Artificial Intelligence might be the answer UK retailers need

With high inflation hitting a 40-year high last autumn and the rising cost of living affecting up to 92% of households in the UK, according to Statista, customer behaviour is changing, causing complications for retailers. In the first week of the year, prices in stores increased by 8% to reach a record level.

Retail trends for 2023 suggest what retailers could do to avoid having to cut margins but also to retain customers, who are increasingly looking for value deals and, as they become more price-conscious, are changing their shopping behaviour and keeping a close eye on their spending.

Cloud-based analytics can help marketers collect, track and analyse data that is not stored in local systems but in the cloud. Companies can manage this data to identify trends and thus improve business results later on.

Thanks to these analytics, businesses can monitor website traffic or even track production efficiency. Detailed insights allow retailers to create modern solutions that transform both business costs and customer satisfaction.

For retailers, understanding customers and their behaviour is crucial, as is the subsequent response. It is the cost of living crisis that has changed this behaviour in a major way and, as prices have not yet stopped rising, it is necessary to speed up innovation and meet customer expectations.

CTS, Sales Team Lead, Andrew Bithell believes "this is where cloud technology is transforming retail, helping companies run sophisticated analytics across multiple data sets to drive vital innovation that will both reduce costs and improve experiences".

Using AI to reduce the number of abandoned baskets during shopping is an opportunity for retailers to minimise lost opportunities. Any item that is added to an online cart while shopping on an e-commerce site but never makes it through to a transaction is considered abandoned by the customer.

Thus, the retailer loses the sale no matter if it was a large or small item. Factors that affect shopping cart abandonment such as complicated procedures to checkout or delivery costs are often responsible for this problem.

The opportunity is to improve the way customers get the products they want. The number of clicks has an impact on the user experience on e-commerce sites. As a result of the reduction in clicks and the associated frustrations, the likelihood of purchase increases as it is easier to navigate the site.

By using Natural Language Processing (NLP), AI can help in finding the desired product even in the case of misspelt or misspoken phrases. NLP technology catches misspellings with up to 98% accuracy and redirects the customer to the correct product.

The customer will therefore not be forced to abandon their shopping cart. Thus, AI can help retailers minimise the number of abandoned goods in shopping carts, which is projected to reach around $4 trillion worth of merchandise.

Customer perception and quality of experience are also an issue related to returns. Annually, free returns cost retailers in the UK £7 Billion. According to 2022 statistics from Drapers, up to 29% of clothing and footwear purchased is returned.

Returns policies are also one of the biggest factors in shopping basket abandonment. For 67% of consumers, an unsatisfactory returns policy is a sufficient reason for cart abandonment.

The opportunity for retailers is to optimise existing return methods. An example is the Swiss company Nespresso. The coffee company offers the option of collecting coffee capsules from the door when buying new ones and then recycling the used ones, which also contributes to improving the environment.

This has been the case since 1991. In this way, in addition to the cost of returning the goods, the quality of the customer experience can be improved.