The retail industry is undergoing a massive digital transformation. According to McKinsey, generative AI could contribute between $2.6 trillion and $4.4 trillion annually across various use cases. It shows no signs of slowing down.
Ahead, you’ll learn how generative AI is reshaping retail operations, from marketing to customer satisfaction, and how Shopify’s Sidekick and Magic tools lead this exciting market trend.
1. Marketing personalization
Brands should personalize every interaction with customers before, during, and after they buy something. One central customer database helps keep messages and offers consistent across websites, phones, chat, and stores.
McKinsey found that personalizing marketing can cut the cost of getting new customers in half, boost sales by 5-15%, improve marketing results by 10-30%, and make customers happier.
But don't assume that just connecting all your retail channels will fix everything. Even if you combine all your customer data, it needs to be organized, cleaned up, and labeled correctly. Otherwise, you might send mixed or wrong messages to customers across different platforms.
Generative AI can sift through massive datasets to identify patterns, predict needs, and automate personalized marketing. For example, it can:
- Gather and organize data from email engagements, product reviews, and in-store transactions.
- Analyze data in real-time to identify the next-best actions or segment customers more granularly.
- Customize emails with different subject lines, images, and buttons based on what customers have bought before.
- Predict what they might want to buy next.
These personalized touchpoints enhance the customer experience by making shoppers feel understood and valued.
But AI can only work with the data you give it. If your data has gaps, mistakes, or biases, AI will make bad recommendations and could spread these errors to more customers.
This is why collecting your first-party data is so important. When you track what customers buy, which emails they read, and how they use your site, you can use this information to make AI work better for them.
2. Product recommendations
Product recommendation systems predict what customers might buy by analyzing their purchase history, browsing patterns, and product details. This helps increase sales by showing customers relevant items.
Generative AI helps with recommendations in the following ways:
- Better product descriptions: It can write personalized product suggestions instead of generic ones, though better descriptions won't fix poor recommendations.
- Real-time upsell/cross-sell offers: It can suggest products based on how customers browse in real-time, but this is expensive and might not work for smaller stores.
- Business insights: It lets stores ask simple questions about product performance, but needs accurate data to be useful.
Shopify apps like Wiser are smart for building your recommendation system. The app plugs into all your store's data to understand how customers shop and what they like. Recommendations become more personalized over time as the tool learns more about your customer’s journey.
Sidekick helps store owners understand their product performance through natural language queries. Retailers can ask questions about sales patterns and customer behavior, getting clear insights that help inform their merchandising decisions. For example, you can ask about which products are frequently purchased together or which items have the highest conversion rates in different seasons.
Retailers can also use Sidekick to spot patterns in their data that might help sell more, though they should still test these suggestions to make sure they work.
3. Inventory management
Good inventory management means having enough products when and where you need them. While stores used to check stock manually or use spreadsheets, new AI retail tools help make faster, more accurate decisions about what to order.
Some use cases of gen AI in this retail scenario include:
- Demand forecasting: AI predicts future product demand by analyzing past sales and trends, helping stores order the right amount of stock.
- Automated reordering: The system automatically orders new inventory when levels get low, considering delivery times.
- Real-time stock tracking: Monitors sales across all channels (online and in-store) to keep inventory counts accurate.
- Price management: Analyzes stock levels and demand to suggest price changes and discounts for slow-moving items.
- Supplier management: Tracks suppliers' performance by measuring delivery times and accuracy, so you can identify reliable partners and improve your supply chain efficiency.
Sidekick helps you understand your inventory data through simple questions. You can ask about current stock levels, historical sales patterns, and product performance across locations. This helps you make more informed inventory decisions based on actual data rather than guesswork.
For example, you might ask:
- Which products are running low on stock?
- How did specific products perform last season?
- What are my bestsellers across different locations?
While Sidekick makes it easier to access and understand your inventory data, it works best when combined with your business expertise and market knowledge.
4. Virtual shopping assistants
AI-powered assistants are quickly becoming a top choice for digital retailers. A recent study by Amazon’s Mechanical Turk found that 96% of surveyed shoppers believed more companies should opt for chatbots over traditional customer support services. An outstanding 94% also believe conversational AI will make call centers obsolete.
Shopify Inbox offers an easy way to add AI chatbots to your online store. This free tool integrates directly with your Shopify admin and can be quickly customized for your brand. The chatbots automatically greet visitors, answer common questions, and suggest products based on customer behavior.
