rooms that are equipped with smart mirrors. These smart mirrors enable customers to instantly try on different dresses without going through the hassle of getting themselves in and out of them. The mirror even includes gesture and touch-based interfaces that enable shoppers to mix and match different outfits, accessories, shoes, etc. 

The adoption of AI in retail is not limited to apparels. Beauty brand Sephora has armed its in-store employees with handheld devices that scan the faces of customers, capture their exact skin tone, and match it with the right shade in their library of beauty products. The device even churns out a four-digit code that becomes the Color ID of the customer. 

4. Supply Chain Planning 

One of the most prominent adoptions of AI in retail is the way the technology is paving the way for smart, connected, and efficient supply chains. By analyzing huge data sets through big data analytics, retailers can predict demand changes, react to them, analyze supplier capabilities, and much more. In fact, IDC estimates that about 50% of mature supply chains will leverage AI for deployment-based planning and long-term demand forecasts. 

Other prominent use-cases in which AI is revolutionizing supply chain and logistics include: 

  • Lowering the costs of operations and inventory management 
  • Providing quicker response time to customers 
  • Predicting the demand for new products 
  • Optimizing factory scheduling and production planning 
  • Improving supplier delivery performance and minimizing associated risks 

For instance, retailers like Target and Walmart are even deploying AI-powered robots that autonomously stroll around stores and scan shelved products to understand if they have been misplaced, mispriced, or if more stock is required. 

5. Next-gen Billing and Payment Systems 

AI has even come to the rescue for retailers in terms of overhauling their billing and payment systems. This can be better attributed to the incredible case study of Amazon Go who has completely eliminated the presence of cashiers, cash registers, and self-service checkout stands from their stores. Customers simply walk into the store, check in through the Amazon Go app and go through an end-to-end automated shopping experience. Various sensors and cameras around the store track the products that customers have picked up and put in their baskets. All they have to do next is make their way out of the store. Their purchases are automatically charged to their Amazon Pay accounts or credit cards. 


As retailers seek to become more customer-centric, they are increasingly harnessing the potential of AI for various retail store elements. This has resulted in a merging of customer experiences across digital and tangible shopping modes while retailers continue to explore revolutionary use cases of AI in the industry. 

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Sumant Kulkarni and Rajesh Mohandas

Posted by Sumant Kulkarni and Rajesh Mohandas

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