Drive to Reimagine

4 Examples of How AI is Reshaping the Retail Industry

Jeremy DSouza
last edited on
July 7, 2023
3-4 mins

Table of contents

Automate your business at $5/day with Engati

Switch to Engati: Smarter choice for WhatsApp Campaigns 🚀
AI revolutionizing retail industry

The retail industry is on the cusp of a major transformation. Thanks to the advent of artificial intelligence (AI), retailers now have the tools to gain deeper insights into their business operations, provide superior customer experiences, and mitigate risk for both employees and customers during and after the COVID-19 pandemic.

With AI, the future of retail looks smarter, more efficient, and more customer-focused than ever before.

How is ai transforming the retail industry?

AI has numerous applications in the world of retail. Here are a few of them:

  • Customer behavior prediction
  • Customer assistance
  • Supply chain, Logistics & Delivery
  • Payments


Customer behavior prediction

AI and predictive analytics can help businesses crunch data, look at past behavioral patterns and make predictions about future behavior. It can even help businesses get a good idea on estimated demand, customer loyalty, and purchase probability.

AI and video analytics can even come together to help businesses understand which parts of the store do customers spend more of their time in. 


Customer assistance

AI can be deployed to assist customers in many ways. It's all about providing your customers with a delightful, seamless and personalized experience.


Chatbots can help customers with everything- from hyper-personalized product recommendations to store navigation. A chatbot can help your customer to find the perfect product, without having to search through your website or your physical store.

When it comes to fashion, food or alcohol, chatbots can help your customers find products that pair well with each other. Essentially, they get a better experience while you get an increase in sales.

Smart Mirrors

Imagine being able to wear a single piece of clothing and see how it would look on you in different colours and sizes, without having to change.

Thanks to AI, this dream is now a reality.

Athletic apparel retailer, Lululemon takes this a step further. It refers to its mirrors as their digital community boards. They show you where you can use the gear you're buying from them- all the local gyms, fitness classes, etc.

AI-powered Smart mirrors
Smart mirrors improve retail experiences

Ever felt like you just couldn't describe the thing you want? Well, you don’t need to anymore. Stores like H&M and American Eagle allow you to upload a picture of the piece of clothing or the pattern you want and find similar options from their catalog.

It saves online customers a lot of effort and frustration.


Supply chain and inventory management

AI can increase the transparency of the supply chain, while simultaneously increasing the efficiency of the logistics department.

Supply chain transparency

AI and blockchain can work together to show your consumers exactly where their products have come from. It helps clear their conscience by knowing that their products have been produced in a sustainable manner, and the people involved in the production process have received fair pay.

Such systems become especially important in stores that focus on eco-centricity and have a clientele that is all about sustainable living.

While speaking at TED@BCG 2019, supply chain expert, Markus Mutz showed us how technology can be used to show consumers the journey of the Patagonian toothfish, right from the ocean to their dinner plate, proving to them that the fish was not caught in over-fished areas and easing their conscience.

Inventory Management

Your customers need to feel confident that you have the product they’re looking for. If you’re out of stock more than a couple of times, they’ll simply stop trying to find it at your store.

By going through buying patterns, AI can tell you well in advance when you’re going to run out of inventory, so that you can stock up and spare yourself the embarrassment of telling your customers, “Oh, sorry, but we don’t have that right now”.

It can also inform you about the times of the year at which the demand tends to rise for certain products, so that you can stock up early, instead of scrambling around at the last moment.

In order to make inventory management easy, using a POS system can be extremely beneficial. It allows for real-time updates of inventory levels, automatic reordering of items, and accurate tracking of sales data. These features can help to streamline operations, increase efficiency, and reduce the chance of stock-outs.



AI can help with payments in a few different ways.

Cashier-less stores

Stores like Amazon Go reduce the need for contact between the shoppers and the cashier. When a customer picks a product and walks out of an Amazon Go store, the amount for the product is automatically deducted from their account.

Such a model can help stores reduce the danger and health risk to both, the customers as well as the employees during the lockdown.

