Retailers Wooing Holiday Shoppers Try AI On for Size

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This post is the latest in our “Holiday Blitz” series. It’s our editorial focus for the month of November, including topics holiday shopping behavior, year-over-year trend analysis and retail strategies. See the rest of the series here

Seventy-seven percent of millennials say they plan to shop at brick-and-mortar stores this holiday season. One of the primary reasons why is the experience of in-person shopping. The role that sales associates play in motivating in-store purchases can’t be understated, as consumers regularly cite personal attention as a reason why they prefer to shop offline versus online.

What if that wasn’t the case? What if e-commerce retailers could use technology to replicate the role of the in-store sales associate, providing people at home with the type of personal attention that really drives sales?

Technology vendors are working feverishly to make that a reality. Using artificial intelligence and voice assistants, like Amazon’s Alexa, Google Home, and Siri, online retailers are beginning to imagine a world where shoppers can ask their voice companions for recommendations on product fit or gift suggestions in specific price ranges. There may even be a time, not too far in the future, when shoppers can get personal feedback during try-ons inside their own closets, thanks to “smart” mirrors and other virtual reality technology. Companies like Coty and MemoMi have already launched smart mirrors that combine full-length LCD displays with HD cameras and augmented reality technology, allowing stylists to provide more personalized consultations to consumers.

Executives at the firms developing AI, AR, and VR technology believe retailers are close to replicating the in-store experience for online shoppers. Retailers are already using AI to generate more personalized marketing messages, and it’s not far-fetched to think that AI-powered shopping assistants could learn customers’ tastes and offer suggestions that are as targeted and relevant as their human counterparts.

“AI works well, since it enables personalization in real-time rather than just basing suggestions on past behavior that don’t align with the needs of shoppers during the holiday season,” says Darin Archer, chief strategy officer at Elastic Path, an ecommerce software company. “When you’re helping consumers find the right gifts, their own shopping preferences are less relevant.”

Imagine a shopper is searching online for a gift for his wife, and he types “blue shirt” into the search bar. Based on his past purchase history, he would probably get served men’s shirts higher in the search results. If a retailer was using AI to power virtual sales associates, the company would be able to recognize that the shopper was searching for a gift when he started clicking on women’s apparel. Based on that pattern, an algorithm would tailor the search results to favor the gift items his wife would most like to receive.

To be fair, AI is already being used widely, and the technology itself isn’t new for retailers. Analysts estimate that nearly 50% of marketers will have adopted AI or machine-learning technology this year. But the primary use in retail is for data analysis and audience insights. Pushing AI to the next level and using the technology to power virtual sales associates is something retailers are still exploring. Even though the technology looks promising, retailers are especially hesitant to adopt anything new during the incredibly busy holiday season.

Bringing AI Into the Mainstream

Before AI technology can move into the mainstream of retail, it needs a solid platform to run on. The most logical choice is voice. But Archer, like many others, believes voice-powered shopping has not reached the point of ubiquity, where retailers can expect to see mass shifts in consumer habits with slight adjustments to their voice marketing programs.

“Consumers haven’t fully gotten on board with voice shopping just yet, despite the increasing popularity of voice assistants,” Archer says. “We are seeing, however, this holiday season consumers who have used voice to shop are becoming much more confident and comfortable with it.”

A recent study conducted by Elastic Path found that nearly half of consumers who have used voice technology to buy something do so more than weekly. As more people use voice to shop this holiday season, voice shopping will become more habitual and less of a novelty.

While they wait for consumers to catch up, Archer says retailers should work to understand which of their own products and shopping experiences are best suited to voice and other technology platforms. For example, when Elastic Path asked consumers which products they are most interested in purchasing via voice, 69% said groceries, 67% said health and beauty products, and 59% said books, movies, and music. Retailers that sell these products should be investing heavily in voice, as the need to browse for these products is low.

Over at Curalate, a company that works with brands to optimize digital commerce for discovery, CEO Apu Gupta is seeing retail brands lean more heavily into emerging platforms as they develop a better understanding of what’s unique to each platform.

“This is all about making it easier for people to discover products they never knew existed before and discover ways of using those products,” Gupta says.

Tailoring for Engagement

Shopping assistants are just one of many ways retailers can apply AI technology. Whether they use AI for customer service, smarter searches, or more personalized recommendations, retailers should make sure to tailor their initiatives toward engagement and stickiness.

According to Nicole Amsler, vice president of marketing at the AI-powered marketing platform Formation, brands need to keep customers at the center of their marketing efforts and let go of the product-centric approach to marketing.

“More and more brands are prioritizing customer experience and personalizing their promotions. I think a customer-centric strategy will be key to building stronger, long-term relationships with shoppers,” Amsler says. “Shoppers have an increasing number of options when shopping, so brands looking to build these long-term relationships will need to form offers that are personally tailored for greater engagement and stickiness.”

Having the technology to support a full integration of AI is also important. Launching an AI-powered shopping assistant too soon, before it’s fully integrated into the purchasing process, could create additional headaches for the brand and for frustrated consumers.

“Retailers also need to make sure they have the technology to support a full integration of voice commerce into the rest of the buying experience,” Archer says. “Brands won’t be able to take advantage of this new way consumers shop if they aren’t able to have a full view of the purchases a customer has made through a voice assistant, in store, on mobile and online.”

Stephanie Miles is a senior editor at Street Fight.Rainbow over Montclair

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.