How AI is Changing the Retail Industry?

Updated on Dec 15th, 2023


Undoubtedly, AI is no longer a futuristic technology that will radically change business in the retail industry. It is a proactive technology that could aid retailers in reducing costs, improving the relevance of their brands to market demands, and providing a more individualized shopping experience.

Although AI retail solutions are being used in novel ways throughout the whole product and service cycle—from assembly to post-sale customer support interactions—retail businesses still require clarification on several crucial concerns: 

  • How is AI changing the retail industry?
  • How are retail companies employing these technologies to keep one step ahead of their competitors today?  

In this blog, we discuss some advantages of using AI development services in the retail industry and some real-world use cases.

So, let’s get started!

AI Solutions in Retail: What & Why?

The United States Department of Commerce projects that in 2023, retail sales will total USD 5.99 trillion in the region.

A competitive advantage, higher revenue, and faster expansion have been enjoyed by numerous retailers who embraced AI development services early on. A growing number of companies will soon use AI, computer vision services, ML, and many more technologies to assist them in completing activities like behavioral analytics, picture identification, and inventory management.

Additionally, it is anticipated that between 2021 and 2028, the market for artificial intelligence in retail will increase at a CAGR of 30.5%, rising from USD 4.84 billion in 2021 to USD 31.18 billion in 2028.

For the purpose of making product and service recommendations and generating business insights, AI solutions in retail can quickly evaluate enormous volumes of data, including customer demographics, search, and purchasing patterns.

Moving ahead, let’s discuss this,

How is AI Changing the Retail Industry?

Below are some benefits and use cases that will help you to understand how AI is changing the retail industry. Have a look!

How-is-AHow-is-AI-Changing-the-Retail-Industry - internal-image-updateI-Changing-the-Retail-Industry


The retail industry has changed. Customers want the same degree of personalization wherever they shop online. Thankfully, as customer expectations rise, AI/ML and computer vision services capabilities also advance, significantly enhancing the retailer’s capacity to deliver excellent customization at scale.

PwC estimates consumers are willing to spend up to 16% extra on tailored shopping experiences. With the use of AI development services, retail personalization offers each customer a distinctive experience that is designed to increase engagement and conversion.

Retail businesses can create, manage, and filter their information to generate personalization tools like shopper profiles based on behavioral patterns, transactional data, and demographic data to give this experience, ultimately giving customers a more tailored experience.

Virtual Shopping Assistance

Customers who want to research online services will find virtual shopping assistants to be especially beneficial. Customers’ lack of familiarity with how things feel and appear in real life is a significant issue with online retail stores, which leads most individuals to make their purchases offline. Having a conversational AI assist individuals by providing verbal clarifications and guidance while they can be energizing and improve the online experience. It would be great for you to hire conversational AI developer to include similar functionality in your new or existing eCommerce website.

Also Read: An Ultimate Guide on Virtual Shopping Platform

Early Fraud Detection

As online purchasing becomes more prevalent, fraudsters have more opportunities to con internet businesses. A startling 25% increase in eCommerce fraud efforts has been observed over time, with significant financial and customer losses. Therefore, it is essential to stop any wrongdoings.

Artificial intelligence is capable of identifying questionable behavior and alerting security. Models for machine learning can identify and stop anomalous operations. Additionally, it is frequently possible to pinpoint the wrongdoer and the offending gear.

Better Supply Chain Management

One area where the application of AI could drastically alter is the supply chain.

According to MarketsandMarkets forecasts, the amount spent on AI in the retail supply chain globally will reach $10 billion by 2025, expanding at a rate of over 45% annually.

By examining historical data and consumer behavior, AI may transform the supply chain and inventory management by ensuring that the merchant always has the appropriate amount of stock—not too little, not too much. It also helps in the following:

  • Calculating costs and expenses both internally and externally at each level of the supply chain
  • Lowering freight expenses for clients and third-party logistics companies
  • Enabling manufacturers, logistics providers, and other supply chain stakeholders with better upward and downward planning
  • Taking corrective action in the face of unforeseen and adverse circumstances

To improve inventory management and streamline the supply chain, many major retail businesses have implemented AI based ecommerce development services.



Computer vision is heavily used in self-checkout supermarkets to direct customers through purchasing. This technology, which requires little human involvement, has also shown to be popular with clients. Self-checkout shopping may soon be the standard due to its effectiveness.

In-Store Assistance

Customers don’t have to ask human employees for further product details. Smart shelf tags provide descriptions of everything on sale and can replace paper price tags in retail establishments.

Additionally, smart shelf tags can display video adverts and tell customers about specials. Customers will be able to do their searches in their local language when shopping abroad. Additionally, this strategy makes inventory management easier because of its real-time monitoring capabilities.

Product Categorization

Artificial Intelligence (AI) can batch and categorize products based on qualities or natural language descriptions. By utilizing natural language processing, an AI-powered product classification system would increase the task’s accuracy while simultaneously increasing its efficiency. For new clients, easier product searches may result from improved product categorization.

Helps in Price Prediction

The ideal pricing for various products can be determined using a variety of AI models that take into account seasonality, price elasticity, as well as real-time inputs on competitor prices and inventory levels. Retailers can employ pricing optimization to boost interest in particular products and, when possible, increase profits. Utilize cutting-edge technologies like AI, ML, computer vision services, and many others for pricing optimization to find possible sales growth possibilities and react to seasonal trends.

Visual Search

An online search can be done using a picture instead of phrases thanks to the AI technology known as visual search. According to statistics, visual search technology has an accuracy rate of over 90% and significantly raises customer happiness.

Visual search is anticipated to have a significant impact on e-commerce marketing by altering how customers buy visual products online and raising customer experience expectations. Business getting into mobile based retail solution like brick-and-mortar ecommerce app can introduce visual search feature by requesting this feature from their finalized ecommerce app development company.

How to Implement AI Solutions in Retail?

Below are some initial steps to implement AI in retail software. Have a look!

  • Decide which of your company’s bottlenecks can be solved by AI development services by identifying them; contacting an AI consultation firm can be beneficial for you to discuss the most pressing issues.
  • Identify the information required to solve the issue. This entails examining business processes that may be improved immediately and identifying the types of data needed to optimize the process.
  • Set clear goals. No need to select the most difficult retail AI use cases. Start small to hasten the release of the software. It can be improved upon over time. The scale of retail software development can be gradually increased. As a result, your business will investigate new potentials and increase value over time.
  • Modify your objectives with AI implementation strategy objectives. It would assist you in selecting the appropriate technology and top AI development companies.
  • Build a model of how you’ll collect and use data to enhance the procedure. You should test your prototype to check if you can effectively collect and use data.
  • Build a solution for collecting and analyzing data; this is one of the stages when professionals might be essential.



Retailers and brands continue to have a wide range of AI-related options for experimentation and expansion. With the appropriate AI strategy, your business can lower expenses, improve business insights, and provide a richer user experience to keep customers and boost sales.

You now know that AI has the potential to completely transform your retail industry. Therefore, you need to adopt this technology if you want to expand your retail business. You must keep an eye on these fresh AI trends and partner with premier AI based ecommerce development services if you want to continue moving on this path.

Enquire now

Give us a call or fill in the form below and we will contact you. We endeavor to answer all inquiries within 24 hours on business days.