5 ways retailers can use AI to improve the customer experience

Ashleigh Bates 30-May-2023 09:56:09

The retail landscape has significantly transformed in recent years as retailers embrace innovative technologies to improve the customer experience and stay competitive. Within this digital transformation, Artificial Intelligence (AI) has emerged as a powerful tool that enables retailers to understand customer preferences, provide personalised recommendations, and create seamless buying journeys. This blog discusses 5 ways retailers can harness AI to improve the customer experience and increase satisfaction, loyalty, and ultimately business growth.

Before you read on take a look at our Artificial Intelligence solutions for retail.

1. Personalised Recommendations

One of the most impactful ways retailers can leverage AI is by offering personalised recommendations to customers. Retailers can use AI algorithms to analyse huge amounts of customer data, including purchase history, browsing behaviour, and demographic information to identify patterns and understand the customer's preferences. Tailoring product suggestions based on this data allows retailers to help customers discover relevant items and save them from feeling overwhelmed by all the different options. Overall, this facilitates a smoother shopping experience and fosters a sense of loyalty and engagement, making customers more likely to continue shopping with the retailer.

2. Chatbots

AI has also allowed retailers to become more responsive to customers through AI-powered chatbots. These virtual assistants are transforming customer service within the retail industry, as they can handle customer queries, provide product information, and even assist with purchase decisions, offering 24/7 support. Chatbots use natural language processing (NLP) and machine learning algorithms to understand and respond to customer enquiries in real time. This improves the customer experience by providing instant assistance and streamlines the shopping experience to make customers feel more valued. It also frees up resources. Businesses can depend on automation to answer common questions and complete various actions, whilst they focus their attention on more complex issues.

3. Inventory Management

Maintaining the right inventory levels is crucial for retailers to meet customer demands and have the right amount of stock so they don't end up with too much or too little. AI algorithms can analyse historical sales data, market trends, and external factors to accurately forecast demand. The more retailers understand customer behaviours and trends, the better they can meet demand and present the best products. Using AI to optimise inventory management enables retailers to deliver seamless shopping experiences to their customers by reducing instances of product unavailability and improving fulfilment efficiency.

4. Checkout Process

The checkout process also plays an important role in the overall customer experience. AI can streamline this process by enabling frictionless and secure payments with facial recognition, biometrics, and AI-powered fraud detection algorithms. As a result, retailers can create a seamless and trustworthy shopping experience, increasing customer satisfaction and reducing cart abandonment rates.

5. Virtual Try-On

For retailers in the fashion, beauty, and furniture industries, AI-powered virtual try-on and augmented reality (AR) offer immersive experiences that bridge the gap between online and offline shopping. Customers can virtually try on clothing, test makeup shades, or visualise furniture in their living spaces. By integrating AI and AR technologies, retailers can enhance the customer experience, improve confidence in purchase decisions, and reduce the likelihood of returns.


In the rapidly evolving retail landscape, AI has become essential for retailers looking to thrive, remain competitive and meet customer expectations. By harnessing the power of AI, retailers can provide personalised recommendations, enhance customer engagement through chatbots, optimise inventory management, streamline the checkout process, and offer immersive virtual try-on experiences. These AI-driven enhancements significantly improve the customer experience, leading to increased customer satisfaction, loyalty, and, ultimately, business growth.

Implementing the systems to support AI in retail can seem overwhelming, but it doesn’t have to be. With an expert partner like DSP, you will be supported through every step of the process. Check out our AI services for retail or speak to one of our experts to learn more about how you could transform your business with AI.