How AI Helps Retailers Expand Their Market Reach

Artificial intelligence (AI) is transforming the retail industry in many ways. Retailers are leveraging AI to better understand customers, personalise recommendations, optimise supply chains, and expand their reach into new markets and demographics. Here are some of the ways AI is helping retailers broaden their market reach and, in turn, boost their profitability.

Analysing Customer Data

AI tools can analyse huge amounts of customer data from sources like web traffic, purchase history, social media, and more. This gives retailers deep insights into customer demographics, psychographics, purchasing habits, and preferences. With this information, retailers can micro-target marketing campaigns to reach new customer segments. AI-powered analytics help retailers identify underserved markets and customise offerings for different regional tastes.

Personalising Recommendations

Recommender systems are one of the most popular AI applications in retail. These systems track customer browsing behaviour and purchase history to predict products they may want to buy. Retailers can then display personalised product suggestions on their e-commerce sites and apps. According to Salesforce, personalised product recommendations can lead to a 10-30% increase in sales. When recommendations resonate with customers’ preferences, retailers can gain loyalty and repeat business. Hyper-personalised recommendations also help retailers market to niche customer groups that may be overlooked.

Optimising Marketing Spend

AI tools can optimise where, when and how much retailers spend on marketing. By analysing past campaign performance data and economic trends, AI systems can recommend the best channels and budgets to acquire new customers. This allows retailers to cost-effectively expand their reach into different markets. AI-driven marketing mix modelling also allows retailers to double down on the campaigns that work best.

Improving Supply Chain Efficiency

Retailers can leverage AI to enhance supply chain operations. AI-powered sensors can track inventory in real-time. Demand forecasting algorithms can then predict optimal inventory levels to meet customer demand. By reducing stock-outs and overstocks, retailers avoid lost sales opportunities. Improving the accuracy of demand forecasts also allows retailers to efficiently scale production and better manage deliveries when entering new regional markets.

Providing Personalised Customer Service

Chatbots and virtual assistants equipped with natural language processing can deliver personalised customer service at scale. With conversational AI, retailers can resolve customer queries faster and more efficiently. Chatbots can also upsell and cross-sell products based on individual customer data. Streamlining customer service this way allows retailers to cater to a larger customer base across geographies. Virtual assistants that understand local languages and accents can help retailers expand into new non-English speaking markets.

AI Merchandising

Retailers are turning to AI-powered merchandising solutions from providers like Retail Express to optimise their product assortments and inventory. By analysing past sales data, customer demographics, market trends and other inputs, AI algorithms can accurately predict customer demand. This allows retailers to stock the right products at the right time. AI tools can also dynamically recommend pricing and promotional strategies to boost specific product sales. Additionally, machine learning algorithms track which products are frequently purchased together. Retailers can use these AI-generated insights to better curate product assortments and create compelling cross-sell offers.

With the right strategy, AI can help retailers cost-effectively acquire, serve and retain new customers both within existing markets and beyond. The result is expanded reach, higher conversions, and ultimately faster revenue growth.