Generative AI in Retail: Reshaping the Shopping to Boost Sales and ROI

calendar October 04, 2023
Ivan Pohrebniyak
Chief Delivery Officer
Generative AI in Retail: Reshaping the Shopping to Boost Sales and ROI

Did you know that according to the recent research on AI in retail…

  • 6 out of 10 clients firmly believe that Generative AI has the potential to revolutionize customer service;
  • 74.7% of consumers are more likely to make repeat purchases from more personalized brands;
  • Top AI for eCommerce and retail personalization features are live search (42%), automated product recommendations (35.7%), and virtual try-ons (32.6%);
  • 11% of clients want online retail chatbots to reach the sophistication level of ChatGPT.

What’s even more interesting is that:

  • 48% of retail leaders foresee AI, ML, and CV as top technologies for retail industry in 3-5 years;
  • 60% of retailers plan to adopt these technologies next year for better in-store and online experiences;
  • Their priorities for AI adoption are better CX (59%), higher productivity (49%), and cost efficiency/ ROI (44%);
  • 70% of leaders predominantly prioritize Generative AI in marketing and sales.

In this article, we’ll delve into the synergy between Generative AI and the retail industry as well as innovations in the sector. We will also review common use cases and examples of Generative AI adoption in merchandising companies.

Generative AI in Retail Industry Use Cases

Generative AI is transforming retail industry, and retailers are considering its application in key areas:

  • 66% for personalized recommendations;
  • 64% for trend analysis and inventory management;
  • 53% for automatic product description generation;
  • 28% for AI-driven virtual try-ons;
  • 21% for faster product design and development.

Now, let’s explore these promising Generative AI business use cases in the retail industry.

Generative AI in Retail Industry Key Use Cases
Generative AI in Retail Industry: Key Use Cases

Product Designs & Visual Search

Generative artificial intelligence innovates the retail industry offering visual search and virtual try-on experiences. These AI-driven systems enable customers to preview products like clothing and makeup in a virtual setting. This is done before the purchase making the shopping experience interactive and convenient.

Leading the way here is Sephora through their Sephora Virtual Artist app. Consumers use facial recognition to experiment with an extensive range of makeup products. Similarly, Google introduced a virtual try-on feature for women’s tops from popular brands.

Generative AI Powered Retail Virtual Try On From Google
Virtual Try On From Google

Generative AI plays a leading role in product discovery, design, and display customization. These models analyze market trends, popular styles, consumer preferences, and sales data. The insights received are used to generate a variety of appealing design options. This innovation extends to various product categories, including clothing, furniture, and electronics.

It also ensures personalized display choices designed as per individual customer preferences. Moreover, the technology minimizes the need for physical trials with interactive experiences. Generative AI for retail technologies elevates clients’ satisfaction and reduces return rates.

Marketing Personalisation

Generative AI is a game-changer in marketing personalization. It thoroughly analyzes customer data, including purchasing behavior and preferences. This data-driven approach allows for the creation of highly personalized marketing content, ensuring it resonates with each individual. Artificial intelligence predicts engaging content, boosting marketing effectiveness and conversions. This personalized approach strengthens the bond between brands and their clients.

Furthermore, the technology has the ability to adapt and learn from customer interactions. This allows for refining the personalization process over time. Continuous improvement ensures that marketing content remains relevant and impactful. The precision of Generative AI in predicting marketing content significantly improves marketing ROI.

Product Recommendations

Generative AI analyzes customer preferences, purchase history, and browsing behavior. Received insights help to provide customized product recommendations. Such personalization boosts the chances of conversions and raises levels of clients’ satisfaction. Additionally, the technology excels in identifying cross-selling and upselling opportunities, thereby enhancing sales revenue.

A prime example of this is Amazon’s recommendation engine. It uses AI-driven recommendations to drive sales and improve user satisfaction. Generative AI can also anticipate clients’ future needs and preferences. All these features serve as a driving force behind enhanced shopping experience.

Improve Inventory Management & Supply Chain

Generative AI can also assist retailers with supply chain management and inventory optimization. Firstly, it predicts demand patterns based on historical sales data, market trends, and external factors. With this foresight, traders can proactively optimize inventory levels. They can also avoid stockouts or overstocking. This approach results in cost savings and ensures products are available when needed.

Moreover, Generative AI-powered technologies take inventory optimization to the next level. Demand forecasting data enables the determination of ideal inventory levels for each product. As a result, it fine-tunes the supply chain for maximum efficiency. As demand for specific products surges, artificial intelligence dynamically adjusts inventory levels.

This way traders can respond swiftly to changing market dynamics. Additionally, the technology streamlines logistics operations by automating tasks such as order fulfillment, shipment tracking, and managing returns. This automation expedites processes and frees up human resources improving customer services.

Virtual Shopping Assistants

Generative AI in the retail industry is at the forefront of creating conversational virtual shopping assistants. Intelligent assistants excel at answering queries and guiding users through purchases. Their primary focus is to enhance the shopping journey and provide a personalized experience. They help to find products, provide tailored recommendations, and resolve issues instantly. This leads to a higher level of satisfaction and customer loyalty.

Customer Service Automation

Providing exceptional customer experiences is paramount for gaining a competitive edge and fostering brand loyalty. Generative AI-powered chatbots for eCommerce and retail are transforming the consumer interaction landscape. These chatbots can generate human-like responses, understand natural language, and provide personalized assistance. Chatbots for customer support can efficiently handle inquiries, offer 24/7 support, and assist with common issues. They significantly reduce the workload on customer service agents and improve clients’ experience.