As Dennis Wakabayashi said,

"Earlier, customers were concerned about having a great customer experience. Now, they’re concerned about staying safe."

Protecting them through the lockdown would get your customers to trust you and your brand.

Payment fraud detection

Through predictive analytics and anomaly detection, AI can help retail stores identify cases of payment fraud.

According to Emerj, these AI-powered fraud detection systems can be integrated into the stores’ payment processing systems.

They can help identify instances of employee theft, identity theft and false returns.

They also recommend the action that should be taken after the fraud is detected. The systems can learn from management decisions through machine learning and understand what is considered acceptable.

AI can even predict the time of the year when the store can expect a spike in fraud rates, helping stores be better prepared for it.


Customers don’t need to visit your store and wait in line. They don’t even need to hunt through your website to find the product they want. All they need to do is send the travel bot a message and they’ll get exactly what they want. And then, they can proceed to even make their payments through the chatbot. Talk about a smooth, low-effort customer experience.

Here's an article that'll help you decide whether your business needs an ecommerce site or not!

What are the benefits of AI in Retail Industry ?

Improved Customer Experience

AI-powered technologies can help retailers provide a more personalized shopping experience for customers, such as personalized product recommendations, real-time assistance through chatbots or virtual assistants, and more. By tailoring the shopping experience to each individual customer, retailers can increase customer satisfaction and loyalty.

Increased Efficiency and Productivity

AI can automate routine tasks and processes, such as inventory management and order processing, freeing up employees to focus on more value-added tasks like customer service and sales. This can lead to increased efficiency and productivity, as well as cost savings.

Better Inventory Management

AI can help retailers optimize inventory levels by analyzing sales data, predicting demand, and identifying trends. This can help retailers avoid stockouts and overstocking, which can lead to lost sales and excess inventory costs.

More Effective Marketing

AI can help retailers analyze customer data to better understand their preferences and behaviors, allowing for more targeted and effective marketing efforts. For example, retailers can use AI-powered tools to send personalized offers and promotions to customers based on their past purchases and browsing history.

Increased Sales and Revenue

By providing a more personalized and convenient shopping experience, optimizing inventory levels, and improving marketing efforts, retailers can increase sales and revenue. In addition, AI can help retailers identify opportunities for cross-selling and upselling, further boosting sales.

Overall, the benefits of AI in retail are numerous and varied, and can help retailers stay competitive in an increasingly crowded and fast-paced industry.

Wrapping up

AI can help take retailers to a whole new level and get ahead of their competition by improving the customer experience, increasing their own efficiency and protecting themselves from theft and fraud.

Start improving your customer experiences with Engati’s AI offerings today. Engage with your customers on the platform they love and use the most via a WhatsApp chatbot. Get your own now.

Jeremy DSouza

Jeremy is a marketer at Engati with an interest in marketing psychology and consumer neuroscience. Over the last year he has interviewed many of the world's brightest CX, AI, Marketing, and Tech thought leaders for Engati CX.

Close Icon
Request a Demo!
Get started on Engati with the help of a personalised demo.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
*only for sharing demo link on WhatsApp
Thanks for the information.
We will be shortly getting in touch with you.
Oops! something went wrong!
For any query reach out to us on
Close Icon
Congratulations! Your demo is recorded.

Select an option on how Engati can help you.

I am looking for a conversational AI engagement solution for the web and other channels.

I would like for a conversational AI engagement solution for WhatsApp as the primary channel

I am an e-commerce store with Shopify. I am looking for a conversational AI engagement solution for my business

I am looking to partner with Engati to build conversational AI solutions for other businesses

Close Icon
You're a step away from building your Al chatbot

How many customers do you expect to engage in a month?

Less Than 2000


More than 5000

Close Icon
Thanks for the information.

We will be shortly getting in touch with you.

Close Icon

Contact Us

Please fill in your details and we will contact you shortly.

This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
This is some text inside of a div block.
Thanks for the information.
We will be shortly getting in touch with you.
Oops! Looks like there is a problem.
Never mind, drop us a mail at