AI-led Loyalty Programmes

To make shopping a more pleasurable experience, AI could help with personalising loyalty programmes. Unlike the generic loyalty programme, personalised loyalty programmes are linked with individual shopping patterns, and rewards or discounts could be customised and aligned with customer interests and what they value most. To increase retention of customers and encourage repeat purchases, AI could gamify the loyalty programmes by encouraging referrals or social media participation and provide associated graded rewards. Hilton Honors uses AI to provide personalised offers, room upgrades and tailored experiences to its loyalty programme members.30 Customers of American Airlines who are part of its loyalty programme have been offered personalised promotions and dynamic offers over the years.

The airline is looking at ways to use AI itself—but it’s just hoping to save time, not let AI bots dictate the price customers pay.31 Domino’s Pizza offers discounts and rewards to its loyalty programme members using its AI-powered virtual assistant.32 Starbucks Rewards is able to use its AI tool to make personalised offers based on customer analytics.33 As the business’s abilities to manage and organise the data matures, personalisation at scale would be feasible for each segment. Predictive analytics would use the data to fine-tune its loyalty programmes with the understanding of anticipated customer behaviour and preferences. AI would help in cost savings and increased sales with targeted and personalised loyalty programmes for its customers.34

Fraud Detection and Customer Protection

Online transactions have led to huge losses for several e-commerce companies. As per Juniper Research 2022, merchants worldwide faced losses exceeding US$48 billion in payment fraud due to online payment transactions.35 AI could help address this problem by identifying suspicious behaviour with the use of biometrics and preventing fraud. Authentication can be made more foolproof and seamless by using facial recognition or fingerprint scanning without having to use passwords. Predictive analytics could be deployed to identify potential threats. AI-powered drones and robots could be deployed to monitor stores and warehouses. Blockchain technology ensures secure data storage and transmission. A few examples of how AI is powering fraud detection and security in the context of the retail business include Amazon’s use of AI-powered access control, Walmart’s AI-powered surveillance systems and Target’s implementation of an AI-driven fraud detection system.36

In future, regulatory compliances will increase, and retailers will have to rely upon AI-led security systems with greater focus on safety considerations in the customer experience. The opportunities to integrate AR, VR and other technologies with AI would also lead to integration issues and security-related risks. Chief technical officers of retail businesses should be mindful of such risks and mitigate the risks by smart deployment of AI to thwart fraudsters.

Future of AI in the Retail Industry

The advancement in AI tools along with other digital technologies would make integration of data and insights more robust. The tightly coupled information would make it feasible to create hyper-personalised experiences, autonomous stores and smart supply chains that would make the cost of such servicing affordable and the retail process seamless in the dynamic world. Sustainability and waste reduction agendas would be embedded into the retail process as much as human and machine collaboration will become far more effective in the future.

Talent Requirements of Retail Industry for the AI Era

To succeed in the exciting yet complex AI-driven environment, the retail industry would need a varied talent force. The capabilities that the retail industry should possess include understanding changing customer behaviour and preferences, implementing AI-powered customer service, leveraging data analytics for decision-making, enhancing inventory management and supply chain efficiencies, creating immersive shopping experiences, strengthening cybersecurity measures and moving away from generic marketing strategies to a personalised marketing strategy. Personnel currently in retail businesses would require to be trained and equipped with various skills to contribute or would have to be replaced with new talent that has the relevant skills. At the same time, due to AI and automation, several roles that are currently handled by humans need to be examined to decide which of them could be redefined with new skills and which roles will become redundant. Let us examine these roles next in Tables 5.3 and 5.4.