How AI is transforming the retail industry | Engati

Retail is never going to stay the same. It’s about to be revolutionized. AI is making retail smarter. It’s giving organizations access to deeper business insights, helping them deliver better experiences to their customers, and even helping reduce the risk to their employees and customers during and after the COVID crisis.

So, how does AI help with retail?

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.

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.


AI can help with payments in a few different ways.

Cashierless 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 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 experience.

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.

Here is an article about Responsible and ethical AI and why is it important in business.

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