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How AI is Transforming the Retail Buying Experience

Modern retail buying experiences are driven by advanced algorithms that look at more than just the demographic your business is selling to. These algorithms analyze and use the unique traits of your audience to offer more personalized shopping experiences that guarantee a better user experience and return customers.

These algorithms are commonly described as AI, one of the most crucial commerce tools of the modern age. According to research, AI is pioneering a new wave of e-commerce personalization, with more than a third of consumers stating that retailers should adopt these personalized shopping experiences. 

So, what is AI, its applications in the retail industry, and what strategy can you use to incorporate it into your online store?

What is AI?

AI, also known as artificial intelligence, is the simulation of human intelligence processes by machines, specifically computer systems, to perform advanced functions such as learning, reasoning, and self-correction. 

In retail, AI primarily consists of machine learning algorithms, automated processes, and predictive analytics designed to improve customer experiences, operations, and decision-making. 

Therefore, retail brands can serve customers with better product recommendations, smooth the checkout process, provide better customer service, and make better stock, demand, and marketing decisions. 

AI is becoming very popular with several retail brands, with data showing that nearly 50% of retail companies now use AI in their daily operations. 

The Applications of AI in Retail

AI has vast applications in the retail sector. Brands can use AI in traditional e-commerce shops or advanced virtual stores in the metaverse with excellent results. Here are some of the top applications of AI in retail. 

Personalized Customer Experiences

AI-powered shopping experiences are highly personalized due to the incredible insights AI can draw about each customer and their shopping behavior. The consumer expects this of modern brands, with data showing that most Gen-Z shoppers expect a high level of personalization in their online shopping experiences. 

AI can drive better personalization in shopping experiences by offering better product recommendations and personalized discounts and suggesting better targeted marketing campaigns for customers. 

Demand Forecasting and Inventory Management

The use of AI has changed inventory management and demand forecasting in retail. Machine learning algorithms can analyze past data on sales and other factors to predict future demand for each product and allow you to ship only what you need when needed. 

Therefore, by using AI, your brand can avoid overstocking and stockouts, thus maintaining optimum inventory levels.

Chatbots and Virtual Assistants

Excellent customer service is crucial to the success of retail brands. Using AI, retail companies can offer superior customer service through chatbots and virtual assistants powered by AI. These chatbots and virtual assistants can be available in their conventional e-commerce or virtual stores.

Chatbots and virtual assistants make it easier for companies to engage customers anywhere and anytime. They can answer queries and help complete transactions without any human intervention. 

Given the great potential of chatbots and virtual assistants, around 80% of medium-sized businesses globally have implemented or plan to implement a chatbot or virtual assistant in their online store.

We’ve helped big brands such as Lancôme to develop dynamic and engaging virtual pop-up stores where customers can shop and engage with integrated chatbots and virtual assistants to learn more about the brand and its products.

Therefore, by combining virtual reality and AI, customers get a superior shopping experience with automated help available 24/7.


AI is making self-service in retail a reality. Retail brands can now operate their online stores hands-free, with AI allowing customers to shop, make inquiries, and, more importantly, pay or purchase products automatically.

Within virtual stores and metaverse stores, AI can allow shoppers to pay directly and automatically using cryptocurrency or other tokens in their wallets, smoothening out the checkout process and making shopping much easier for customers. 

Therefore, brands can operate cashier-free shops, including physical ones. A good example is Amazon, which has developed cashier-less stores that use AI to eliminate the need for queues and lengthy checkouts after shopping.

Strategies You Can Use to Incorporate AI into Your Retail Business

AI is enticing for retail brands. But how can you successfully integrate it into your operations? Here are a few steps you can take.

Identify the Issues You Want to Solve

Before leveraging the power of AI, it is crucial that you first identify the specific challenges you want to solve and research the particular AI solutions to these problems. 

For instance, if you’re struggling to curb losses in your store, you may want to research and invest in AI solutions that analyze returns and flag possible fraud cases. If your advertising has a low ROI but a high clickthrough rate, you may want to research and invest in AI solutions that personalize online ads. 

Address the Capability Gap

As with many tech adoption cases, capability gaps are inevitable among most businesses. Not so many enterprises have the technical expertise to implement AI and its underlying technologies and stay up to pace with technological changes.

Therefore, you should establish what’s possible and impossible to accomplish based on your budget, existing talent, and resources so that you can better prepare for the implementation and have reasonable expectations.

This step is usually the longest and most challenging to complete. However, you don’t have to source talent from within.

You can contract an experienced party in AI and its implementation in retail to fill the capability gap and ensure you have an optimal AI solution for your business problems. 

Such is the path brands such as Mitsubishi have taken, partnering with us to open virtual stores that can be used within the metaverse and incorporate advanced AI tools for superior customer experiences. 

Start Small

Before fully launching your AI solution, it is best that you start with a small data sample and customers to ensure everything is working as intended. Taking on too much too soon can lead to catastrophe.

Taking small steps towards the full implementation will allow you to understand how AI affects your business and fine-tune the solution to serve your customers better. You’ll also take the time to build better data management strategies and organize your operations around the AI solutions.

Prioritize Trust

AI in retail relies on massive amounts of customer data to work effectively. When your brand suddenly needs such a vast amount of data from its customers, it’s vital that you establish and prioritize trust with them.

According to research, 73% of customers are worried most of the data companies collect is of no actual value to them. A larger portion considers how companies process their data to be very important, affecting whether they’ll choose to buy from them or not. 

Start Incorporating AI into Your Retail Business

AI is powering retail into a new future driven by analytics, data, and better customer experiences. However, you need to make the transition smooth for your operations and customers to reap the full benefits.

Talk to an expert and learn how to introduce AI into your business.