Louise Welsby, a marketer and communications specialist, and former chair of The Giftware Association, is the founder of Buy-From, a creative agency which helps businesses articulate their purpose, vision and story.
Addressing an audience on the RetailRevealed stage at Top Drawer earlier this month, Louise shared her views on AI and the future of the shopping.
“The retail industry in the UK is undergoing a profound transformation, driven by the rapid advancement of artificial intelligence (AI). More than just a buzzword, AI is reshaping how businesses operate and how consumers interact with brands. This technological revolution offers unprecedented opportunities to enhance customer experiences, optimise operations, and drive innovation.
According to Forbes, by 2025, 80% of retail executives expect their companies to use intelligent automation technologies. However, AI isn’t a plug-and-play solution. To truly harness its potential, businesses need a strategic approach.
Generative AI, particularly models like OpenAI’s ChatGPT, is revolutionising business processes by automating complex tasks, enabling businesses to focus on strategic growth. For example:
- Boosting Efficiency: AI automates routine tasks, freeing resources for strategic activities.
- Enhancing Creativity: GenAI generates unique content, from marketing materials to product designs.
- Improving Decision-Making: AI analyses large datasets to provide actionable insights for better business decisions
One of the most significant ways AI is transforming retail is through the personalisation of the shopping experience. With the ability to analyse vast amounts of data, AI can predict consumer preferences and behaviours with remarkable accuracy. This predictive capability allows retailers to offer personalised recommendations, promotions, and content that resonate with individual customers, making shopping not just a transactional activity but a tailored experience.
For example, Kingfisher, the parent company of Screwfix and B&Q, has integrated AI into its marketing strategies to create more personalised customer interactions. By launching a marketing automation platform in partnership with customer engagement specialist Braze, Kingfisher has been able to tailor email communications, app notifications, and in-app messaging, significantly enhancing its data capabilities and driving more personalised customer engagement. This initiative, launched in 2022, illustrates how AI can be used to deepen customer relationships through more targeted and relevant interactions.
Beauty brand Estée Lauder is also focusing on enhancing customer experience through AI. Its Clinique Lab, introduced in March 2023, provides a metaverse space where customers’ avatars can access Skin School videos, chat with consultants, purchase products, and collect discounts. The Lab incorporates AI-driven diagnostic tools like Clinique Clinical Reality and Foundation Finder, which offer personalised skincare recommendations based on a quick photo upload. This innovative approach allows customers to receive highly tailored product suggestions in an interactive, virtual environment, pushing the boundaries of what is possible in digital retail experiences.
Beyond enhancing the customer experience, AI is also revolutionising inventory and supply chain management—a critical area for retail profitability. Traditional inventory management relies on historical data and manual processes, which can lead to overstocking or stockouts. AI, on the other hand, uses real-time data and predictive analytics to optimise inventory levels, ensuring that the right products are available at the right time.
Additionally, AI technology eliminates human error by automating real-time inventory tracking and management. Machine learning algorithms analyse sales data, customer demand, and stock levels to ensure correct inventory levels and counts, resulting in reduced overstocking and stockouts. For example, Ikea has embraced AI to enhance its customer engagement strategy with the launch of Ikea Kreativ, an AI-driven digital home-design experience. This platform allows customers to create 3D replicas of their homes and experiment with Ikea products, enhancing customer confidence and encouraging purchases. The AI-powered tool not only provides a novel shopping experience but also helps in maintaining accurate inventory by predicting demand based on customer designs and preferences.
AI’s impact extends to the supply chain as well. Ocado Solutions for example, focuses on using AI to enhance supply chain efficiencies through robotics. Its robotic picking arms, guided by AI, learn how to handle items more effectively, increasing the productivity of its customer fulfilment centres by over 50%. These examples underscore the transformative potential of AI in not only improving operational efficiencies but also reducing waste and enhancing supply chain agility.
