Practical Use Cases for Generative AI in Retail

Generative AI is revolutionizing the way retailers and retail brands interact with their customers and perform back-office tasks. According to one study, nearly 40% of retail directors stated they used artificial intelligence (AI), computer vision (CV), and machine vision (MV) for selected operations and departments in 2023. By harnessing the power of this technology, brands can personalize the shopping experience, streamline operations, and unlock new revenue opportunities.

Customer-facing applications such as virtual try-ons and personalized recommendations enhance engagement and satisfaction. Meanwhile, back-office applications like inventory forecasting and customer service automation improve efficiency and reduce costs.

In this blog post, we'll explore some of the practical use cases for generative AI in the retail sector.

Identifying Opportunities and Quick Wins for Generative AI

Retailers and retail brands looking to integrate artificial intelligence (AI) into their operations must begin with a strategic assessment of their business to identify where AI can add the most value. This involves analyzing current processes, customer interactions, and pain points to pinpoint areas ripe for improvement.

For instance, if a retailer notices a high volume of customer queries that overwhelm staff, AI-driven chatbots could be a quick win, enhancing customer service efficiency and freeing employees for more complex tasks. Similarly, examining sales data with AI can uncover insights for better inventory management or personalized marketing strategies.

To conduct a strategic AI assessment effectively, consider following these steps:

• Identify business objectives: Clearly define what you hope to achieve with AI, be it increased sales, improved customer satisfaction, or operational efficiency.
• Map out current workflows: Understand your existing processes to pinpoint inefficiencies or bottlenecks where AI could make a significant impact.
• Assess data readiness: Evaluate the quality and accessibility of your data since AI solutions depend heavily on data inputs.
• Research AI solutions: Investigate available AI technologies and vendors, focusing on those with proven success in the retail industry.
• Competitor analysis: Look at how competitors have implemented AI and the outcomes they’ve achieved.
• Pilot and evaluate: Start with a small-scale pilot to test the effectiveness of AI in your identified area before rolling out extensively.

By taking a structured approach to assessing where AI fits within their operations, retailers can make informed decisions and maximize return on investment.

Practical Examples of Generative AI Uses in Retail

Generative AI does more than simply automate tasks. It can also create entirely new ways for brands to engage with consumers and optimize their operations.

Here are a few compelling examples of how generative AI is being put to use in the retail sector:

• Personalized Marketing Campaigns: By analyzing customer data, AI can generate customized marketing messages and product recommendations. This ensures that customers receive offers that are relevant to their tastes and buying history, significantly boosting conversion rates.
• Dynamic Pricing Models: Generative AI can dynamically adjust pricing based on demand, inventory levels, and competitor pricing, ensuring retailers remain competitive while maximizing profit margins.
• Virtual Product Trials: Using AI, retailers can offer customers the ability to virtually try on clothes and makeup, or even help them see how furniture looks in their home before buying, increasing confidence in online purchases.
• Automated Content Creation for Ads: AI can generate advertising copy, product descriptions, and even visually appealing images or videos, reducing the need for manual content creation and speeding up marketing processes.
• Supply Chain Optimization: By predicting demand, AI can help retailers optimize inventory levels, reducing waste while ensuring product availability.

The integration of generative AI into retail marketing, advertising, and operations is not merely a futuristic concept but a current reality that is enhancing the way retailers interact with their customers and manage their back-office operations. These technologies allow for an unprecedented level of personalization and efficiency, driving customer satisfaction, loyalty, and ultimately, business success.

By exploring and adopting AI-driven solutions, retailers can stay ahead in the competitive market, providing exceptional value to their customers while streamlining their processes for better profitability.

How Crocs Used AI to Enhance Its Amazon Ads

Crocs, Inc. provides a perfect example of how retail brands can use generative AI to enhance their marketing and sales strategies. According to an article by Amazon Ads, the renowned casual footwear manufacturer significantly leveraged artificial intelligence (AI) through its partnership with eCommerce advertising software company Perpetua to enhance its Amazon ads campaign.

Crocs was Initially burdened with the manual management of their Amazon Ad campaigns. This involved scrutinizing keyword performance and adjusting bids based on results analyzed by humans.

Pepetua's Automated Bidding Solution

Crocs sought a more efficient method to boost its Amazon advertising strategy. The brand decided to integrate oPerpetua’s AI-powered platform to automate the cumbersome task of campaign management and optimization.

According to Perpetua's website, their solution enables companies to "Make the right bid, at the right time, on the most likely to convert keywords." Bids are automatically adjusted each day to help brands meet their target advertising cost of sales (ACOS), saving the brand time and ensuring campaigns are always running smoothly.

Crocs Achieved Measurable Business Results

This strategic move not only streamlined operations but also unlocked new avenues for growth, particularly by shifting the focus towards unbranded categories and competitor keywords. These were previously unexplored areas of potential for Crocs.

The results of the approach were a testament to the power of artificial intelligence in retail marketing/ Crocs witnessed a 100% and 120% increase in weekly sales for two of its product lines, respectively. The brand also achieved an incremental return on ad spend (ROAS) of 300%.

Take Advantage of the AI Revolution for Retail Success

Retailers, from giants like Crocs to smaller boutique stores, have an incredible opportunity to leverage AI for competitive advantage, fostering innovation and growth. By embracing AI-driven technologies, retailers can address the dynamic demands of the market and anticipate customer needs with unprecedented precision.

To learn more about how your company can use generative AI, don't miss the next eTail event. It's happening in Boston, Massachusetts at the Boston Marriott Copley Place from August 12th to 15th.

Download the agenda and register for the event today.