AI’s ‘double payoff’ is emerging in retail

While robots may not be folding sweaters anytime soon, retail companies have huge aspirations for AI—to make work easier and more efficient for employees while delivering better and more personalized service to customers.

Retailers have embraced AI at a remarkable rate, with 71% of employees now saying they use it weekly, according to Freshworks’ latest Global AI Workplace Report. 

In doing so, they’re notching a double win by improving employee experience and customer service, says Bryan Gildenberg, managing director of Retail Cities, a global retail consulting firm. That means a lot in a sector where even the slightest margin improvement can mean the difference between winning and losing.

Retail shows the highest AI adoption rate by employees across industries. What’s driving that?

Retail has unique characteristics. The industry has a highly decentralized workforce that requires understanding individual customers where and when you meet them—whether it’s a chatbot interaction online, a customer support call, or in-store interaction.

Retail naturally lends itself to AI applications through selection, curation, and purchase history analysis. Most retail workers now carry AI-powered technology—either store management devices or phones—that puts a wealth of data at their fingertips.

Where is AI delivering the most benefit for retailers today—in employee experience or customer service?

It’s paying off both simultaneously. Retail presents some of AI’s simpler use cases for eliminating drudge work, streamlining operations, and improving customer support. In itself, this isn’t new: The industry has long used algorithms and communication platforms to enhance human interaction. AI represents more of an evolution than a revolution in retail, building upon existing tools like chatbots, task automation, and employee engagement platforms. 

Retailers are trying to figure out how to make their associates’ jobs easier because they know it creates better customer service. AI is an essential tool to that and delivers a double payoff, both in enhancing the customer experience and creating a more engaging and interesting environment for their employees to work in. 

Retailers are investing heavily in AI agents to handle basic customer queries. Where else do you see AI boosting customer experience?

Supply chain forecasting has been an AI stronghold for years, but today’s AI is optimizing store inventory based on demographic patterns and streamlining logistics. For example, AI systems can now enable retailers to sell returned items while they’re still in transit, eliminating delays in processing returns before restocking.

Read also: How AI agents will make smart decisions 

Rather than waiting for items to be returned, processed, and reinventoried, AI can get that item in a customer’s hands faster. AI is also improving inventory management by predicting seasonal demands, reducing overstock situations, and minimizing waste. These improvements directly impact a retailer’s bottom line while freeing up staff to focus on customer interactions.

High employee turnover in retail is a persistent and costly issue. Looking ahead, how might AI impact retail employment and retention?

AI and automation will continue to eliminate much of retail’s grunt work. That’s invaluable. While everyone enjoys getting a commission on a $200 sweater, tasks like inventory counting are universally disliked.

By reducing that drudgery, retail jobs can become more fulfilling and retention-focused. The key will be finding the right balance between automation and human interaction, ensuring that technology enhances rather than replaces the personal touch that makes retail unique.