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  • Writer's pictureJohn Ennis

Eye on AI - June 19th, 2020

Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!


Hi everyone! This week we revisit the use of AI for personalization in retail by highlighting an excellent article from Forbes by Arun Shastri, which outlines five methods retailers can use to build their brands and reconnect with their customers.


How Personalization Can Save Retail

The world battened down the hatches when the pandemic hit. People shuttered their homes. Businesses shuttered their doors, while others still teeter on the brink of collapse. But hope is not lost. In the Forbes article “Personalization May Be Key To Retail’s Survival,” contributor Arun Shastri describes how smart retailers can use the current market conditions to their advantage with the help of AI-driven personalization.

“Retail was in a state of dramatic change before COVID-19,” writes Shastri. “Now it’s in crisis mode. In April, retail sales fell 16.4%, the largest-ever decline on record. Sales at non-store retailers, a category that would include e-commerce sites like Amazon, increased 8.4% in April.... As a result of this crisis, the big retailers without long-term debt issues are likely to get bigger and their position stronger as they reach into their deeper pockets to adapt.”

It’s impossible for smaller retailers to compete with the giants on things like price and delivery. But by focusing on personalization, it is possible for them to retain and even expand their customer base despite the current difficulties.

“If you can’t be faster or cheaper, make your customers feel respected, special, seen and heard,” continues Shastri. “Don’t compete to win their impatience or thrift; fight for their trust. Win their hearts. Understanding these shifts and responding with personalized offerings and messages may be key for retailers to differentiate, and AI is the most effective way to deliver personalization.”

5 Simple Methods for Improving Personalization

In a previous post, we discussed how customers turn to the brands they trust during periods of uncertainty. Trust signals reliability. And reliability is particularly important in times of distress. To build that trust and develop effective personalization techniques, Shastri outlines five simple AI-driven methods you can use now and in the future to help build your brand.

  1. Think dynamically. As norms are disrupted, new opportunities arise. “Allow for a changing landscape and be prepared with an agile mindset that best supports it,” suggests Shastri. “For instance, Frito-Lay launched a direct-to-customer site to respond to the recent snacking surge. Other CPG companies are likely considering different modes of marketing or even new product categories as new habits emerge.”

  2. Understand your customers. Your company is likely already collecting data that will help predict customer behavior. Look to things like syndicated location intelligence data to help monitor behavior at a more granular level to them to gain a better understanding of consumer behaviors and preferences. Look for an AI consultant to help put systems in place to mine your data if you don’t already have an in-house AI team.

  3. Match offers to needs. Once you understand your customers’ needs, you should generate offers matching those needs. This will help move customers from awareness to trial to adoption to brand champion. “Let the customer indicate how they feel about your promotions (such as “thumbs up” and “thumbs down” buttons), so that rapid feedback helps you better understand what’s resonating with them,” adds Shastri.

  4. Test. Algorithms can predict whether certain offers work, but they’re not always accurate. It’s important to test offers quickly to determine what works before investing time, money and effort is a critical capability, whether using an in-house team or a consultant.

  5. Learn and adapt. You need to keep up with the rapidly changing retail landscape if you want your company to stay relevant. “Be prepared for new norms,” notes Shastri. “Some of them can’t be predicted, but others are obvious. Increased work from home is likely to be permanent. With consumers working from home, grocery shopping from home and seeing doctors from home, digital consumption is likely to increase beyond the lock down. We’re already seeing this kind of adaptation in action. The NBA now sells team-branded face masks. Zappos launched a customer service site for anything—from help picking out a wall color to post-pandemic vacation planning—no purchase necessary. And Walmart is establishing drive-through testing for COVID-19.”

“AI is made for precisely this task and can be seamlessly integrated with many automation mechanisms and tools,” continues Shastri. “It can handle large volumes of data, and it can create and manage more segments than a human can, in a fraction of the time. Leverage machine learning to make offers to customers while it learns from their responses and suggests adaptations. Set up experiments and A/B test your ideas and keep your adaptations as nimble as our changing world demands… Your future may depend on how you prepare for what’s to come. Now is the time to invest in AI and personalization.”

Times are tough for all retailers. Budgets are down. Companies are struggling. Spending may be difficult. But as the world becomes more reliant on digital sales, companies must pivot to stay afloat. AI technology is available now to create systems that increase brand personalization and sales, yet is nimble enough to adjust as the world changes.

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