How AI is Helping Retail Brands Thrive

In an era of economic uncertainty, consumer behavior is following suit to become increasingly more elastic. These behaviors are not only more elastic, they’re more contradicting. Consumers are switching to more affordable brand alternatives while spending lavishly on certain goods.

Amidst these unconventional patterns, a couple truths prevail. First: consumers love deals. A recent survey found that two thirds of US consumers seek special offers while shopping. The second: marketers cannot solely rely on traditional means to combat this behavioral chasm set in motion by the economy. To best equip themselves, marketers need to supercharge their strategies with AI.

Addressing shifting consumer behaviors

With the holidays behind us, it’s clear that consumers are still expecting brands to offer promotions. The fact is, consumers expect these deals and they’ve become increasingly important given the economic uncertainty to date.

However, brands cannot completely pull back on promotions if they want to remain competitive. That said, any pullback in promotional activity must be carefully planned, and moving away from promotions entirely presents a significant risk to any brand.

One of the main ways we are seeing brands closely manage the promotional strategy is going back to basics on the main promotional levers: discount penetration and average discount. The amount of the overall assortment that is discounted has continued to decline over the last three years, whereas the discount depth has only declined marginally in that same period. What this tells us is that retailers aren’t pulling away from promotional activity, but instead, they are being more selective as to which products are discounted, and when.

Managing promotions is a highly complex undertaking, and by leveraging AI, marketing and sales teams can get the right content in front of the right customer right at the right time.

But implementing AI is about more than optimizing the pricing strategy. As McKinsey research found, generative AI alone may eventually be responsible for more than $4 trillion in “annual global productivity.” Three-quarters of that productivity will fall to organizations, such as customer operations and marketing and sales. As an industry, retail and CPG may be able to reap half a trillion of that $4 trillion figure.

Automating mundane tasks

Allowing AI to automate management of creative libraries can alleviate some of the pressure marketers face to make fast turnarounds with last-minute creative changes and product swaps. Intelligent library solutions with content analytics can help teams even when they’re not facing a time crunch. With data about how assets are performing, it’s much easier to leave high-performing content in circulation and also quickly identify the low-performing assets back to the drawing board.

More generally, leveraging AI to automate repetitive tasks can free up employees to focus more on mission-critical exercises, such as building customer relationships. The same McKinsey research estimated that generative AI and similar technologies may be able to “automate work activities that absorb 60 to 70 percent of employees’ time today.” And with generative AI now being able to parse natural-sounding human language, this is more of a reality. The report estimates that natural language is required for activities that comprise 25% of work time. Using the time once allotted for these tasks to more critical processes that require a human touch can help further optimize marketing spend.

Meeting customers where they are

According to our research, we found that more than one-quarter of consumers will unsubscribe from emails when personalization is wrong or inaccurate. Most (56%) say that they are overwhelmed by all the communications they receive from brands. While that fact may seem obvious, 58% still say email marketing is the most useful way to evaluate products or make purchase decisions.

However, when looking at peak shopping seasons, we recently found that 90% of marketers are integrating AI into their strategies, expecting AI to offer better predictive insights (44%), enhanced engagement (41%), and more automated content generation (39%).

These contrasting facts pose quite a conundrum to marketers who must toe the line between satiating consumers’ preference for email marketing without getting too many “unsubscribe” requests in return. Instead of flooding customer inboxes with another unread email, the key is to deliver messages as often as customers want to see them and when they're most likely to engage with that content.

To help answer those variables, AI can help strike this balance for marketers. AI-enabled email marketing tools can provide statistics about email performance and really help teams hone in on the ideal cadence and content to keep customers loyal. And the potential for AI goes well beyond email campaigns.

Intelligent data analytics platforms supercharge analysis of everything from email open rates to purchase history. Algorithms can also hone existing predictive purchase models and even analyze voice searches, a tool most young shoppers use. AI-infused tools can combine robust analytics with automation to create design, messaging, and content of any campaign to reach customers when and where they want to be reached.

Building trust and reliability

Marketers face plenty of stress preparing for various shopping seasons. Consumers do, too. The urge to make the exact right choice without spending too much or missing out on a deal can introduce plenty of anxiety into the shopping experience. Exacerbating this anxiety-inducing task is consumer demands for highly tailored experiences.

Six in ten consumers expect brands to “tailor experiences based on their preferences,” and 90% of marketers say personalization improves profitability. Instead of bombarding customers with generic ads and marketing initiatives, retailers can turn campaigns into thoughtful relationship-building exercises. When people feel as if they’re being spoken to on a human level, they become more likely to trust that brand and continue engaging with it.

AI-enabled tools can access inventory levels and store locations to show consumers that the company is thinking about their needs, specifically, while still providing visibility about more generic promotions. For example, AI can help create an email that retains existing promotion information but fills the rest of the message with personalized offerings. To go a step further marketers can include useful, tailored information, like the nearest in-store pickup locations. This combination keeps major promotions top of mind while demonstrating the personalized, thoughtful touch needed to build loyalty, trust, and an enduring relationship.

Leaning Into Gamification

Brands that gamify their owned channels in a well-designed, intuitive way can enhance purchase intent, continued use of the app and long-term brand loyalty. To streamline gamification, marketers can turn to AI. AI-enabled technology can help create virtual or augmented reality games like scratch-offs or mystery offers that keep customers opening the app and coming back for more, whether it’s the holiday season or not.

Holiday and other seasonal promotions are retailers’ lifeblood. Those pivotal moments can prove to be more of an obstacle than enabler for marketers who must adapt to changing consumer behaviors and marry long-term strategy with short-term trends. It’s a delicate act, and it’s no wonder nearly one-third (27%) of e-commerce marketers believe AI will benefit their email campaigns. AI is a multifaceted tool that can do everything from automate to personalize to analyze, all while allowing the marketing team to focus on what it does best. Marketers who harness the power of AI will see significant growth and customer engagement to build upon the post-purchase journey.