South African retailers are likely to ramp up their investment in automation and artificial intelligence (AI) in 2024 as they look for new ways to drive innovation and outsmart their competitors. This aligns with global trends, with research from Honeywell showing that six in 10 retailers worldwide plan to adopt AI, machine learning and computer vision over the next year to enhance the shopping experience.
Steven Heilbron, CEO of Capital Connect, a fintech that offers fast and flexible business funding to South African retailers, says that the maturity and accessibility of AI has improved in leaps and bounds in recent years. Cloud-based platforms have made AI easier to use and more affordable, democratising the technology.
AI features and tools are becoming common in software that retailers already use, such as ecommerce platforms like Shopify and customer relationship management systems like Salesforce. This has created opportunities for even small and mid-sized retailers to use AI to improve customer service, enhance decision making and drive efficiencies through automation.
“AI can be used both to drive operational efficiency behind the scene, as well as to improve customer experiences,” says Heilbron. “The technology can be used for applications such as better demand forecasting, so that retailers can make savvy inventory management decisions. In addition, it can enable retailers to offer more personalised customer engagements in-store and online.”
Some examples of AI in action in retail include:
- Personalised recommendations—AI can be used to analyse customer data such as purchase history and browsing behaviour to offer products to each shopper. This isn’t just about ecommerce—retailers that have loyalty programmes can also use AI-driven insight to send personalised recommendations to customers.
- 24/7 online sales and service—AI-powered chatbots can answer customer questions on a business’s WhatsApp line or website all day long. They can provide immediate answers to common questions.
- Inventory management—Predictive analytics tools can use machine learning algorithms to analyse shopping trends and forecast future demand for products accurately. This enables retailers to reduce overstocking or understocking issues, helping them to save money and optimise sales opportunities.
- Marketing—Generative AI tools like ChatGPT and DALL·E can help retailers with limited resources to rapidly create professional-looking marketing materials such as social media images, brochures, marketing emails and web landing pages.
- Pricing optimisation: Retailers can use AI to optimise their pricing strategies by analysing data on customer behaviour, competitor prices, and market trends.
- Targeted advertising: Machine learning algorithms on platforms like Google and Facebook help retailers to target the right message at the right audience when they advertise online.
“It has never been more important for retailers to be agile and innovative to attract and keep customers,” says Heilbron.
“AI can help retailers to grow profitably and become more efficient. Retailers will need access to affordable and convenient finance to capitalise on many of the opportunities they discover through AI. With Capital Connect, retailers can apply for an unsecured, short-term business loan of up to R5 million from our app and the funds will be in their bank account within 24 hours or less, so that they never miss out on a retail opportunity.”