Search
Smart technologies in operation at a retail store

AI and analytics in retail: A smart revolution

Discover how AI is transforming shopping and making retail smarter for everyone

October 29 2024Eike Folkerts

AI revolution in retail: A game-changer for the industry

AI is changing how we shop, reshaping everything from customer service to store operations. With the market set to grow by over 30%1 annually, it’s clear that AI is the future of retail. Leading European brands such as Zalando and Lidl use AI to predict trends, manage inventory, and personalize customer experiences, driving innovation and business growth.

How AI and analytics work together

Have you ever gotten the perfect product recommendation while browsing online? That’s AI and analytics at work! Retailers use AI to understand customer behavior, while analytics turns that data into valuable insights. From predicting trends to adjusting prices in real time, over 60%2 of retailers are using AI to stay ahead, not just keep up. This powerful combination allows them to offer faster, more personalized shopping experiences that customers love, creating convenience and building loyalty. As AI continues to evolve, retailers are transforming how they engage with customers—making shopping smarter, more efficient, and tailored to everyone.

AI adoption in European retail is rising rapidly

According to a recent study by the German Retail Association (HDE)3, the proportion of German retail companies using AI has surged from 7.5% in 2022 to 23.5% in 2023. AI has evolved from a futuristic idea to a practical tool, enhancing e-commerce with visual searches and personalized advice, while traditional retail is catching up. For instance, computer vision streamlines checkout, machine learning refines inventory management, and conversational AI boosts customer service. As AI adoption increases, retailers using these technologies will gain a notable competitive edge, shaping a more innovative retail future.

How is AI transforming customer support: Ready to meet rising expectations?

A woman uses virtual reality for window shopping

AI is revolutionizing customer support and reshaping how businesses connect with their customers. Remember the last time you stepped into a bustling retail store where questions came at you from every direction? It is easy to feel overwhelmed, right? That is where AI-powered chat assistants come into play. Take Nike4, for example –they implemented a chat assistant equipped with sentiment analysis that expertly manages routine inquiries. This means that human agents can now focus on the more complex questions that require a personal touch. The result? Happier customers and a thriving bottom line! With 77%5 of consumers valuing customer experience as much as product quality, AI is not just an option, but a necessity. 

Now let’s talk about Deutsche Telekom’s AI-powered Frag Magenta chatbot. It is like having a personal assistant available 24/7, ready to help with billing, orders, and troubleshooting. It efficiently manages frequent questions, escalating only the tricky ones to human agents. This streamlined approach speeds up service and ensures that customers receive personalized attention when needed. With AI tools working behind the scenes, support becomes faster, more tailored, and always available. So, whether it’s chatting with a bot or receiving instant recommendations, AI is making your shopping experience more enjoyable than ever. Embrace the change and see your customer interactions evolve into something extraordinary!

Harnessing AI for effective resource management in retail

While AI offers incredible opportunities, it is not without its challenges. Smaller retailers often struggle with the cost and complexity of implementing AI solutions. As discussed earlier, even these businesses can harness the power of AI with the right strategy. Partnering with experts who understand the technology and the retail industry can make all the difference. Let us take the example of resource management. Walmart uses AI to predict busy times and adjust staffing schedules accordingly. This ensures that they have enough staff on hand to meet customer demand, improving service without overspending on labor. Smaller retailers can implement similar technologies to provide personalized services that engage customers and encourage their return.

Effective personnel management is crucial for retail success, yet it remains a significant challenge. AI is revolutionizing this aspect by offering sophisticated tools for resource planning and performance analysis. Which means you can improve service and keep operations smooth. AI also tracks employee performance, helping you make better staffing decisions. It is like having an intelligent assistant that ensures your team is always at its best.
 

Transforming the checkout experience: Faster, safer, smarter

Have you ever shopped in a store where there were no lines, no waiting—just grab what you need and go? That’s exactly what REWE’s6 new Pick&Go store in Hamburg is offering. Using advanced AI-driven systems and computer vision technology, customers can simply pick their items and walk out, bypassing the usual checkout process. It’s not just about convenience; this technology also enhances security by reducing theft and provides retailers with valuable insights into customer behavior and real-time inventory management. With innovations like REWE’s Pick&Go, shopping becomes faster and more seamless for customers, while businesses gain smarter tools to optimize stock levels, increase profits, and improve overall efficiency.

