AI in Retail: How Data-Driven Technologies are Transforming the Industry


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It’s no secret that the retail landscape is more competitive than ever. The customer is in total control, and only a personalized, unique retail experience will capture their attention (and open their wallets).

But despite this, many retailers are slower to adopt new technologies that enable them to change – they must evolve with the customer, because the customer will not change for them. If they don’t, they will soon be seen as irrelevant or “boring” – which can become a mitigating factor for retailers.

So how can you engage a technologically-savvy and selective customer? How can a retailer differentiate themselves from the competition, and deliver the extraordinary experiences that customers seek?

Answer: Digital Transformation.

What is Digital Transformation?

Put simply, digital transformation is the idea that businesses should utilize new technologies and business models to motivate their employees to be more productive and to provide value for customers. Microsoft defines digital transformation as “The realignment of or investment in new technology, business models, and processes to drive value for customers and employees and more effectively compete in an ever-changing digital economy.” Digital transformation isn’t specific to any one industry; instead, it applies to any industry marginally affected by the advent and evolution of technology.

Consider all the ways digital transformation manifests in the retail industry:

  • Retailers provide omnichannel shopping and delivery options for customers
  • Customers can access stores from anywhere in the world in just a matter of moments via a mobile device;
  • Social media has become a primary form of advertisement;
  • Cutting edge technologies such as AI, augmented reality, and virtual reality have become an active part of the shopping experience;
  • Retailers use data analytics and machine learning to inform major business decisions.

It’s easy to see how vital digital transformation is to the retail industry, so it’s important that you, as a retailer, understand how to implement its basic tenets in your business strategy.

The 4 Pillars of Digital Transformation

Digital transformation is made possible only when retailers understand the four pillars: Customer engagement, employee empowerment, optimizing operations, and reimagining your product.

1. Customer Engagement

Customer engagement is at the heart of everything the retail industry does, and businesses depend upon a satisfied customer base to increase their bottom line.

Technological advancements like mobile computing and data analytics have made it easier for retailers to communicate with and understand customers than ever before.

You can take your business and your customer relationship to the next level with a customer relationship (CRM) system. CRMs are designed to analyze customer data and provide granular insight into customer demographics based on behavior and preferences. You can then use the insights generated by the CRM to develop more strategic, targeted marketing and selling campaigns in the interest of creating a higher quality, more personalized customer experience.

2. Employee Empowerment

Employee empowerment is all about instilling your employees with confidence by equipping them with the knowledge, skills, and tools necessary to do their jobs well. In addition to providing insight into customer demographics and behavior, a CRM enables employees to access a wealth of detailed customer information, which they can use to upsell, make informed customer recommendations, and more, all through a single, easy to use management interface.

3. Optimize Operations

The third pillar of retail digital transformation, optimizing operations, emphasizes rapid, data-driven decision-making, streamlined workflows, and greater operational visibility across channels. Once again, integration is paramount: In the age of ecommerce, organizations operate on a multi-channel playing field. In order for your business to provide the seamless omni-channel experience customers expect, you need operational consistency.

To promote integration, start by implementing an ERP system. ERP systems breaks down the barriers between applications to provide a more holistic view of cross-channel operations, including inventory, customer transactions, purchases and returns, customer service, and more.

4. Reimagine Your Products

Lastly, reimagine your products. To keep up with the pace of innovation, you need to actively keep an eye out for ways to incorporate the latest advancements into your offerings. The process is easier than it sounds and, like the other three pillars of retail digital transformation, simply requires the right software and tools.

Prioritize software and systems that feature predictive analytics to achieve the greatest ROI. Certain systems combine insights gained through ERP, CRM, and BI with machine learning to detect potential failures before they can occur and automatically take preventative or reparative measures and leverage digital intelligence to identify new revenue sources and growth opportunities.

Tools for Digital Transformation in Retail

Machine Learning and Predictive Analytics

Machine learning is key to cementing a bond between retailer and customer by helping the retailer better understand and predict what the customer wants. Machine learning is a data science that collects data from one (or several) sources, and then feeds that data into machine learning models that in turn help predict future outcomes.

Machine learning data enables retailers to identify shopping patterns, understand buying behaviors, adjust promotions and special offers, personalize product recommendations, tweak pricing on the fly, and create forecasts based on historical trends and customer preferences.

Artificial Intelligence

Customers expect answers and assistance any day, at any time – and the easier, more convenient it is, the better. Artificial intelligence (AI) is an important new way to deliver the attentive 24/7 service that shoppers now expect.

For instance, AI-driven chatbots can act as a digital store associate, instantly responding to customer queries through texts or Chatbot messages. Chatbots can also upsell or cross-sell products, pointing customers toward merchandise they may be interested in, based on the customer’s engagement.

Chatbots are a cost-effective and rapid response service tool that can help seal conversions and create new sales. In addition, chatbots deliver messages that are consistent with the brand’s voice – the chatbot says what it is programmed to say. There’s no worry that a chatbot will share something it’s not supposed to, or that it will be rude and impatient with a customer’s questions.

Unified Commerce

Shoppers are using multiple channels – web, mobile, social, etc. media – and they expect you to be ready and waiting across channels at all times. To achieve that, many retailers implement a unified commerce strategy, a single, fully integrated software platform that manages all the different systems that a retailer uses to conduct business, from one interface.

Before the unified commerce concept, retailers used different systems for managing components of their business. Trying to reconcile data pulled from multiple systems is a time-consuming, resource-draining process. To best keep data integrity intact and secure, data siloes must be broken down, and data from disparate sources integrated into one unified commerce system.

Get Started with Digital Transformation

Digital transformation sounds great, and the tools may sound cool and exciting, but how do you get started? The quickest, easiest, and most cost-effective way to successfully navigate your digital transformation journey is with a partner.

Hitachi Solutions is a world leader in retail digital transformation projects, with purpose-built, industry-specific solutions across retail verticals. Our team has deep experience around operations, relationship management, business analytics, and user collaboration. As the world’s leader in Microsoft Dynamics implementations, our team understands how critical innovation is for today’s retail industry.

For questions on how Hitachi Solutions can help your business reach the next level, please contact us today.