Store closures and social distancing have caused a rise in demand for virtual tools and technologies that bring the shopping experience into consumers’ homes. Beauty brands, which were among the first to try out AI and AR to enhance the consumer experience, are increasingly using the technology to suggest products based on people’s preferences and unique characteristics, including skin tone and face shape, as well as to help customers virtually try on products before committing to a purchase. Even before the Covid-19 crisis, the technology had already proved its worth. Figures from Perfect Corp, which develops virtual makeup technology, show that virtual try-on technology generated 2.5 times higher e-commerce conversions for brands and decreased return rates by more than 8%.
As the technology develops and becomes more sophisticated, consumers are progressively trusting in AI to help them make purchase decisions.
“Consumers trust this technology to curate a choice of products, services and experiences that reduce complexity and make life more fulfilling,” writes Andrew Cosgrove, Global Consumer Knowledge Leader & Lead Analyst at EY. “AI knows its “owner” so well that it suggests new and unexpected product ideas or experiences they love.”
Digital suddenly finds itself one of the main commerce channels for retailers. We expect AI and AR are here to stay, as more consumers become aware of their virtues when it comes to convenience, and as these technologies can help retailers to continue trading regardless of what happens in the real world.
1. Bring the in-store shopping experience to your customers’ homes. Here are four ways to make AI and AR work for your business:
Take online shopping to a whole new level by making it possible for consumers to choose from selected products picked out just for them, try out new experiences and test products in ways they wouldn’t have been able to previously – all from the comfort of their homes.
Early pioneers of AI- and AR-powered online shopping include opticians, who realized that consumers still want the option to try on glasses and see what styles suit them before committing to a purchase. Virtual fitting technology has made this possible, with some retailers further elevating the experience using this technology to automatically suggest the perfect frame to suit your face.
Indeed, AI lends itself to verticals where consumers may find themselves bogged down in complex choices. Instead of having to scroll through hundreds and hundreds of beauty products, for example, new services such as My Beauty Matches use AI-powered algorithms, and using the consumer’s previous searches, purchases, and known preferences, they suggest items from large databases (in this case, there are over 400,000 products) that couldn’t be easily browsed by the consumer.
Advances in machine learning help brands to identify consumer styles and preferences to gain a granular level of customer understanding, so they can optimize each customer’s individual journey.
“In one of the worlds we modeled, consumers valued time much more than money,” Andrew Cosgrove, Global Consumer Knowledge Leader & Lead Analyst at EY, said. “Their personalized AI learned about their unique preferences and used those insights to buy most of the things they needed. This allowed them to spend their time shopping only with brands that reflected their values and purpose.”
2. Find the right items across infinite aisles of products
The most successful experiences today tend to be delivered by retailers that have large item assortments and the ability for consumers to personalize their choices. Home goods and furniture retailers are a clear use case, with many using the technology to help customers choose products that will fit beautifully into their homes and match their existing décor.
Online furniture retailer Wayfair is known for using AI to target customers with personalized recommendations. The company’s search algorithm extracts the customer’s style preferences from their search history to present a selection of furniture that is likely to appeal. Another service allows customers to take a photo of a furniture piece they like and match it to a similar item in the Wayfair inventory, which holds millions of products.
AR then takes this a step further by giving consumers the ability to virtually see how products will look before committing to a purchase. Returns on investment have been demonstrated with increased conversion and reduced returns.
AI is proving its worth in fashion too, helping customers choose clothing that will fit them best by analyzing previous purchases and suggesting sizing based on their profile. Iconic jeans brand Levi’s uses an AI-based chatbot to help customers find the perfect pair of jeans. It asks consumers their preferences when it comes to fit, rise, amount of stretch and wash, and asks what size they are in another brand to determine the best size in Levi’s and suggest the right pair.
And in beauty, brands are using the technology to offer services such as instant foundation shade matching and advanced skincare analysis, as well as matching consumers with products and looks that will suit their complexion, style and occasion.
3. Anticipate consumer demands
One of the major benefits that retailers can draw from AI and AR experiences is the amount of data they can collect about their consumers along the way. This data, if collected appropriately, can be used to improve the accuracy of stock and inventory requirements forecasts throughout the year.
“As consumers browse, test features and make purchases, they are providing retailers with an entirely new set of data points,” writes Hamaad Chippa on Retail TouchPoints.
Retailers can then use this information to rethink product assortments for a better shopping experience, or to develop highly targeted marketing campaigns that lead to greater conversion rates. For example, a customer who just bought a whole load of supplies from a pet store for their new kitten is likely to want to sign up for home deliveries of cat food.
AI can also help retailers target consumers with promotions that are more likely to lead to purchases based on past browsing and purchase history. “Whether that is 10% off online, 15% in-store or free shipping, customers automatically receive the promotions that are most likely to make them convert,” writes Imtiaz Mohammady on Forbes.
4. Optimize inventory, both present and future
Retailers are increasingly using AI to gain a better picture of what stock they hold currently and what they will need in future. Although many are used to interrogating their data to anticipate demand and make accurate forecasts, AI is taking the game to new heights by helping them to better prepare for unexpected events and predict and prevent potential supply chain disruptions. Advanced forecasting and replenishment tools can help react to changes, recalculate new quantities to reorder for stores and warehouses, and adjust the supply systems to keep up with demand.
Supermarkets in particular are turning to AI models to help keep store shelves stocked. Companies such as Walmart have been trialing robots that scan aisles for missing products. And in its Walmart Neighborhood Market store in Levittown, New York, the company is exploring the possibilities of AI and using real-time information to help store associates know more precisely when to restock products, so that items are available on shelves when they’re needed.
“Customers can be confident about products being there, about the freshness of produce and meat,” Mike Hanrahan, CEO of Walmart’s Intelligent Retail Lab, said in a press release. “Those are the types of things that AI can really help with.”
Technology to overcome challenges
Retailers need to be able to offer rich and convenient customer experiences, and both AI and AR are very quickly opening up new possibilities that could transform retail, making it more adaptable to diverse situations.
In the not too distant future, AI and AR could help to make retail experiences even more personalized, unique, collaborative and social. Without moving from their sofa, customers may be automatically sent a selection of outfits and beauty products curated just for them in anticipation of an upcoming family party. They will simply scroll through the selection, try everything on virtually, mark down what they want to purchase, and wait for everything to arrive well in time for the big event – no hassle, ultimate convenience.
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