AI in Retail: How to Boost Sales This Holiday Season 2024

Artificial intelligence (AI) is powering the future of shopping. In fact, the market for AI in retail is growing quickly; it’s expected to reach $40.74 billion by 2030 from $11.61 billion in 2024, making it clear that AI is changing the way we shop.

And this holiday season, retailers are turning to AI to boost sales by making shopping easier and more personal.

Let’s see how generative AI for retail can make shopping feel even better.

Table of Contents Table of Contents

1. Key Takeaways
2. 10 Use Cases for AI in Retail, With Examples
3. The Bottom Line
4. FAQs
5. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. 10 Use Cases for AI in Retail, With Examples
3. The Bottom Line
Show Full Guide
4. FAQs
5. References

10 Use Cases for AI in Retail, With Examples

AI enables stores to predict what customers might want based on their browsing habits and past purchases, allowing them to recommend items that shoppers are likely to love. This way, customers can quickly find what they’re looking for, which increases sales.

AI in retail also helps merchants improve customer service. AI chatbots answer questions instantly and guide customers through their shopping journeys, whether they need help tracking their orders or they’re looking for product suggestions.

For example, Amazon’s AI-powered shopping assistant Rufus helps customers find products on Amazon by answering questions, providing comparisons, and making recommendations based on their needs and preferences.

By using AI to understand what shoppers want, personalize shopping, and manage inventory, retailers can better meet customer demand and have a successful and green holiday season.

What else is it capable of? How is AI used in retail? Let’s take a look at some examples of AI in the retail industry.

1. Personalized Recommendations

One of the AI use cases in retail is offering shoppers personalized recommendations. AI analyzes customers’ shopping habits, past purchases, and even what they’re searching for to suggest products that are most relevant to them.

Example: Amazon

• For example, Amazon’s AI tracks what shoppers browse and buy to recommend similar or complementary products.
• During the holiday season, it can show customers gift ideas based on what they’ve bought before, helping them find gifts they might not have thought of.

2. Improved Inventory Management

Artificial intelligence in retail helps merchants predict how much of a product will sell, when it will sell, and where it should be stocked.

Example: Target

During the holidays, for example, Target uses AI to analyze past sales trends and predict what products are likely to be in high demand. This helps them avoid having more products on hand than they need and running out of items, ensuring popular products are always in stock for customers.

3. Chatbots for Customer Service

Retailers use AI chatbots to make holiday shopping faster and easier by quickly answering customer questions, checking whether products are available, tracking orders, and providing gift ideas.

These chatbots are available 24/7, which means customers don’t have to wait for help during the busy holiday shopping season.

Example: Walmart

Walmart’s Gen AI-powered customer support assistant provides personalized shopping support, helping shoppers find products, answering questions, and even helping them manage returns.

4. Reducing Cart Abandonment

AI helps retailers reach customers who show interest in items but don’t purchase them by displaying ads for those products on social media or other websites and sending personalized emails, for instance. Reducing cart abandonment can help merchants increase holiday sales by turning sales that might have been lost into completed purchases.

Example: DICK’S Sporting Goods

For example, Dick’s Sporting Goods uses AI in e-commerce to help bring back customers who leave items in their carts. The company sends personalized emails, shows targeted ads, and offers discounts based on what customers are shopping for.

AI also helps predict when shoppers might abandon their carts and sends automated purchase reminders, while chatbots offer help or deals in real time to encourage customers to finish their purchases.

5. Supply Chain Optimization

AI helps make the supply chain more efficient by predicting delays and managing stock levels better. Retailers can use AI to track which products are in high demand and automatically adjust their orders from suppliers. This helps ensure that stores don’t run out of popular items during busy holiday shopping times.

Example: Walmart

Walmart, for example, is using AI to enhance its supply chain by optimizing delivery routes and streamlining warehouse operations to ensure that products are shipped to stores more quickly and cost-effectively.

6. Fraud Detection & Prevention

During the holidays, shopping increases, and so do fraud attempts. AI helps retailers spot unusual behavior or transactions that might indicate fraud.

Example: PayPal

For example, PayPal uses AI to look for patterns, such as unusual purchases or login attempts. If the system detects something suspicious, it flags the transaction, protecting both the customer and the retailer from fraud during the busy shopping season.

7. AR to Enhance the In-Store Experience

One use of AI-powered augmented reality (AR) is to help stores check a customer’s size and suggest products that fit them best.

Example: Nike

Nike Fit uses AI-driven augmented reality to check a customer’s foot size and recommend the best-fitting shoes. This makes shopping more personal and helps customers find the right shoes to wear to their holiday work parties. It also makes shoppers more confident in their purchases and leads to fewer returns.

8. Voice-Activated Shopping

AI-powered voice-activated shopping lets customers make purchases or add items to their carts just by speaking to a voice assistant, such as Amazon’s Alexa, Apple’s Siri, or Google Assistant.

The AI listens to what customers say, understands their requests, and can suggest products based on what they’ve bought before. This hands-free way of shopping makes it easier for customers to shop while doing other things, especially during busy times such as the holidays.

A number of merchants have implemented this technology, including Amazon, Best Buy, and Walgreens.

Example: Walgreens

Walgreens implemented voice-based artificial intelligence technology to improve the in-store experience for associates and customers. It introduced Theatro’s enterprise-wide, voice-powered AI solution at 9,560 stores.

9. Smart Product Bundling

Retailers can use AI to group products by looking at what customers like to buy. AI suggests the best items to bundle together based on what people often buy together, creating deals that match each shopper’s interests. This makes shopping easier and more personalized.

During the holiday season, AI-driven bundles can encourage customers to buy more by offering discounts on popular or related items, which helps increase sales and makes shopping more fun.

Example: Walmart & Target

Retailers, including Walmart and Target, use product bundling to attract shoppers and boost sales. These retailers might bundle items such as gaming consoles with accessories or offer seasonal bundles for the holidays.

10. Customer Sentiment Analysis

AI-powered sentiment analysis helps stores increase holiday sales by checking customer reviews, feedback, and social media to see how people feel about certain products or deals. It can quickly tell if customers are happy or unhappy, so stores can change their marketing and suggest products that people are excited about.

For instance, if shoppers are talking positively about a specific product, the retailer can push that product more during the holidays to drive more sales. AI can also predict trends, customize offers, and make shopping more personal, which attracts more customers​.

Example: Walmart

Walmart uses AI to analyze customer feelings and improve the products it offers, especially during busy shopping periods such as the holidays. This helps Walmart see which products customers like or don’t like so the company can be sure the right products are available and offer discounts or deals on items customers really want.

The Bottom Line

Retail AI is changing how merchants connect with customers, making shopping faster, easier, and more personal. By learning what shoppers like, keeping the right products in stock, and offering real-time support via AI shopping assistants, AI helps retailers stay competitive during the busy holiday season.

With advancements in AI technology, using AI in retail will likely make each holiday buying season even easier and more enjoyable for retailers and customers.

FAQs