5 of the Biggest Retail Challenges solved with AI Solutions in 2022
August 18, 2022
Today, the retail industry is facing a variety of challenges that are providing opportunities for the smartest of brands to stand out.
With over 7.5 million people leaving retail jobs in 2021, retail now remains the only remaining industry in 2022 to continue to have a shrinking labor force. Mix in the growth of e-commerce, increasing competition, and changing customer expectations, many brick and mortar stores are now being forced to evolve.
From AI tracking technology to customer experience and efficiency optimizations, the most innovative of retailers have put exploring new ways of engaging consumers as a top priority for solving their challenges.
Across all industries, the labor force is expected to continue to shrink by 5 million workers by 2022 and retail will be hit hardest.
We are experiencing an unprecedented change in how work is being viewed as demand for employees grows. Over 41% of retailers saying labor shortages are impacting their business and 21% of business owners saying they have lost customers due to staffing issues. This means retailers must now find ways to not only attract more workers and retain employees but adapt to a new reality working with smaller teams.
Currently, retailers have been dealing with staffing shortages with three tried and true methods: improving wages, increasing benefits, and offering more flexibility. While these methods work as a temporary solution during economic downturns, they are becoming a costly option and don’t solve the supply issue at its core.
Smart retailers have already begun to turn to technology such as self-checkout machines, store help kiosks, and store branded apps to reduce the number of staff needed on hand. We however will always need physical hands on deck for when these just aren’t enough.
AI innovations have reached the point where we no longer require complex custom hardware to do powerful real world analytics, in fact many work on existing security camera infrastructure such as Zensors.
Smart retailers have been using this tech to better optimize limited staff by understanding where staff is needed. By automatically recognizing spills, high concentrations of customers without staff nearby, or long lines at checkout, AI image recognition instantly notifies staff or implements changes that enables them to work most efficiently.
Think about being able to identify products that need to be re-stocked before they go empty, maximizing floor space by understanding where customers congregate, and being able to instantly open new checkout lines before customers wait becomes frustrating.
By using image recognition, retailers can identify underutilized areas of the store and direct employees to use the space more efficiently, maintaining customer satisfaction.
With online shopping enabling customers to shop in the comfort of their PJs on the couch, shoppers are expecting more from brands than ever before.
Over 75% of buyers are preferring to buy from brands that provide a personalized and engaging in-store experience that reflects the brand’s personality and helps customers get more out of their shopping. With customer service reviews influencing up to 88% of buyers, small retailers such as SHOWFIELDS are generating unique interactive experiences and exhibits that are an attraction themselves.
While not every retailer can perfectly personalize an experience, AI technologies both in store and online have been highly effective in enabling management teams to better understand customer shopping patterns and preferences in real-time.
We’ve all already experienced the AI in online shopping that is already collecting information about customers. Ecommerce is collecting information such as shopping preferences, past purchases, and browsing behavior, and using this information to tailor the shopping experience on their websites.
In stores, AI image recognition is enabling stores to collect this same data and generate the same insights. Think being able to identify trends in categories of customers that head directly to loss leaders and being able to then build a customer journey of similar products they are likely to purchase along their route.
Instead of a web shopping history, we’re now seeing retailers engaging in a physical shopping history that’s less privacy invasive for the better.
Online sales are projected to reach $533 billion by the end of 2022, with the top e-commerce companies (Amazon, Newegg and Walmart) accounting for a quarter of all sales. As online commerce shows no signs of slowing down, brick-and-mortar retailers are finding ways to enhance their online presence and remain competitive.
Retailers have been overcoming some of the challenges by focusing on their strengths. This includes focusing on categories where brick-and-mortar stores have an inherent advantage, like apparel and groceries, or on areas where e-commerce sales have not yet gained much traction, like home improvement.
Using these services as loss leaders to bring customers back to brick and mortar is not a permanent solution. With 52% of shoppers saying that that more than half of their purchases are influenced by convenience, digital is an inevitability.
Becoming digital however does not mean that brick and mortar stores can't exist.
In fact, it means the contrary.
We’re bringing the online world more in tune with our physical world, and merging both together. As we see more and more online retailers such as Amazon with Amazon Go bring their offerings to the physical world, it’s obvious that brick and mortar is here to stay, just more in tune with our online world.
Retailers have been leveraging physical stores to improve their e-commerce sales by using AI-powered technologies from live inventory management and pricing to the physical store analytics that Target performs. We’re also seeing retailers use AI recognition to supplement recent innovations such as curbside pickup where cameras are being used to identify when cars arrive and where to drop off orders.
The retail landscape is changing quickly, and the biggest brands are upping their game. More competition is entering the scene due to the ease of creating online shopping experiences and Amazon alone has expanded its operations into dozens of new business lines, and has been acquiring competitors at a rapid pace.
In 2018, Amazon launched its Amazon Prime Wardrobe service, enabling customers to try on clothes before they buy them. These services represents a significant challenge for retailers as customers gain many of the formerly unique benefits of brick and mortar through online shopping.
With 66% of customers saying that shopping technologies and innovations have improved their experience, becoming a digital innovator has become essential in succeeding in the retail space.
Retailers are staying a head by taking cutting edge AI technology to create automatically generated visual content and shopping experiences in stores and online.
From contactless clothing demos to interactive exhibitions and AI chat companions, retailers have been increasing their digital capabilities greatly. In fact, with 95% of retailers say they plan to increase their investment in digital in 2022 alone. Are you?
With global supply chain disruptions causing chaos in 2021 and now in 2022, expecting to staying in stock 24/7 is no longer possible.
The inability to forecast demand and the increasing use of click-and-collect services, for example, has led to an increase in the number of orders retailers are receiving that are being delivered on a later date: 94% of US retailers say they were significantly hit by delays in supply chain which has been leading to greater losses in customers and decrease in customer satisfaction than any other metric.
Sure its obvious that not having product in store means you’re losing customers, but what have retailers been doing about this?
While data analytics is nothing new, retailers have been using both AI algorithms and image recognition together to improve forecasting and forecasting accuracy to the individual store level.
Not only has this enabled companies to build better distribution networks and warehouses to keep closer to just in time inventory, it’s enabled better dynamic predictions for informing customers of shortages to alleviate concerns.
Retailers have been challenged to adapt to the changing retail landscape, but these difficulties have also provided opportunities for the smartest of brands to stand out.
AI has provided retailers with the tools to compete with e-commerce, enhance their in-store and online experiences, and provide a higher level of personalization. Retailers are expected to make significant investments in AI, with over 95% of retailers saying they plan to invest in their digital capabilities as it provides them with invaluable insights that can be used to make better business decisions.
We’re using AI to use it to make our operations more efficient, enable personalized experiences for our customers, and better understand our customers’ needs and preferences. With tools such as Zensors on the market, its clear that AI is not a simple replacement for staff or a temporary patch for a problem, but now an actionable tool that staff works alongside and the future of how we make business decisions.