Generative AI: Revolutionizing content creation

Generative AI is revolutionizing how retailers create and manage content. At OTTO7, AI generates product descriptions, saving time and efforts for content teams and helping customers make informed choices. It does not stop there – OTTO is also testing AI to personalize product images, showing a sofa in different settings based on customer preferences. This tech ensures consistency, boosts engagement, and creates tailored shopping experiences. GenAI isn’t just fast; it’s making content dynamic and interactive, perfectly matching customer needs and enhancing content creation and customer engagement, smoothly!

AI strategy offers

There’s only one way to start AI: by starting. T-Systems drives your AI-transformation through its end-to-end approach.

T-Systems’ role in supporting retail businesses

Reflecting on the discussion from our earlier blog, choosing the right AI partner is crucial. At T-Systems, we focus on bringing practical AI solutions to the retail industry based on real-world success. With over 400 AI use cases significantly affecting various sectors, we are well-equipped to address the specific challenges that retailers encounter. For example, Frag Magenta is already enhancing customer service for 60 million Deutsche Telekom users through natural, responsive interactions. In the retail sector, such technology could help you improve customer experiences, reduce wait times, and simplify processes.

Whether you intend to use AI avatars for round-the-clock personalized customer support or to optimize energy consumption, our approach is designed to fit your specific needs. We focus on human-centered AI, built with security and privacy in mind, and offer end-to-end support to guide you through every step of your AI journey. With T-Systems, you are not just adopting AI—you are finding smarter ways to enhance retail operations, from customer service to sustainability. Our goal is to help you unlock the full potential of AI in a way that is practical, secure, and forward-thinking.

Embrace the future of retail with AI

As AI and analytics continue to advance, the retail sector is on the verge of even more significant transformation. Enhanced inventory management and personalized customer interactions are just the beginning. However, these innovations depend on a robust IT infrastructure, often cloud-based, to manage the vast data they produce. For retailers, staying informed and adaptable is crucial. By integrating AI and analytics, you can address current market demands while predicting future trends, ensuring the long-term success of your business.

Together towards a smarter future!

As AI continues to transform the retail industry, we are just scratching the surface of its potential. From speeding up checkout with innovative tech to creating personalized shopping experiences through savvy recommendations, AI is already making waves. How has your journey with AI been so far? Have you hit any bumps along the way or celebrated some big wins? Let us share our stories and brainstorm new AI ideas that take your retail business to the next level. I would love to hear your thoughts—feel free to reach out and let us explore how we can innovate together!

The impact of AI in retail: Boosting business efficiency

From personalized shopping experiences to smart inventory management and dynamic pricing, AI is driving efficiency and innovation. Curious about the future of retail? Watch this video to learn how these advancements can benefit both customers and businesses alike!

(Video with English subtitles: Please click the button at the bottom of the video to show English subtitles.)

About the author
Eike Folkerts – Head of Business Development Retail, Media & Services

Eike Folkerts

Head of Business Development Retail, Media & Services , T-Systems International GmbH

Show profile and articles

Our solutions you’d like to explore!

We look forward to your feedback

Do you have any ideas, suggestions, or questions on this topic? We cordially invite you to exchange ideas with us. Get in touch with us!

1 AI in Retail Market, 2024, Fortune Business Insights

2 AI in retail survey 2024, 2024, NVIDIA

3 AI in retail: Intelligence is sexy, Christian Beaufils, 2024, ISPO

4 Retail AI customer service, 2024, Matrixflows 

5 50 stats that prove the value of customer experience, Blake Morgan, 2024, Forbes 

6 Eroeffnung pick and go, 2024, REWE Media center

7 Künstliche Intelligenz bei OTTO – schon heute in sämtlichen Geschäftsprozessen, 2024, OTTO

Do you visit t-systems.com outside of Germany? Visit the local website for more information and offers for your country.