Retailers Use AI to Combat Shrinking Seasonal Workforce, Surging Customer Demands

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If there’s one thing retailers have learned from the pandemic, it’s that Americans love to buy. Money might be tight and local restrictions might keep some shoppers at home, but holiday sales are anticipated to be through the roof in 2021.

The National Retail Federation is projecting November and December retail sales of $843 billion to $859 billion, up 8.5% to 10.5% from 2020. NRF’s new forecast tops the previous high of $777 billion in 2020, along with an average gain of 4.4% over the past five years.

With that expected surge in holiday sales comes another kind of surge — one that retailers are less excited to embrace.

Increases in customer service tickets are expected to come just as seasonal workforces are hitting all-time lows. According to Puneet Mehta, founder and CEO of the AI platform Netomi, about 25% fewer agents are working in seasonal customer service roles now than before the pandemic. Customer service accounts for a lot of the seasonal roles retailers have traditionally hired for, and now retailers are looking at leveraging technology to fill that labor gap.

“The retailers that are leveraging AI to automate resolutions to customer issues are better able to protect against this shortage and maintain a more consistent customer experience as ticket volume increases,” Mehta says. “AI agents can instantly resolve repeatable tickets like order status and returns autonomously, letting human agents focus on more complex scenarios.”

Mehta anticipates that retailers that rely on human-only workforces will see resolution time rise significantly and customer frustration increase, and it will be harder for these retailers to turn short-term demand during the holiday season into long-term relationships.

Beyond scaling their customer service operations, national retail chains are also using AI to prevent returns and drive revenue this holiday season. As Mehta explains, retail brands have begun setting up AI agents to recommend gifts and cross-sell based on customer profiles, shopping behaviors, and items in online carts.

AI is also helping decrease supply chain issues, or at least lessen the impact when those issues delay customer shipments. When an order is affected, AI agents can automatically act on status changes from back-end systems to preemptively let customers know that their orders will be delayed. This eliminates the surprise and frustration that comes from expecting a package that doesn’t arrive and needing to reach out to a company. In some cases, AI agents can even use data from customer profiles and the specifics of an order to suggest alternative items that would be delivered on time or ask customers if they would like a refund.

AI Prevents Return Losses

Retailers lose billions on product returns each year, particularly during the holiday season. With more customers shopping online, and some fitting rooms still closed due to pandemic restrictions, retail brands have had to get creative. 

Mehta says AI can be used to reduce losses associated with returns by preemptively intervening before checkout. For example, AI technology can track behavior and situations—including shoppers adding two of the same item in different sizes to a cart, or when a shopper checks the return policy multiple times. When these situations occur, a trigger is set and an AI agent can initiate a conversation with the online customer to help educate and persuade the shopper to ensure they are happy with their purchase.

“This is now the ‘relationship economy,’ and customers care as much about experiences as they do price and even quality,” Mehta says. “In this environment, trust is the new currency, and retailers need to obsess over it.” 

To build that trust, retailers need to meet rising expectations. Consumers now demand effortless shopping experiences across platforms, and this includes rapid resolution of any issues.

“Trust is easily depleted following one bad interaction, and the impact can last forever,” Mehta says. “This is why retailers are leveraging AI to build, maintain, and grow customer trust through personalized, always-available 1:1 interactions at scale and proactively resolve issues before they even exist.”

​​Stephanie Miles is a senior editor at Street Fight.

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.