To remain competitive in today’s market, retailers must prioritise productivity – an area in which AI excels. However, AI’s strength is built on leveraging data. To get the best value out of their deployment, retailers must ensure the information they use is accurate and reliable.
Mainstream adoption of Artificial Intelligence (AI) has grown exponentially since the hype around Generative AI and Large Language Models began in early 2023. Businesses in multiple industries have explored using these technologies to automate manual processes and create new efficiencies.
In the retail sector, brands also note AI’s ability to improve customer service through personalised recommendations, improved demand forecasting, and inventory-based decision-making. Ultimately, AI has the potential to significantly improve retailers’ operations across every level of their organisation.
According to Deloitte, as retailers have started to realise the role AI can play, the technology’s popularity is showing no signs of slowing down, with 91% of retail executives voting AI as the top game-changing retail technology over the next three years. However, retailers must consider a range of factors before jumping into full-scale deployment to realise a return on their AI investment.
Key Challenges Facing Retailers
To remain competitive in today’s market, retailers must prioritise productivity – an area in which AI excels. However, AI’s strength is built on leveraging data. To get the best value out of their deployment, retailers must ensure the information they use is accurate and reliable.
If a retailer has an inventory accuracy of less than 70%, any AI calculations that retailers use are prone to inaccuracy and cannot be trusted. With Deloitte’s research also showing that 71% of customers today expect personalised experiences from their data, meeting customer expectations becomes increasingly difficult without reliable information.
This compromises both short-term sales opportunities and long-term customer loyalty. A Statista study revealed that only 9% of US shoppers believed AI improved their online shopping experience, further highlighting the challenges retailers face using inaccurate data sets. Ultimately, accurate inventory visibility is critical to the success of AI inventory-related operations, which is where the transformation of item-level RFID technology comes into play.
How AI and RFID Combined Can Transform Inventory Management
To operate effectively, retailers must have visibility over the stock they have and the stock they don’t have. This empowers retailers to ensure product availability, optimise orders and reduce costs. However, information can become inaccurate due to manual stock counts and inconsistencies when products are distributed across multiple locations.
Deploying RFID technology can significantly increase inventory accuracy by up to more than 98%, providing retailers with accurate datasets that AI can leverage to drive success. With RFID in place, retailers gain access to detailed information in critical areas such as stock levels, availability, location, and sales trends.
By inputting this data into an AI ecosystem, the technology can analyse data almost instantly to identify any patterns in product demand. By using both RFID and AI, retailers can accurately predict when to replenish stock levels and better capitalise on peak shopping periods to maximise sales and increase revenue.
The Role of AI and RFID in the Customer Experience
A retailer’s ability to deliver high-quality customer experiences can create a competitive advantage, which is why customer service is one of the most common areas where retailers deploy AI. In particular, retailers are using AI to provide personalised recommendations to customers, elevating customer service to a new level.
However, if a retailer offers a personalised recommendation for a product that isn’t in stock, this results in cancelled orders, and the customer experience plummets. Being unable to fulfil customer orders clearly indicates low-quality experiences, and with a wide range of brands to choose from, making the switch has never been more accessible for customers.
However, by leveraging the data provided by RFID, which is continually updated in real-time as stock is manufactured, transported, stored, and sold, retailers can confidently use AI to provide bespoke interactions without the risk of cancelling orders.
RFID solutions also provide accurate data on purchase history and preferences, and when analysed by AI, it can provide highly personalised recommendations based on individual customer context. Ultimately, this helps deliver bespoke interactions that increase sales and brand loyalty.
The Right Combination
While AI has been around since the 1950s, its vast potential remains largely untapped. Retailers are increasingly looking for new ways of how technology can reshape their businesses. However, retailers have to deploy AI effectively to achieve meaningful results.
With RFID’s ability to provide accurate and detailed data in real-time, the technology offers the perfect match for AI to deliver on its promise of delivering exceptional customer service and creating new efficiencies in-store. Without this foundation in place, retailers run the risk of not being able to make a return on their AI investment.
