As we stand on the cusp of 2024, the retail landscape is poised for a transformative shift driven by the relentless march of artificial intelligence (AI). In an era where technology evolves at an unprecedented pace, understanding the trends shaping the future of retail is crucial for businesses and consumers alike.
A study by IBM predicts that AI adoption in retail will jump from 40% to over 80% within three years, indicating a significant trend towards AI-powered retail environments. Retailers are looking to leverage AI to gain a competitive edge, and this article sheds light on the innovative ways they plan to do so.
Join us as we unpack the key trends and technological breakthroughs that are set to make waves in the retail tech sector. With expert analysis and forward-looking perspectives into how AI-powered chatbots, virtual assistants, and sophisticated algorithms will predict buying patterns, automate tasks, and optimize workflows, freeing human creativity for more strategic endeavors.
More human-like chatbots on the rise
The chatbot market is experiencing a significant surge, with projections indicating growth from USD 5.27 billion in 2023 to an impressive USD 14.95 billion by 2028, at a CAGR of 23.28%. In 2024, chatbots are becoming increasingly sophisticated, offering a more human-like experience to customers.
These advanced bots can understand natural language and context, providing real-time assistance and building brand loyalty in the retail industry. They're expected to become the primary customer service channel in a quarter of all businesses by 2027.
"Chatbots can now be programmed to react to people’s intent to a granular level, including recognising when people are unhappy, angry, or pleased. They can adopt a suitable tone and take the appropriate action to satisfy both the spoken and, importantly, the unspoken needs of the customer." said Yaniv Hakim, Co-founder of CommBox.
"Using advancement sentiment analysis, chatbots can even transfer customer to a human agent in severe cases, minimising potential churn."
Supercharging search with generative AI
Retail giants like Amazon, Walmart, and Google are harnessing the power of generative AI to enhance search capabilities, providing users with more relevant and informative results. This technology allows for personalized search experiences, suggesting products based on consumer history and preferences, and anticipating future needs.
"I can tell you from experience that 2023 saw a massive upswing in retailers interested in this technology and this will only grow next year." said Will Underwood, CEO and Founder of Optiversal. On the marketing side specifically, arguably the highest ROI use of GenAI in retail is for capturing new SEO demand. Everything from keyword opportunity discovery, to copywriting, to product assortment selection can be done with AI."
AI-powered call centers 
Call centers are using AI to analyze conversations at scale, offering personalized recommendations, and improving first-call resolutions. AI-powered call centers utilize advanced technologies to enhance interactions, providing customers with quick and accurate support, thereby setting a new standard for customer service excellence.
"Personalization and seamlessly integrated tech ecosystems are paramount!" said Nikola Mrkšić, CEO & Founder of PolyAI.
"In contact centers, traditional IVRs will be forced to evolve or die, as consumer/end user expectations will broaden with maturing technological capabilities. The already strained patience for "press 1 for accounts" or "tell us in a few words..." will all but disappear in the wake of an influx of agile automated agents greeting callers with..."Hello Angela, thanks for being a customer since 2017. How can I help?"
"We’re seeing a lot of interest in coversational AI from typically slower-to-adopt industries, like home services, retail, and hospitality, not from an operational, cost-cutting perspective per se, but because they’re looking to hit the crossroads of maximizing their customer’s experience with their brand with automated efficiency. The concept of waiting on hold to talk to an agent – virtual or otherwise – is at an end."
Enabling the perfect soundtrack
Generative AI is also making waves in the audio space, with tools emerging in 2024 that enable the creation of professional-sounding soundtracks and speech. This technology is expected to become as ubiquitous as AI-generated visuals and playlists to further enriching the in-store retail experience.
"Retail brands that continue to grow and thrive will hone in on how to further differentiate their guest experiences, which includes playing the right music at the right time," said Ola Sars, CEO of Soundtrack Your Brand.
"Because music is the most cost-effective way to differentiate a brand and its overall experience, we anticipate more retailers will leverage custom made-for-business tech tools such as scheduling, affordable curation and the greatest depth of music catalogs to achieve the ideal brand-fit playlists and variety, so employees won’t hear the same songs on repeat."
Leverage cookieless advertising with Universal IDs
As the advertising industry moves away from traditional cookies, Universal IDs emerge as a solution for cookieless advertising. Retailers use Universal IDs powered by AI to track user behavior without relying on traditional cookies, ensuring targeted and effective campaigns. These identifiers combine first-party cookies and offline data to create unique visitor profiles without the need for syncing across platforms, offering a new approach to user targeting in a privacy-focused era.
