Retail Depravity    

Is AI the solution?

By Katrina McDowell on Dec 10, 2024 in News

With fewer consumers in-person shopping and America’s shoplifting epidemic, retailers have their work cut out. Let’s explore what’s happening in retail stores and how this holiday season can make or break them.

In-store experience competes with e-commerce

Many still crave that in-store shopping experience. Brick-and-mortar retailers can offer unique experiences to retain consumers. Personalized customer service is essential for building trust and community. For example, Nike elevated personalized in-store experiences by leveraging customer feedback collected via in-store surveys and its NikePlus loyalty program. The brand hosts exclusive events for NikePlus members, providing them early access to new releases, limited-edition products and the chance to meet professional athletes. These events create a sense of exclusivity and make consumers feel part of an elite community, strengthening their bond with the brand.

Immersive experiences such as live demos, workshops, and events help get word-of-mouth marketing accomplished and increase the number of consumers inside the stores. For example, Eataly debuted at NorthPark Center in Dallas amid the pandemic. However, its eating, shopping, and learning concepts have made it known, and the numbers are soaring. This gigantic Italian market, with fresh pasta, luxe Italian ingredients, and plenty of local goodies, also serves as a cooking school.

Artificial Intelligence has the potential to revolutionize the in-person shopping experience. The older generation may seek AI technology for convenience, while the younger generation would use AI to shop and engage with brands. IBM reports that three in five consumers are interested in using AI applications while they shop. From obtaining product information, finding deals and promotions, getting service, asking questions, and resolving issues, AI can provide a seamless, dynamic, and contextual experience. This could range from the ability to shop for products from multiple brands on a marketplace with a single checkout to verifying brands’ sustainability. However, implementing augmented reality comes with high costs and requires consumer education.

Shoplifting affects the community

America has a shoplifting epidemic, and it’s not the stereotypical consumer many might assume to be and have on their radar. As everyone deals with inflation, people steal everything from small items in drugstores to larger items worth hundreds of dollars at hardware chains. Some steal because they think items are unjustly expensive or view it as a way to get back at “the man”—larger corporations considered big and evil.

Whatever the reason is, shoplifting takes a financial toll on small businesses and local economies. It reduces access to essential goods when stores close due to theft, thus creating a ripple effect: job losses, decreased foot traffic, and urban blight. The growing trend of store closures in urban areas is due to shoplifting, rising costs and safety concerns. Increased shoplifting rates and organized retail crime impact profit margins. Economic and social pressures of operating in high-density, high-cost locations strain small businesses. When a small retail store finally decides to close up, customer’s reactions affect community ecosystems.

The role of technology and AI in preventing shoplifting

Technology and AI are helping retailers combat shoplifting and reduce inventory shrinkage. Security innovations like AI-drive cameras, RFID tags and facial recognition have all helped. RFID tags help retailers manage inventory accurately and prevent loss. Some retailers use smart shelves that monitor stock levels and customer behaviors—both security measures benefit by reducing waste, improving restocking efficiency, and enhancing customer experience.

With technology booming, the future of retail could hold cashier-less stores. On the pro side, cashier-less stores offer convenience, faster checkouts, and operational efficiency. However, they also come with a high upfront technology cost, maintenance costs, and challenges that potentially alienate less tech-savvy customers.

For example, Amazon Go stores have had successes and failures within its “new kind” corner stores. While its innovative technology and intuitive design offer consumers convenience and feel revolutionary, stores offer limited product selections and tech problems. There are only 22 Amazon Go stores in the U.S. and a handful in the UK. Amazon is now working on smart shopping carts as a new way to change how people shop for food.

The potential of cashier-less stores is undoubtedly intriguing, and using AI to capture thieves could reshape the retail landscape in the future.