How AI Can Fix What the Internet Broke

In-store shopping has undoubtedly changed since e-commerce’s acceleration in 2020. As the world came to a halt, staffing and inventory challenges became the norm, painting a bleak picture for brick and mortar. But while the internet can be an easy punching bag, it could also make shopping better, even for the physical store.

Trends pop up overnight, riding the wave of virality from cowboy core to cherry red makeup to the resurgence of cargo pants. Consumers expect to be able to buy what they want when they want it and where they want it, no matter the supply chain and inventory obstacles a certain item might present. It’s paramount that retailers ensure their inventory keeps up with the pace of trends, or they risk looking like laggards and missing out on repeat customers.

While the internet and social media fuel these trends, AI is powering the omnichannel experience and bringing disparate data together to blend the physical and digital retail experience.

A mutually beneficial relationship

Brick and mortar took the gold in product discovery for a long time. A person could visit a store looking for a jacket with little to go on beyond a mood or vibe, but as they walk through the space, they might see a jacket that’s more comfortable and cheaper while still on trend. E-commerce struggled to mimic the same journey and identify “mood,” until AI came along. Now, AI models can analyze product images and identify those characteristics to show people similar items. It’s particularly handy when faced with out-of-stock items so brands can try and retain wallet share by suggesting alternatives that meet the same criteria.

E-commerce has a lot to offer physical retail as well. AI has improved in-store shopping simply by connecting shoppers to retail locations. It’s much easier for shoppers to find the retail store and more importantly, find the product they need at the shop they want. This is only possible by using AI and its predictive models to influence inventory management. Retailers can see real-time stock levels and plan their stores more efficiently based on best-selling items. AI can help plan for product demand, reduce overstocking, and prevent lost sales from out-of-stock products. The retail landscape is increasingly competitive as consumer loyalty wanes, and the cost-conscious shopper looks for the best deal. Retailers can stay in the game by, at the very least, ensuring their products are available when shoppers are ready to make a purchase.

Faster and more flexible fulfillment

On the one hand, the internet led to high delivery expectations whereby people anticipate next-day or even same day delivery for their online purchases. On the other hand, consumers have become more accustomed to alternative fulfillment models like buy online, pick up in-store (BOPIS) and micro-fulfillment centers or pick-up lockers to avoid expedited shipping costs while still getting fast delivery. These different fulfillment options have led to more complex supply chains and inventory management, but the brands that do it right are creating a seamless shopping experience.

As AI learns from customer engagement and shopping behavior, retailers can better manage inventory awareness and fulfillment offerings and drive urgency. If a sporting goods company makes a hefty investment to sponsor a celebrity athlete, they will want to measure the ROI of that initiative. They will look to closely track which products in the collaboration flew off the shelves, which ones were maybe less popular and all the nuances in between.

These retailers can use AI to promote products tied to those events or collaborations, drive urgency to limited-time offerings and rank in-stock inventory while deprioritizing frequently returned items, for example. This also means shoppers get better product recommendations with different fulfillment options depending on how quickly they want or need that item.

Location-aware recommendations tied to inventory status are becoming more integrated throughout the industry. Shoppers demand accurate and real-time product options tied to speed and convenience.

Winners embrace a “phygital” playbook

Instead of pitting physical and digital retail against one another, we need to consider them as a unified experience. By planning with the “phygital” in mind, retailers can use predictive insights for inventory management and understand which trends perform better. There are algorithms out there that show the lifecycle of a trend and insights that are valuable in the face of limited warehousing space or physical retail footprints. Brands can also tailor their marketing efforts to better align with shopper behavior and emerging trends.

The combination of physical and digital creates a favorable relationship between teams as they reimagine product catalogues, deal days and sponsorship opportunities to promote an omnichannel and unified shopping experience.

The internet has made retail smarter, but the key is not to lose the personal interactions and industry expertise that make shopping a breeze. Consumers still want to be delighted and pleasantly surprised with new product recommendations which means brands will have to find the balance between serving hyper-customized offerings and over-personalizing to the point of hindering product discovery.