"In 2024, look for more reailers to leverage universal identifiers (UIDs) as a way to tap into the broader data ecosystem," said Cory Munchbach, CEO of BlueConic.
"First-party data is the holy grail for retailers looking to deliver personalized, value-added experiences to customers while safeguarding their privacy at the same time. But scaling first-party data can be challenging. When used in conjunction with first-party data, brands can reach a wider audience, gain deeper insights, and deliver more targeted campaigns, while still respecting user privacy and consent.
Theft detection self-service checkout
Smart systems can now detect anomalies, flag suspicious transactions, and reduce the likelihood of shoplifting. Juniper Research forecasts that by 2023, over $2 billion in mobile payments will be processed through smart checkouts, demonstrating the growing reliance on AI to improve self-service checkout systems in retail.
"Shrink has been a persistent challenge for retailers, but increasing levels of theft have dominated headlines over the past few year. Self-checkout has obvious benefits for retailers (e.g., labor), but is also a significant contributor of shrink with Self checkouts contributing 2X more shrink,"said Kurt Staelens, a Senior Managing Director at FTI Consulting."Implementation of computer vision solutions can identify customers not scanning items or ‘re-tagging’ bar codes of cheap items on expensive items."
AI-powered retail sales floor
Nearly 50% of retail respondents are actively employing AI technology, as reported by Gartner, indicating a significant shift towards interactive retail in-store solutions. For instance, Walmart has introduced an interactive wall that uses AI to estimate body positioning, offering a fun and immersive experience.
"The retail sales floor, amplified by cutting-edge technology, is set to become a hub for meaningful interactions that will change the competitive retail landscape. From interactive displays to smart mirrors and personalized digital signage, these technological advancements will redefine the shopping journey," said Keri Moore from Batteries Plus.
"We're exploring the addition of many different elements of technology to the sales floor, like the pioneering commercial IPTV from Havrion and Samsung. These decisions are strategic moves to engage our customers at different purchase points, offering them an enhanced and interactive experience."
AI-enabled smart shelf inventory
This technology utilizes a combination of sensors, RFID tags, digital shelf labels, and IoT connectivity to provide real-time data on product availability. It automates stock tracking, informs stores when items are running low or misplaced, and even allows for dynamic pricing strategies.
Retail giants like Walmart have implemented smart shelves to track inventory levels and streamline restocking processes. The use of AI in smart shelves also aids in reducing theft and shrinkage by keeping accurate track of items on the shelves. In addition to the core features to analyze sales data, predict demand, and optimize inventory levels to prevent stockouts and overstocking.
"Retailers like Sephora are implementing smart shelves to offer detailed product information and personalized recommendations, elevating the in-store experience. This integration of technology not only boosts customer engagement but also furnishes retailers with insightful data on consumer behaviors and preferences," said Ionut Vlad, the Founder and CEO of Tokinomo.
Emotional AI in Digital Advertising
Emotional AI is set to transform TV advertising by enabling chatbots to handle emotionally charged interactions, creating a deeper human-like connection with viewers and potentially increasing engagement and conversion rates. SHARE Creative reports that Emotion AI enhances consumer understanding and engagement, signaling a shift towards more emotionally intelligent advertising strategies in the retail sector.
"It takes less than three seconds for people to have a gut reaction," said Tricia Allen is VP Business Development at Reticle AI.
“Retailers can leverage emotional AI to target audiences in connected TV ads. CTV ad spend is forecast to outpace regular TV ad spend. Just in June, companies spent a record one billion dollars advertising on connected TV."
"Emotional alignment has the ability to drive attention up by 20 percent. And it also engages viewers, with a 12 percent increase in videos watched to completion. Retailers big and small can take advantage of emotional AI to get their ads in front of the audiences who are most likely to feel the emotions their ads evoke."
AI mobile messaging chatbots
Retailers are increasingly adopting AI mobile messaging chatbots to guide everyday customers. These AI-driven chatbots and virtual assistants are becoming integral to customer service, improving response times and problem resolution, and blurring the lines between physical and digital retail spaces. They offer instant information on product availability and store layouts, transforming the retail experience and streamlining customer service.
"Consumers are increasingly reliant on mobile devices, particularly among Gen Z." said Yaniv Hakim, Co-founder of CommBox.
"At the same time, we’re also seeing heightened customer expectations for transparency and accountability."
"With over 2.8 billion users, WhatsApp is rapidly emerging as the preferred platform among consumers seeking a seamless and effortless experience. WhatsApp's inherent functionality, such as threaded conversations, built-in audio and real-time messaging, fosters more personalised and efficient interactions."
