Artificial intelligence (AI) is moving beyond theoretical discussions to become a practical tool for retailers. Recent developments show AI's application in diverse areas, from enhancing customer experience and optimising internal processes to driving sales and informing strategic decisions.
This explainer outlines key areas where AI is making an impact. It provides a framework for understanding how retailers can integrate AI solutions into their operations today, focusing on tangible benefits and measurable outcomes.
Enhancing Customer Experience and Sales
AI-powered solutions directly improve how customers interact with brands and make purchasing decisions. Guided sizing, for example, addresses a common pain point in apparel retail. Boody added $700,000 in annual sales by replacing tape measures with guided sizing, lifting 90-day repeat orders by 19 per cent across 230,000 shopper sessions in Australia and New Zealand.
Smart displays and connected home devices integrate AI for convenience and service revenue. Apple launched the $299 HomeView Smart Display, pushing Siri AI into the connected home. This device ships with accessories from LG and Schneider Electric, aiming to drive services revenue across home ecosystems. Wearable technology also incorporates AI for personalised experiences, such as the Mibro AeroPace Running Smartwatch, which offers Mibro Coach with over 20 goal-based training plans and five selectable AI coaches.
In-store media and smart trolleys represent another AI application. FairPrice deployed 3,000 smart trolleys, indicating a retail shift towards in-store media. Mondelēz generated 61% of its sales growth online this year, expanding retail media and micro-occasion campaigns.
- Implement AI-driven sizing tools to reduce returns and increase repeat purchases.
- Explore smart displays and connected devices for new service revenue streams.
- Utilise AI in wearables for personalised customer training and engagement.
- Deploy smart trolleys and in-store media for targeted promotions and sales growth.
Optimising Operations and Supply Chains
AI is proving critical for streamlining internal retail processes and managing complex supply chains. The digitisation of ordering systems for franchises is one example. BuyBuyCart launched BuyBuyWholesale to digitise franchise ordering, allowing partners to manage replenishment directly while tracking salesperson performance and SKU-level sales.
The demand for AI-related hardware is driving significant economic shifts and supply chain considerations. ASML warns AI chip tool demand will outstrip capacity through 2028, projecting fourth-quarter sales up to €15.2 billion. Customer orders are backed up through 2030. Taiwan's 2026 growth forecast was raised to 10.7% by the IMF, driven by AI demand, making it the only economy worldwide projected for double-digit expansion this year due to hardware shipments.
- Digitise franchise and wholesale ordering with AI platforms for efficiency.
- Monitor AI hardware supply chain forecasts for potential impacts on tech-reliant retail.
- Assess economic growth projections tied to AI demand for market opportunities.
Strategic Infrastructure and Market Response
AI is influencing urban development and retail infrastructure. Seoul is starting a $184 million Yongsan Electronics Market overhaul into an AI hub. Developers will contribute 247 billion won in public funding, converting eight commercial zones into mixed tech facilities. This indicates a strategic investment in AI-centric retail and technology ecosystems.
Retailers are also using AI-linked tools to respond to market volatility. Australian retailers link TradingView to brokers to track currency swings. This integration with ASIC-regulated brokers like EasyMarkets helps import businesses monitor foreign exchange shifts and protect margins.
The broader tech market is reacting to AI advancements. Asian tech shares plunged after a Chinese chipmaker reported a key advance. Institutional investors trimmed positions in established hardware suppliers as competitive risks altered regional earnings projections. Retailers dependent on tech sales or with significant tech investments must monitor these shifts.
- Evaluate urban development projects focused on AI for future retail presence.
- Integrate AI-powered financial tools to manage currency risk and protect margins.
- Monitor tech market shifts driven by AI advancements for competitive intelligence.
What to take away
- AI directly enhances customer experience through tools like guided sizing and smart displays, leading to measurable sales growth.
- Operational efficiency improves with AI-driven platforms for inventory, ordering, and supply chain management.
- Strategic infrastructure investments are creating AI-focused retail and tech hubs, indicating future growth areas.
- Retailers use AI-linked financial tools to mitigate market risks, such as currency fluctuations.
- The demand for AI hardware is a significant economic driver, impacting supply chains and regional growth forecasts.
Questions & Answers
Q.How can AI improve customer experience in retail?
How can AI improve customer experience in retail?
AI can improve customer experience through guided sizing tools, smart displays offering personalised content, AI coaches in wearables for tailored advice, and smart trolleys providing targeted in-store promotions.
Q.What operational benefits does AI offer retailers?
What operational benefits does AI offer retailers?
AI offers operational benefits by digitising franchise ordering, optimising replenishment, tracking salesperson performance, and providing SKU-level sales data, leading to increased efficiency and better inventory management.
Q.How does AI impact retail infrastructure and market strategy?
How does AI impact retail infrastructure and market strategy?
AI impacts infrastructure through the development of AI-centric tech hubs, like Seoul's Yongsan overhaul. Strategically, retailers use AI-linked platforms to track market shifts, such as currency swings, and respond to competitive risks in the tech sector.
Q.Are there specific examples of AI driving sales growth?
Are there specific examples of AI driving sales growth?
Yes, Boody increased annual sales by $700,000 using AI-powered guided sizing, and Mondelēz saw 61% of its sales growth online this year, partly through expanded retail media and micro-occasion campaigns facilitated by data insights.
Reporting behind this briefing
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