What is AI's impact on the retail industry? Over the years, AI has transformed from the challenged to the embraced, with many businesses now turning to artificial intelligence to support them with low resources or time pressures. But how useful is it for the retail industry specifically, and how effective can it be at helping brands build a genuine connection with customers?
This blog discusses how customer reviews are critical in the retail sector, and how artificial intelligence can offer retail brands the insights and resources they need to build a deeper connection with customers.
Key highlights:
We know that AI is here to stay, but what impact will it have on the retail industry, and most especially customer reviews, which are so key to decision-making?
Let’s look at the vital role that customer feedback plays in the retail industry.
We know that 90% of consumers read online reviews before buying a product.
With social media e-Commerce on the rise and set to continue to rise exponentially, and consumers returning to spending after an era of cautious shopping, real reviews from real people remain a vital influence on that final decision to press the buy now button.
That’s because people trust reviews. 79% of consumers put as much weight on online reviews as they would personal recommendations. 70% of online shoppers read between 1 and 6 reviews before making a purchase. And they’re not only valuable from a consumer respective. Brands see a 128% uplift in conversions when website visitors interact with review content.
Reviews are no longer optional for brands; they’re a cornerstone of success in the retail industry. Brands operating without the means to collect customer feedback have a significant competitive disadvantage.
Reviews play a huge role in giving customers confidence to buy and building social proof in your offering. Simply showing reviews online can produce an 18% uplift in sales.
They also give brands the retail consumer insights they need to make impactful decisions, from product developments to strategic business directions. Family-run high-end linen business Belledorm used customer retail insights to develop products in the direction their customers wanted – creating a sustainable bamboo product line.
Finally, the way retail brands manage and respond to reviews can have a big impact on how they’re perceived by consumers and how deep their connection is to their customers.
In all these scenarios, AI can support brands to meet and exceed their customers’ expectations - from gaining retail consumer insights to enhancing the customer experience in the retail industry.
Our research shows that consumers across the board crave a deeper connection with brands, with 54% expecting a response to a review no matter the context. As Kerry Leighton-Bailey, Feefo’s CMO said of the current consumer landscape: “Consumers expect brands to offer tailored experiences, but they also want control over their interactions. They don't just want personalisation; they demand intelligent, contextual engagement that respects their agency.” Artificial intelligence is the resource that brands need to elevate their offering to customers and build the deeper connection they’re so craving.
AI is transforming the retail industry by elevating customer experiences, from more efficient services to personalised interactions and operational developments. The adoption of AI in the retail industry has increased by 25% year on year since 2020.
AI supports the customer experience in the retail industry in a plethora of ways, including being able to respond to every review, analysing feedback, and managing moderation. Here’s how.
As well as consumers expecting a response to a review whether it’s positive or negative, we also know that people are 97% more likely to repeat purchases from a merchant that replies to reviews. That should be news enough to motivate every brand to at least attempt to respond to every review within 24 hours. As mentioned above, the family-run business Belledorm achieved this with Feefo’s AI Replies feature.
A challenge many brands in the retail industry face is the volume of customer feedback they need to acknowledge and respond to. And it’s not just the response that’s an issue, it’s finding an authentic way to greet and thank every customer with a personalised message, without repeating the same phrases, and remaining consistent with brand tone-of-voice. AI Replies supports merchants to do this, by generating unique replies to every review that are customisable by the user and speeding up response time across the board.
Charles Tyrwhitt Shirts are already transforming their customer engagement with AI Replies, and finding it’s freeing up more time to focus on conflict resolution and customer engagement.
Brands in the retail industry benefit from the additional support that AI Replies offers, creating greater capacity to respond to every customer and freeing up time to manage more in-depth tasks.
What’s particularly valuable is the time that it opens up for team members to handle conflict resolution. We found that 44% of people who said they had left negative feedback for a business, would use the business again if they received a satisfactory response. If artificial intelligence tools can help free up the time for merchants to dedicate more attention to resolving unhappy customers, it’s a win-win.
Collecting retail consumer insights is one thing, knowing how to analyse your data and make actionable decisions is another. This is a particular challenge when it comes to retail brands with high volumes of customer feedback, where the breadth of data is too large for the human brain to recognise patterns. This is where AI comes in.
Feefo’s Customer Sentiment Analysis leverages technology to analyse reviews and identify customer sentiment automatically. It enables brands to gain immediate and valuable insights into the key issues impacting their customers. With vivid illustrations businesses can see customers’ top priorities, to inform more intelligent decision-making. In this instance, AI enables brands to analyse customer feedback in an instant.
Finally, monitoring every piece of customer feedback for accuracy can be a resource burden, particularly for smaller teams. Thankfully, with Feefo’s verified-only review collection process businesses need not worry about fake or false reviews, as they know each feedback is generated by a real customer. Content moderation is useful to ensure that customer feedback is accurately represented.
Even on an invite-only platform, brands may still get reviews that are inappropriate from time to time e.g. those that contain bad language or are about the wrong product. Feefo’s Essential Moderation does the work to flag feedback for moderation and to determine if it’s within moderation guidelines. Using AI helps elevate team pressures by vetting and flagging content that may have inappropriate content, for a human to investigate further.
While brands are turning to AI for support on-mass, now’s a critical moment for businesses to choose to use artificial intelligence in a customer-conscious way. Consumers are hypersensitive to personalisation and human connection, especially to customer services. Retail brands should employ AI support at optimal moments in the customer journey that don’t detract from the customer experience but instead build a deeper engagement and free up time for a broader connection with customers elsewhere.
Brands in the retail industry are under pressure to manage high volumes of customer engagement. This is where AI tools can step in to support and build the capacity of teams to recognise and engage with every customer and analyse large volumes of feedback. AI should support the humans behind the business, not replace them.
Feefo helps you not only collect authentic customer feedback but also understand your insights and make actionable improvements. Contact Feefo today to find out more.