Microsoft expert shares how AI will impact retail in 2024

AI is everywhere in retail

Artificial intelligence (AI) is having a transformative impact across the retail industry. Virtual assistants are helping shoppers choose the right outfit. Real-time inventory management platforms are keeping the shelves fully stocked. Hyper-personalised marketing programs are luring in new customers. And so much more.

In fact, generative AI alone is predicted to contribute up to $9 billion annually to Australia’s retail sector by 2030. No wonder so many retailers regard it as a must-have tool for 2024.

Question is, how can you start putting AI to work? To find out, we spoke to Sarah Carney, National Technology Officer, Microsoft Australia and New Zealand. Here are some of her key takeaways about how AI is changing the retail landscape.

Shoppers embrace AI-powered shopping

Thanks to the powerful personalisation and automation that AI delivers, it’s a lot easier for customers to discover, research and complete purchases.

Sarah explains. “AI-driven recommendation systems elevate the customer experience, offering personalised product suggestions based on intricate analyses of individual preferences and behaviours. Virtual assistants and chatbots, powered by AI, provide real-time support—while capturing valuable insights from customer interactions to enhance service quality.”

And, if customers have questions about a product or service, brands can provide more timely responses with help from AI tools. “We are starting to see more and more companies using AI in their call centres to monitor how customers feel about their calls in real-time and react accordingly with the best responses,” says Sarah.

All of this helps elevate the customer experience—which in turn drives more sales.

Retailers reap behind-the-scenes benefits, too

It’s not just consumers who benefit from an AI-powered retail experience. According to Sarah, AI creates a more streamlined operational process for store owners and frontline staff. “By creating simpler frontline experiences, automating mundane tasks and integrating modern technologies, retailers can empower staff to focus on more value-added, personalised customer-facing tasks,” she says.

“And, through predictive analytics, retailers can finely segment their customer base and tailor marketing strategies with unprecedented precision. These predictions can help identify growth markets and shape expansion strategies.”

Inventory management is transformed, too. “AI can have a significant impact on how retailers manage this often-tricky business function. It can help predict future demand and trends by analysing historical data, current events and external factors, such as weather, holidays and competitors. Armed with this information, retailers can better optimise inventory management, pricing strategies, marketing campaigns and product development,” says Sarah.

AI isn’t just for the big brands

Adopting a ground-breaking technology like AI might feel out of reach for some smaller eCommerce businesses—particularly those whose resources are already stretched. Yet the reality is that AI can help make existing resources go further.

“Tools like Microsoft Copilot can reduce the number of mundane tasks that small businesses need to complete, such as order tracking and customer service. This frees up more time to focus on bigger ticket items like innovative customer experiences and new products,” says Sarah.

And these tools don’t have to break the bank. “Free tools like Copilot for Bing can help with research tasks, drafting summaries and social media content calendars; Bing Image Creator can generate images based on prompts; Copilot in Windows 11 can search for information from across your personal computer to help you be more productive; and more advanced tools like Copilot for Microsoft 365 can help automate tasks across everyday Microsoft 365 applications like Word, Excel and PowerPoint.”

How can small businesses get started with AI in 2024?

One area that is ripe for disruption using generative AI is social media and marketing. Retailers can reap immediate benefits when using AI-powered tools for with social media management—whether it’s to analyse data about which types of content will perform better with specific audiences, or to prepare the actual posts based on that data.

Another area that’s easy to get off the ground is an AI-powered chatbot or virtual assistant, which helps you deliver better customer service while reducing the burden on your own team.

Or, to help increase cart size, what about personalised product recommendations? With the right AI tool behind you, you can use existing data to make real-time recommendations that your customers will love.

The bottom line? AI is opening up remarkable new opportunities for eCommerce in 2024 and beyond. As more retailers jump on board, customers will come to expect the hyper-personalisation and convenience it delivers—and if you’re not thinking about adopting it, you could get left behind.