As a burgeoning market, artificial intelligence (AI) is making positive waves across industries and geographies. The retail sector is no exception, with the global AI in retail market size valued at $7.14bn in 2023 and projected to grow from $9.36bn in 2024 to $85.07bn by 2032.
It comes as no surprise that the retail industry is expanding to embrace such technologies, given how much the sector has struggled to grow and adapt in recent years. With the number of financially vulnerable retailers at risk of failure escalating from 39% in October 2022 to 43% in August 2023 and to 44% now, technologies such as AI are playing a critical role in reshaping how retailers engage with consumers, optimise operations, and drive growth.
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This new approach is especially significant during peak shopping events like Black Friday and Christmas, when retailers face the challenge of handling high transaction volumes efficiently while maintaining a seamless customer experience. By utilising AI, retailers can introduce new forms of personalised shopping experiences, predictive analytics, supply chain optimisation and more, helping to meet growing consumer expectations in the digital age.
Introducing AI
First and foremost, AI and Machine Learning (ML) algorithms can analyse vast amounts of transaction data in real-time to not only detect patterns indicative of fraudulent activity but analyse customer behaviour to personalise checkout experiences.
Crucially for the Golden Quarter period, AI can help to reduce cart abandonment, using data analysis to predict when a user is likely to abandon their cart. It can then trigger personalised interventions like sending reminders, offering discounts, or suggesting alternative payment options to encourage customers to complete their purchase. Security is also a consideration, with AI in payment systems able to continuously monitor transactions in real time to identify any inconsistencies, errors, or fraud attempts.
AI can also analyse which payment options are most preferred by users and optimise the checkout flow to offer those options first, as well as optimise cross-border payment processes by automating currency conversion and ensuring compliance with local regulations. All this reduces friction in international transactions and provides users with a smoother experience.
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By GlobalDataAI-driven systems are transforming the payments industry by automating processes, enhancing security, and improving the customer experience. Meanwhile, automation technologies are revolutionising back-end payment operation.
The benefits of automation
Automation technologies are transforming back-end payment operations by making them faster, more efficient, and data-driven. Retailers who adopt these technologies can enjoy faster processing speeds, real-time analytics, predictive insights, and scalable solutions.
Not only can automation ensure payments are routed through the most efficient and cost-effective channels in real time, but it also offers an alternative to traditional batch processing, which can be incredibly time-consuming. Automated systems can also support back-office operations to optimise the processing of large volumes of payments during the Golden Quarter.
Automation in payment systems can also settle transactions in real time, eliminating the delays that often accompany manual reconciliation processes. This not only improves security but also provides immediate insights into transaction success rates and other key performance indicators (KPIs). Crucially, automation streamlines the reconciliation process by matching transactions from payment gateways, acquirers, and bank statements with internal records.
Put simply, the efficiency introduced and time saved by using automation technologies helps merchants to respond quickly to changing market conditions and ensure they stay competitive and prepared for the future.
Next generation chatbots
It’s hard to talk about AI without mentioning chatbots. Although much-maligned for replacing human interactions, next-generation chatbots, powered by AI and ML can enable superior operational efficiency during this crucial retail period.
Of course, the main benefit of advanced chatbots is their ability to deliver instant, round-the-clock support. Shoppers often have urgent questions about product availability, return policies, or shipping timelines, especially when making Christmas purchases. A sophisticated chatbot can handle a high volume of inquiries simultaneously, providing accurate answers without delay, reducing cart abandonment, and improving conversion rates.
But more importantly, next-generation chatbots go beyond basic Q&A, offering a personalised shopping experience. Using data on past purchases, browsing behaviour, and preferences, they can suggest relevant products and promotions tailored to each user. This can prove crucial during the Golden Quarter, when consumers are more likely to be influenced by recommendations for gifts or seasonal deals.
On an operational level, these chatbots can help retailers manage the surge in customer inquiries without the need to drastically scale up human support teams. By automating repetitive tasks and routing complex issues to human agents, AI-driven chatbots free up resources to focus on higher-value interactions, enhancing efficiency and boosting customer satisfaction.
As the Golden Quarter approaches, retailers need to look to AI and automation for new ways to enhance personalisation, optimise operations, and create a faster and more efficient shopping experience. With unprecedented levels of automation and AI integration expected this year, retailers must be careful to not be left behind and to be better equipped than ever to meet the challenges of the busiest shopping period of the year.
Dwaine Thomas is Deputy Chief Operating Officer at PXP Financial