Generative AI Retail Examples

Walmart Vendor Negotiations

AI-powered chatbots are transforming vendor negotiations in the retail industry. They make the procurement process more efficient and cost-effective. One example is Walmart adopting a chatbot powered by Generative AI to negotiate cost and purchase terms with its suppliers. The chatbot engages in negotiations for smaller contracts involving equipment suppliers. It uses historical trends, competitor pricing, and material costs to calculate fair prices.

Walmart’s AI-Powered Chatbot for Vendor Negotiations
Walmart’s AI-Powered Chatbot for Vendor Negotiations

Key results:

  • Achieved 68% supplier deal closure since 2021.
  • Preferred by 75% of suppliers for negotiations over human representatives.
  • Delivered an average of 3% cost savings on negotiated contracts.

Walmart’s procurement teams can now focus on larger and more strategic contracts. This innovation greatly enhances operational efficiency and saves costs.

Carrefour Chatbot Hopla

Carrefour introduced a ChatGPT-based intelligent assistance chatbot called Hopla. It offers real-time product suggestions based on budgets, dietary preferences, and menu ideas. Hopla acts as an intelligent concierge.

Generative AI Chatbot In Retail Intelligent Assistance From Hopla
Carrefour’s Intelligent Assistant Hopla

It provides prompt and reliable support on products, services, and store information. It makes the shopping journey more engaging, personalized, and client-centric. Additionally, Carrefour is using Generative artificial intelligence internally for procurement processes. This includes tasks such as drafting invitations and analyzing quotes.

Newegg’s ChatGPT Integration

Newegg Commerce, Inc. has integrated ChatGPT from OpenAI into various aspects of its operations. It is used in the PC Builder tool, text content optimization, customer service chat, email subject lines, and SEO.

ChatGPT-Powered Summaries of Customer Reviews
ChatGPT-Powered Summaries of Customer Reviews

Furthermore, Newegg uses ChatGPT to provide concise “Review Bytes” and summaries of reviews. AI streamlines the shopping for consumers by highlighting key terms and sentiments from other buyers. This comprehensive implementation enhances the overall online shopping experience at Newegg.

Mercari’s Virtual Shopping Assistant Merchat AI

Mercari’s Merchat AI, driven by ChatGPT, serves as a virtual shopping assistant. It swiftly guides users to their desired products, eliminating the need for tedious searches. Merchat AI offers a user-friendly and efficient approach to online shopping.

Mercari used ChatGPT’s capabilities to provide real-time recommendations and personalized shopping experiences. It allows the platform to cater to users’ unique preferences and budgets. This assistant can also suggest gift ideas, collectibles, and home decor options. While currently in beta, Merchat AI enhances the customer experience. It also makes secondhand shopping more accessible and appealing.

Generative AI Retail Benefits

Generative AI brings significant benefits to the retail industry. According to a Salesforce report, 17% of shoppers have used artificial intelligence for purchasing inspiration. 45% of consumers expressed interest in using it for shopping. Traders are capitalizing on this trend, with 92% investing more in AI. Moreover, 59% of them are already using it for personalized product recommendations.

Time & Cost Efficiency

Generative AI offers substantial time and cost savings for the retail industry. According to a Stanford University study, it can increase productivity in the commerce sector by up to 2% of annual revenue. This is equivalent to $400 billion to $660 billion. Such an increase is primarily achieved by automating administrative and repetitive tasks. Thus, employees can focus on more critical initiatives. Additionally, 46% of commerce companies adopt this technology to control costs.


Personalization is a key driver of customer engagement and loyalty. Generative AI in eCommerce and retail analyzes vast amounts of clients’ data to provide personalized recommendations. This approach has proven effective, with 35% of consumers stated they are more likely to do business with a company with a chatbot. Furthermore, 61% of retailers plan to use artificial intelligence for applications like chatbots.

Improved Customer Service

Generative AI enhances customer service by providing accurate and timely responses. It is an attractive option for traders. In fact, 58% of merchandising companies are considering the use of AI for customer service chatbots.

This technology streamlines interactions and improves the overall consumer experience. Additionally, 38% of traders explore advanced search technologies to better understand client’s inquiries. It further highlights the growing interest in using new technology to enhance customer service.


Are you considering adopting Generative AI for retail business but unsure where to start? That’s where Master of Code Global’s expertise comes in handy. The ideal starting point for embracing Generative AI in retail is through conversational commerce.

It serves as a testing ground to explore the technology’s potential. You can then expand its application across your business ecosystem. Additionally, merchants can identify new use cases by addressing critical questions such as:

  • Where do sales associates spend most of their time, and how can AI optimize their tasks?
  • What opportunities exist for upselling or cross-selling? How can Generative AI support these efforts?
  • How can associates access internal knowledge more efficiently to enhance customer service?
  • Where do consumers and sales associates encounter the most frustration, and how can artificial intelligence alleviate these pain points?
  • What are the most frequently asked customer questions that intelligent assistants can address?

Master of Code Global is committed to helping retailers unlock the potential of Generative AI. We have a wealth of expertise in a wide range of artificial intelligence technologies. Our specialization includes utilizing the power of models like GPT, DALL-E, PaLM2, Cohere, LLaMa 2, and other Foundation Models (FMs).

We are well-equipped to develop Generative AI solutions as per your unique business needs. We can also assist with AI integration into your existing communication platforms, productivity tools, or other applications. Contact us today for Generative AI consulting to elevate your retail business and transform it with artificial intelligence.

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