Shopify Magic helps you create clear, consistent responses to common customer questions. It helps you maintain your brand voice while handling routine inquiries efficiently, freeing up your team to focus on more complex customer needs.
Shopify Inbox also handles routine questions, letting your team focus on more complex issues like warranty claims or compatibility queries. It can even capture customer contact information and help prevent cart abandonment by offering timely discounts or automatically addressing concerns.
5. Product catalog management
Whether customers shop on your website, through an app, or in your store, they need accurate product information—things like names, descriptions, features, and photos.
When you have thousands of products from different suppliers, their information often comes in different formats. Gen AI can make all this information consistent so sizes, colors, and materials are written the same way across your catalog. It can even add helpful details that might be missing, like noting whether clothing is casual or formal.
If you sell products in multiple countries, AI can quickly translate all your product information into different languages. This helps you reach customers worldwide without having to translate everything manually.
💡 Note: Retailers generally adopt a hybrid human-AI workflow. Gen AI can misrepresent products or fabricate details, so it’s always good to have a human editor review product descriptions and translations.
6. Content generation
AI is also changing how stores create their content. No longer do they have to write everything by (digital) hand; a marketer can now use retail gen AI tools to make product descriptions, social posts, ads, and articles.
Shopify Magic is one such tool. Give it a few details about your product and target customer, and it creates polished content that matches your brand's style. For example, tell it about your summer shoes, and it will write descriptions and social media posts highlighting their lightweight design and outdoor use.
Sidekick goes further by using your store's data to suggest content ideas. If winter coats are selling well, it might recommend writing a blog post about styling winter coats, complete with an outline and keywords.
7. Media generation
Retailers can also use gen AI to create and edit visual content. Professional-looking photos and videos that help sell products are a few clicks away.
For example, Shopify Magic lets you quickly improve product photos by removing or changing backgrounds. Imagine taking a photo of a winter coat and placing it in a snowy scene without hiring a photographer. The AI can also fix lighting and make products look sharper.
AI tools like Steve.AI and Synthesia can turn product photos into videos for social media and websites. You just tell it what you're selling, who you want to reach, and what makes your product special. The AI then creates videos with text, music, and smooth transitions.
Retailers take advantage of media generation in different ways:
- Updating photos and videos for each season to keep media fresh.
- Creating photos and videos perfectly sized for each platform.
- Testing different looks cheaply to see what customers prefer.
- Making ads based on what your customers already buy.
8. Customer segmentation
Customer segmentation helps retailers create personalized marketing by grouping similar shoppers together. Tools like Sidekick make this easier by letting you create segments using everyday language instead of complex spreadsheets. You describe the customers you want to target, and Sidekick automatically creates the segment.
When combined with Shopify's Segmentation features, you get powerful targeting capabilities:
- Easy segment creation. Just tell Sidekick what you want (like "find customers who bought Product X twice in six months but not recently"). Fine-tune these segments using Shopify's location, purchase, and engagement filters.
- Real-time updates. Segments update automatically as customer behavior changes. Quickly adjust segments using simple language commands, perfect for flash sales or seasonal campaigns.
- Personalized marketing. Target specific groups like VIP customers or cart abandoners. Automate personalized emails and offers through Shopify's marketing tools.
- Safe and smart data use. Get detailed insights while keeping customer data secure. Stay compliant with privacy laws using Shopify's built-in safeguards.
Together, Sidekick and Shopify give retailers the best of both worlds: AI-powered segmentation that's easy to use, plus tools to act on these insights effectively.
9. Analytics and reporting
AI makes retail data analysis much easier when working with ShopifyQL. Instead of writing complex code, ask questions like “What were my best-selling products lately?” and get charts showing your results immediately.
Sidekick makes retail data analysis more accessible by letting you ask business questions in plain language. Instead of navigating complex reports, you can ask direct questions about your business performance and get clear, data-driven answers.
For example, you can ask about:
- Recent sales trends
- Product performance
- Customer behavior
- Store comparisons
This natural language approach to analytics helps everyone on your team make data-informed decisions, regardless of their technical expertise.
Get ahead with generative AI in retail
Generative AI helps retailers work smarter by simplifying complex tasks and surfacing valuable insights. The most successful retailers use AI thoughtfully to enhance their core business capabilities, focusing on practical improvements that matter.
Shopify's approach puts commerce first, with tools like Magic and Sidekick designed specifically for retail challenges. Whether you're writing product descriptions, analyzing sales data, or serving customers, these AI capabilities help you work more efficiently while maintaining control over your business decisions. The result? AI tools that deliver real value for retail, not just impressive demos.
