The Future of Retail: Leveraging AI for Personalized Experiences & Efficient Operations


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Retail is evolving with the adoption of generative AI, promising to revolutionize operations from product catalog management to customer support. According to McKinsey, integrating gen AI could unlock an additional $310 billion in value for the retail sector, particularly in optimizing customer interactions. Embracing this technology offers retail businesses a competitive edge, especially with customer service leaders facing the challenge of enhancing experiences, boosting productivity, and controlling costs. Gen AI presents opportunities to scale support efficiently, simplifying processes and delivering enhanced value across the board. Finding the right solution is critical in achieving success.

Personalized Customer Experience

To delight their customers, businesses need to prioritize swift and personalized support across various channels. Gen AI offers AI-driven self-service options tailored to customer preferences. Imagine online shopping where every product recommendation aligns with your tastes. With gen AI analyzing customer data, retailers can provide highly personalized suggestions, boosting engagement and sales. This approach cultivates customer loyalty and drives revenue growth.

For example, Amazon uses gen AI to enhance customer purchasing experiences by tailoring suggestions to individuals based on their browsing and purchase history, significantly contributing to vendors’ and customers’ success. This technology helps Amazon determine recommended items, ensuring customers find what they need and leave satisfied. Amazon has taken this a step further, recently introducing Rufus, an AI assistant that enhances shopping by providing personalized recommendations through conversational queries.

Efficient Support Systems

Approximately 75% of customers use multiple channels to engage with retailers. They expect seamless support across various channels. Legacy customer service solutions often fall short of this expectation, leading to disjointed experiences and increased costs. By streamlining support processes and creating a single unified view of customer data, businesses deliver consistent information, reduce response times, and simplify setup and configuration for administrators.

Support may involve having AI-powered chatbots handle routine queries, thereby freeing live agents to focus on complex issues. For instance, Middle Eastern e-commerce fashion brand Styli, a client of Freshworks, the company I work for, streamlined customer inquiries across channels, resulting in a 42% enhancement in average resolution time and a substantial productivity increase, with bots handling nearly 45% of WhatsApp queries. Timely support is a preferred aspect for customers engaging with the brand.

Optimized Inventory Management

Some retailers are finding that gen AI provides invaluable insights into inventory management. By analyzing historical data, AI predicts inventory needs, mitigating overstocking and understocking risks. AI can also help optimize resource allocation, such as staff scheduling, by identifying peak shopping times and popular products.

Retailers like Walmart, Walgreens, and Britain’s ASOS use AI technology for inventory management, leveraging data such as weather and social media trends to optimize stocking strategies and reduce inventory imbalances. By leveraging AI-driven inventory management, retailers can minimize costs, improve efficiency, and enhance customer satisfaction.

Finding the Right Solution

Retailers should look for an omnichannel customer support solution that drives rapid business impact and maximizes technology investment returns. Solutions should seamlessly integrate AI-powered conversational self-service, facilitating swift deflection of inquiries and seamless transitions to live agents with AI-assist tools. Look for a solution that streamlines workflows and ticketing capabilities to enable prompt resolutions for complex issues, proactive insights to enhance satisfaction, and identify gaps for sustained success.

Retailers embracing gen AI will experience continuous improvements in customer service and operational efficiency, driving long-term growth and success—keeping their competitive edge and taking it to the next level.

Mukesh Mirchandani
Tech exec with 2+ decades of expertise building and selling enterprise tech solutions, and SVP of Solution Engineering at Freshworks. An engineer by education, I've spent a considerable part of my career studying customer and employee engagement and customer service trends. I believe using empathy as a CX tool can create customers for life.


  1. Thank you for the insightful article, Mukesh. It provides a comprehensive overview of how generative AI is reshaping the retail sector, emphasizing the importance of personalized customer experiences and operational efficiencies. One area where AI shows immense promise is in customer segmentation. The use of AI to power customer segmentation processes allows retailers to categorize their customer base into distinct groups with similar preferences, behaviors, and purchasing patterns. This segmentation enables targeted marketing strategies, more effective inventory management, and customized customer support solutions.

    Implementing AI-powered customer segmentation helps in precisely identifying and understanding the diverse needs of each segment, facilitating personalized engagement that significantly enhances customer satisfaction and loyalty. Moreover, it supports strategic decision-making regarding product offerings and stock levels, aligning them more closely with market demand.

    As retailers continue to navigate the challenges of a highly competitive landscape, the adoption of AI for customer segmentation will be crucial for those aiming to offer superior customer experiences and achieve greater operational efficiencies. Your article effectively highlights the transformative impact of AI in retail, and I believe that focusing on customer segmentation as a core application of AI will be instrumental for retailers looking to harness the full potential of this technology.


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