Plus, AI is making a significant impact in customer service and engagement,transforming how retailers interact with their customers and enhancing the overall shopping experience.
Exceptional customer service is a key differentiator in today’s competitive market. AI enhances customer interactions by personalising experiences and streamlining operations. The integration of GenAI into customer service brings tangible benefits across various metrics:
- Reduction in Response Time: AI processes and responds to customer queries instantly, reducing response times.
- Increase in Customer Satisfaction Scores: Personalised, quick, and accurate responses lead to higher satisfaction.
- Cost Reduction: Automating routine interactions reduces the need for large human workforces.
There are several practical applications of AI in customer service:
- Automating Customer Enquiries: AI resolves common queries like product information and availability in real-time.
- Processing Returns and Refunds: AI streamlines returns, verifying eligibility and processing refunds quickly.
- Updating Customer Information: AI ensures data is updated accurately, enhancing service delivery.
AI technology is also a game-changer for boosting shopper and customer engagement. Machine learning algorithms analyse customer data to offer tailored product suggestions, anticipate needs, and provide personalised promotions. Retailers like Estée Lauder are setting a high standard with AI-driven customer engagement tools that create a highly interactive and personalised shopping experience. For example, Sephora uses AR and AI-driven tools like virtual try-ons and personalised skincare recommendations based on customer data and preferences. These tools make it easy for customers to select the right product for their unique skin type—without having to set foot in a store.
AI has also revolutionised customer service, allowing retailers to meet customer demands more efficiently and effectively. AI technology can handle multiple customer support requests simultaneously around the clock, automating responses, reducing wait times, and personalising interactions. Currys, a UK electronics retailer, has introduced KettyBot robots in stores to help customers navigate and find products, freeing up staff to provide expert advice. This innovation enhances the in-store experience by blending AI with the human touch, ensuring that customers receive both efficient service and knowledgeable assistance.
AI has also proven to be a powerful tool in revolutionising marketing strategies. It helps retail marketers make data-driven decisions, enhances marketing forecasting, and analyses user data to create highly personalised and targeted campaigns. AI’s ability to process large datasets quickly allows it to complete these tasks in a fraction of the time that a human team could manage. This efficiency is why 91% of marketers already use AI as a companion in their jobs.
While the benefits of AI in retail are clear, it is essential to address the ethical considerations that come with the adoption of this technology. As AI becomes more integrated into retail operations, concerns around data privacy, security, and bias must be carefully managed. Retailers have a responsibility to ensure that their use of AI is transparent, fair, and respectful of customer privacy.
Data privacy is a particularly pressing issue. With AI systems relying heavily on customer data to function effectively, retailers must be vigilant in protecting this data from breaches and misuse. Compliance with regulations such as the General Data Protection Regulation (GDPR) is not just a legal obligation but a critical component of building and maintaining customer trust.
Moreover, there is the issue of algorithmic bias. AI systems can inadvertently perpetuate biases present in their training data, leading to unfair outcomes. Retailers must take steps to regularly audit their AI systems, ensuring they operate fairly and inclusively. This is especially important as consumers become more aware of and concerned about ethical AI practices.
As we look to the future, it is clear that AI will continue to play a pivotal role in the evolution of the retail industry. The UK retail sector, in particular, stands to benefit significantly from the adoption of AI technologies, which offer the potential to enhance customer experiences, optimise operations, and drive innovation.
However, the successful integration of AI into retail requires more than just technology; it requires a strategic approach that considers the needs and expectations of customers, employees, and stakeholders. By embracing AI responsibly and ethically, retailers can unlock new opportunities for growth and remain competitive in an increasingly digital world.
In conclusion, AI is not just the future of shopping; it is the present. Retailers who are quick to adapt and innovate with AI will not only meet the evolving demands of their customers but also set themselves apart in a crowded marketplace. The future of retail is here, and it is intelligent, personalised, and driven by AI.”
Top: Louise Welsby delivered a keynote speech at Top Drawer on how AI is transforming retail.
