Discussing promotion strategies in the retail sector leads us to explore a conversation that, for a moment, might have been considered exhausted and well understood. However, the emerging impact of artificial intelligence technologies has forced companies to reevaluate their existing knowledge. We are faced with a revolutionary tool that exceptionally enhances the effectiveness of these strategies, allowing companies to understand and meet the needs and preferences of their customers with unprecedented precision.

1. What is Artificial Intelligence (AI)?

Artificial intelligence refers to the creation of computer systems that can perform tasks that typically require human intelligence, such as learning, reasoning, and decision-making. It uses algorithms and data to improve its performance over time and is applied in a wide range of industries, from healthcare to automotive and customer service.

To achieve this emulation of intelligence, machines need to acquire knowledge from data and follow specific guidelines, enabling them to make autonomous and meaningful decisions based on their prior learning, somewhat resembling the natural intelligence of living beings.

2. AI Transforms the Retail Sector

Artificial intelligence is revolutionizing the retail sector in multiple ways. By leveraging data analysis and machine learning, stores can personalize the customer experience by recommending specific products based on their preferences and past purchasing behaviors. Additionally, it optimizes inventory management, helping predict demand and reduce waste. AI-powered chatbots and virtual assistants improve customer service by providing quick responses to common questions. It is also used in fraud detection and payment security, protecting both retailers and consumers.

Its relevance is extensive, and its expansion in the sector will continue in the years to come. According to an IBM Corporation report, the incorporation of artificial intelligence into retail and consumer products is expected to increase from 40% of current companies to over 80% within three years. Furthermore, there is anticipated significant growth in the size of the artificial intelligence market in the retail sector, projecting an increase from USD 7.30 billion in 2023 to reach USD 29.45 billion by 2028, with a compound annual growth rate of 32.17% during the forecast period from 2023 to 2028 (Mondor Intelligence, n.d.).

3. Why is AI Essential for Retail Promotions?

Despite the expectation surrounding the implementation of advanced technology in the retail sector, it is undeniable that many companies still maintain a skeptical and resistant stance toward its adoption. According to a study by Teamcore, it is evident that a considerable proportion of companies within the retail sector still use traditional methods, such as spreadsheets, for managing their promotional strategies. This practice creates a disconnect between the store management team and the administrative procedures carried out at headquarters. As a result, the analysis of results is often conducted after the conclusion of promotional campaigns and frequently lacks certainty about their real effectiveness. According to various consulting firms, approximately 55% of promotional campaigns fail to generate a positive return for companies in the fast-moving consumer goods sector, as pointed out by Teamcore’s senior executive.

However, the implementation of artificial intelligence in this context can significantly increase the profitability of promotions by up to 31%, establishing AI as an essential tool in the retail sector, underscoring the importance of its adoption.

4. Artificial intelligence (AI) has revolutionized the retail sector by providing key applications that improve promotion and sales strategies. Some of the most prominent applications include:

– Personalizing offers through AI allows for precise analysis of customer purchase history and preferences, providing valuable information to retailers for creating tailored offers and discounts.

– The use of artificial intelligence in personalization and customer relationship management (CRM) results in the ability to analyze customer data to offer highly personalized product recommendations, contributing to customer loyalty. The successful implementation of advanced computer systems, such as IBM Watson, facilitates natural interaction with customers and identifies their specific needs.

– Using AI for price optimization plays a crucial role in managing dynamic pricing strategies, adapting prices based on supply and demand. This approach maximizes profit margins and attracts buyers looking for purchasing opportunities.

– Social Media. Advertising platforms on social media, such as Google Ads, Facebook Ads, Twitter Ads, LinkedIn Ads, and YouTube Ads, have incorporated artificial intelligence to create more effective campaigns and achieve specific goals with the audience.

– AI plays a crucial role in enabling retail professionals to significantly improve inventory management. This is achieved through detailed data analysis, including purchase patterns, weather conditions, geographic location, and demographic characteristics of buyers. This strategic capability not only helps prevent issues like product shortages in high-demand areas but also avoids excessive inventory storage, enabling more efficient and specialized management.

– Optimization of Retail Promotion Strategies through Artificial Intelligence: With the support of powerful Machine Learning tools, it’s possible to thoroughly examine the sales history, identifying promotions that either surpass or fall below expectations. This capability allows for the creation of agile and precise action plans to enhance promotion strategies in real time, maximizing their impact and effectiveness in a specialized and professional manner.

– Artificial intelligence can be a valuable tool to help retail companies define specific business goals for their promotion strategies, allowing for greater clarity and focus on their objectives.

– Agile Adaptation to Market Dynamics in the Digital Era through Artificial Intelligence: In the digital environment, market changes are inevitable, but AI plays a fundamental role in mitigating the impact of these transformations. This is achieved by providing rapid detection of the emergence of new competitors, fluctuations in demand, and changes in customer preferences, enabling the ability to adjust promotion strategies quickly and effectively.

AI is used in Customer Relationship Management (CRM) software to automate marketing activities and in predictive analytics to identify customers with a higher likelihood of purchasing specific products.

5. Finally, we will highlight some of the retail promotion tools, including those mentioned earlier. It is essential to detail their definitions for a more precise and specialized understanding of these key tools:

OptiMonk AI: It is a conversion rate optimization (CRO) platform that uses artificial intelligence to personalize the user experience on e-commerce websites. In the context of retail promotion, this tool can identify user behavior and offer specific promotions and personalized offers in real-time.

Drift: In the retail sector, Drift can play a significant role in engaging with online customers by providing instant responses to questions about promotions and products, increasing customer satisfaction, and ultimately driving sales.

Seamless.AI: This tool enriches CRM data and contact lists with accurate and up-to-date information. In the context of retail promotion, this tool can help companies identify target customers and create personalized promotional campaigns.

IBM Watson: It is an advanced artificial intelligence platform used in various applications, including data analysis and natural language processing. In retail, Watson can analyze large data sets to identify consumer trends and preferences, allowing companies to customize promotions and sales strategies to meet changing customer needs.

Lead scoring: It is a technique that classifies and prioritizes leads (potential customers) based on their likelihood of converting into actual customers. This allows sales teams to focus on high-quality leads and maximize their conversion efforts.

The incorporation of artificial intelligence in the retail sector unleashes significant growth potential by improving not only promotional strategies but also various operational aspects. It is imperative for retailers to gain a deep understanding of AI applications and capabilities to optimize their benefits. In a highly competitive sector, staying informed about emerging trends is essential to remain competitive.

To stay informed about these innovations, it is recommended to explore Expo ANTAD, an event that provides a comprehensive view of emerging trends in the retail sector, allowing professionals to stay updated in a fiercely competitive market.

References (s.f). La mayoría de las CPG locales planean sus promociones en hojas de cálculo.

Storecheck. (s.f). Inteligencia artificial, herramienta de promoción de ventas – Blog StoreCheck. Blog Storecheck.

Economía, R. (2023, 14 abril). Inteligencia artificial optimiza el manejo de las promociones en el retail – Revista Economía. Revista Economía.

Rodríguez, B. (2023, 17 agosto). Inteligencia artificial para potenciar las promociones en retail. Excélsior.

Intel. (s.f). Inteligencia artificial en el comercio minorista