Generative AI progress in the retail industry

Generative AI for Retail - Key trends to watch in 2025

It’s that time of year when the pundits opine on what next year will bring for retailers. Rather than listing the top technology trends in retail as I did last year, I’m going to focus on generative AI and highlight some key trends to watch. If 2023 was the year when generative AI exploded on the scene, and 2024 was the year of experimentation, then 2025 will likely be the year the technology matures even further. We’re getting closer to Gartner’s “slope of enlightenment” but we’re not quite there yet.

If you’re tired of hearing about generative AI, I can commiserate. Generative AI reminds me of the band Nirvana. There were many grunge bands that paved the way, yet Nirvana got all the attention at the expense of many other great bands. But no one can deny that Nirvana, and generative AI, have had a major impact on our world.

So, here are three retail-specific use cases and three technologies to watch in 2025:

1. Virtual Shopping Assistants (use case)

2. Hyper-personalization (use case)

3. Virtual Try-on (use case)

4. AI Agents (technology)

5. Domain-specific Foundation Models (technology)

6. Computer Use (technology)

1. Virtual Shopping Assistants

The concept is simple. When a shopper is unsure of what to purchase, they can ask in-store associates for expert advice—at least in theory. But what if you’re shopping online? Enter the AI-powered virtual shopping assistant, versed in such diverse topics as plumbing, digital networks, and cold-weather fashion. What tools do I need to repair an in-ground sprinkler system? Which Wi-Fi router works best outdoors? And what should I look for in stylish ski gloves? Getting answers to these questions was the idea behind Rufus, the virtual shopping assistant launched by Amazon.

What makes Rufus particularly useful is the fact that it’s conversational, allowing a back-and-forth exchange with shoppers until they’re satisfied with the answers. Just like a human expert, the virtual shopping assistant asks questions to help understand the shopper’s needs and preferences. Some might consider this conversational search.

This certainly doesn’t displace traditional search, so retailers should start by modernizing their Search & Product Discovery solution, then decide whether Chatbots & Virtual Assistants make sense for them. These solutions will likely increase buyer confidence, leading to increased sales and possibly fewer returns.

2. Hyper-personalization

Personalization using machine learning has been in use for 25 years, when Amazon first started using collaborative filtering that predicts a given customer’s preferences based on the likes and dislikes of similar customers. The next wave combines machine learning with generative AI to create individualized experiences for shoppers. This includes hyper-personalizing marketing communications, search results, product detail pages, and even chatbot conversations.

Eventually, each web store session could be customized for individual shoppers, showing them products using appealing themes, tailored assortments, and curated offers based on their personal preferences. This sort of white-glove service that was once reserved for the wealthy may trickle down to average shoppers. Retailers should consider how best to hyper-personalize each and every shopper interaction, leveraging data such as past sales, product data, and third-party customer data.

[Explanation of "Hyper-Personalizing":

"Hyper-personalizing" refers to using detailed, individual-level data and advanced analytics to deliver highly customized experiences to each user or customer. Unlike basic personalization, which might address a user by name or show products based on general preferences, hyper-personalization aims to understand and anticipate individual needs, preferences, and behaviors to an extremely precise degree.

For example, rather than just recommending items similar to what a customer

Episode 3484 - December 8 - Tiếng Anh - Tiến bộ của AI Tạo sinh trong ngành bán lẻ - Vina Technology at AI time

Vina Technology at AI time - Công nghệ Việt Nam thời AI

Episode 3484 - December 8 - Tiếng Anh - Tiến bộ của AI Tạo sinh trong ngành bán lẻ - Vina Technology at AI time