The future of AI retail marketing
By Jean-Matthieu Schertzer, Chief AI Officer, EagleAI
Retailers have the power to control Artificial Intelligence (AI) and use it for faster, better outcomes. Given the volume of customer data made available to retailers through their loyalty programs, the AI opportunity is particularly exciting in the context of improving the customer experience.
According to Mordor Intelligence, 40% of American retailers have already adopted AI in some form, and this number is projected to leap to 80% over the next three years.
However, according to the Retail Industry Leaders Association, only 20% of retailers use data analytics to its fullest potential. There remains huge potential for customer-facing innovation through AI and data analytics.
Part of this journey will require retailers to develop a firm understanding of what customers want and what AI can do to improve experiences.
Our global consumers report Grocery’s Great Loyalty Opportunity found that 50% of shoppers said discounts were what they valued most from loyalty programs. Predictive AI’s capabilities can help streamline finding the best deals, but they extend much further to the overall retail journey.
The right AI tools can harness the data retailers already hold to deliver real-time individualised offers based on thousands of metrics. Additionally, successful AI-powered data analytics creates a virtuous circle whereby AI multiplies feedback and improves the data to enhance the accuracy of predictive AI.
Loyalty strategies can also be improved. According to Retail TouchPoints research, 61% of retailers focus on loyalty program points to drive retention and loyalty. Naturally, customers want this process to be simple and engaging rather than a chore. Other than streamlining the earning and redemption process, retailers have turned to gamification to make it enjoyable.
Gamification turns the boring and mundane into something engaging and exciting. It’s why gamification has been estimated to increase customer acquisition by 700%. Another study discovered that gamification features boosted user engagement by 48%.
Retailers Embracing AI Today
AI’s role in driving efficiency is nothing new. Retail giant Amazon has been at the forefront of AI applications for some time. In February 2024, Bloomberg reported on Amazon’s AI-powered shopping tool, Rufus, to help consumers comparison shop and get answers to more complicated queries.
This customer experience improvement enables shoppers to skip the time-consuming search engine process and quickly find products relevant to them via an interactive process.
AI-powered shopping tools like Rufus can increase purchase probability using the following process:
- Detecting shopping intent
- Breaking down shopping intent into a list of needs
- Connecting those needs with the active product catalogue
- Designing intelligent chat responses based on data from the catalogue
Amazon is just one example. While AI in retail is far from critical mass, many opportunities exist for retailers wanting to take advantage of this generational technological development. Retail chains worldwide have already made substantial investments in AI tools for one use or another; Amazon alone announced a $4 billion AI investment in 2023.
Let’s look at some use cases and see how retailers are implementing these AI trends today.
One of the UK’s largest grocery retailers is leading the charge in terms of adopting AI to bring benefits to its customers, via its loyalty program.
Tesco launched Clubcard Challenges in May 2024, a loyalty-integrated gamification initiative that utilises AI to create customised, shopper-specific challenges.
Loyalty members are invited to participate in the game, and they are then served 20 distinct challenges, like spending £20 on summer BBQ supplies, for the chance to collect up to £50 in Clubcard points. Once all tasks are completed, they can win additional rewards.
What sets the Tesco Clubcard Challenges campaign apart is the bespoke thresholds for each individual participant, drawn from insights into that customer’s past purchase history, preferences and other contextual data points analysed and processed by EagleAI’s machine learning algorithms.
Every shopper that opts into the program receives personalised offers. For Tesco, the UK’s largest supermarket with nearly 3,500 stores, the ability to deploy individualised challenges is a significant achievement.
If you’re a coffee lover, good news, Starbucks is using AI algorithms as part of its Starbucks Rewards program. The solution analyses customers’ purchase histories, and suggests items based on preferences and contextual factors, like weather and the time of day.
Starbuck’s analytics and AI tool, Deep Brew, is central to recommending personalised choices to customers. It can dynamically suggest an offer for a free iced coffee on a hot summer day to a customer who consistently orders similar cold beverages on warm days at a specific time.
French grocery chain Carrefour is also doing great things with AI, offering gamification and personalised promotions. The retailer collaborates with EagleAI to create challenges in it’s MyClub loyalty program, generating customer thresholds and goals for members.
The experiences are tailored to each member’s shopping habits and preferences. The solution uses purchase history data to predict triggers for desired customer actions.
As these examples of AI in action show, retailers can vastly improve their customer experience, drive loyalty, introduce new engagement tactics like gamification and increase the profitability of their promotional strategies by utilising this powerful technology.
Embarking on the path to AI mastery requires adopting AI’s promised competitive edge, developing a strategic approach to data optimisation, and collaborating with expert partners who can navigate the journey to an AI-enhanced retail future with you.
This article is an excerpt from the recent whitepaper, Eagle Eye’s AI Anthology, the definitive resource on leveraging AI for personalisation and retail marketing.
