As online retailing continues to grow exponentially, retailers find themselves facing new sets of problems that weren’t indicative of the in-store shopping experience of yesterday.   Two weeks ago, Nike cited industry research that shows that roughly 60 percent of consumers are wearing the wrong shoe size.  This is a significant problem for the athletic shoe giant because many online shoppers overcome the challenge of finding a proper-fitting shoe by purchasing multiple sizes of their desired shoe online and then returning the ones that didn’t fit.  Trying on multiple pairs of shoes in the comfort of your home is definitely a great way to find the perfect fit, but it is also a very cumbersome and expensive solution. 

For one, it’s inconvenient for the customer to order and pay for multiple pairs of shoes and then go through the process of returning the ones that they don’t want. For retailers like Nike, it increases their cost since they have to process a much higher number of returns and credit customer accounts.

Technological Innovation Helps Better Serve Customers (and Improve the Bottom Line)

In order to save costs and better serve its customers, Nike introduced a smartphone app that uses augmented reality (AR) to perform a highly accurate scan of one’s foot utilizing a smartphone camera.  By mapping out a morphology of both feet, the customer is assured that the size ordered is the only one necessary.  This innovative technology builds the level of trust that shoe buyers have in Nike which helps solidify brand loyalty. 

What’s more, Nike saves the foot map results in the customer’s profile for later use.  This insight into the customer’s foot physiology has a number of business benefits for Nike including building personal relationships that retailers are striving to create with each customer in order to better succeed in a hyper-competitive retail environment.  Nike’s undertaking is part of a massive trend in the retail sector as 100 million consumers will shop in AR online and in-store by 2020 according to Gartner, Inc.

AI Helps You Learn About Your Customer

The first commandment of retail is “Know thy Customer.”  To better understand your customer, you need information and a way to process and interpret that information.  This is where AI and cloud service providers such as Azure come into play.  According to a McKinsey study, AI could potentially generate $4 billion to $8 billion in annual revenue for the global retail economy as well as $2 to $5 billion in consumer goods.  A greater insight into shoppers means a greater ability to convert them into regular customers.  That is the power of AI.  AI and the data gleaned can:

  • Increase promotion efficiency
  • Cultivate personal relationships with your customers
  • Innovate and develop new products
  • Increase sales transactions
  • Reduce customer complaints
  • Build brand loyalty

Chatbots and Azure

Chatbots are also growing more prevalent every day in the retail industry. Retailers are using Azure’s Bot Service and Framework to service customers more effectively and efficiently.  Modern bot software today relies on a growing stack of technology and tools in order to deliver increasingly complex experiences that users now demand. 

Gartner has stated that 25 percent of customer service and support operations will integrate chatbot technology by 2020, up from just 2 percent in 2017.  They also believe that within a few years, chatbots will power 85 percent of all customer service interactions.  In fact, by then, they predict that the average consumer will have more conversations with chatbots than with their spouse! Juniper Research estimates that by 2023, 75 percent of all chatbot interactions will be retail-based.  Why? Because the retail sector is one of the most promising sectors for automated agents with huge upside revenue potential. What’s better? Implementing this technology costs less in the retail sector. 

Many online shoppers have experienced chatbots first-hand; but chatbots aren’t limited to online commerce alone.  Large box retailers and shopping malls are integrating them in order to help customers locate and direct them to products on the shelf.   One example is the Mall of America that services 400 million people a year.  The mall’s chatbot is accessible through a number of alternative mediums and helps customers locate retail and restaurant establishments in real-time.  It can even makes suggestions or connect the shopper with a mall associate for additional information.  The integration of online AI-driven tools within the brick-and-mortar environment creates an omni-channel retail experience for the shopper in which they can experience consistent service throughout all of their shopping interactions.  This omni-channel strategy allows consumers to purchase wherever they are, whenever they want – and stay in constant communication.

Sentiment Analysis and Gesture Recognition

The ability to determine what your customers may want before they are even fully certain would be a huge competitive advantage for any retailer.  This requires the ability to understand the opinions or sentiment of shoppers.  The good news is that consumers today express their sentiments everyday through social channels, text messages, chatbots, tweets, online reviews, etc.  One of the ways that Microsoft Azure offers this capability is through text analysis. By analyzing these sentiments, retailers can fine-tune their suggestive marketing strategies when they come in contact with customers. 

Retailers are also integrating apps and kiosks into their stores in order to serve customers more efficiently.  Taco Bell was able to increase their average order transaction by 20 percent by encouraging customers to use its app rather than human cashiers.  Cinemark Theater’s use of self-service kiosks increased concession spending per person for 32 straight quarters.  Kiosks are even more effective when AI technology is integrated with facial and/or gesture recognition.  With facial recognition, frequent customers are instantly identified as they approach a kiosk or storefront. The technology then offers suggestions based upon known shopping history.  And gesture recognition enables shoppers to find their preferred products with a simple wave of the hand using a touchless device.

Moving Forward in Retail

No facet of retail has been untouched by the technological disruption in recent years.  AI helps give the insight you need to create seamless and effortless experiences with customers.  By better understanding your customers you help build customer relationships with your brand. Ultimately this brand loyalty reduces the likelihood that your customers shop elsewhere.  What’s more, the efficiencies that AI brings to your operations helps reduce costs that will add to your business’ profitability.  The digital transformation of the retail sector has already begun.  Now it’s time to fully embrace it. 


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