AI

Revolutionizing retail: How Gen AI elevates the shopper experience

For retailers ready to embrace this innovation, the rewards are immense: deeper customer loyalty, increased sales, and a significant competitive edge. As generative AI continues to evolve, one thing is clear: the future of retail is not just digital — it’s intelligent, sustainable and customer-centric.

Photo: Adobe Stock

April 25, 2025 by Melanie Nuce-Hilton — Senior Vice President of Customer Success, GS1 US

Generative AI is transforming the retail industry in a myriad of ways, including enabling personalized shopping, customized style recommendations, virtual try-ons and so much more. It's reshaping how retailers engage with their customers — both online and in-store — while driving operational efficiencies and supporting sustainability.

From improving decision-making to enhancing supply chains, generative AI is not just a technological advancement; it's a game-changer for the future of retail.

The age of personalization in retail

Today's shoppers expect brands to understand their preferences and provide tailored experiences. Generative AI is helping retailers meet this demand by analyzing purchasing behavior, browsing history, and even social media interactions to create dynamic, accurate customer profiles. Such data supports retail success, with a McKinsey report highlighting that effective personalization can increase sales by 10%–15% and improve customer satisfaction by 20%.

For example, AI-powered recommendation engines guide customers with personalized product suggestions that improve decision-making at every touch point. Consider a shopper who buys a summer dress — AI might suggest coordinating accessories or a cardigan for cooler evenings. These personalized interactions make shopping intuitive and enjoyable, boosting engagement and conversion rates.

Unlike static recommendation systems, Gen AI adapts in real-time to changes in customer behavior so every interaction feels relevant and timely. Retailers who adopt these systems see significant improvements in customer loyalty and overall sales, underscoring the value of a personalized approach.

Virtual try-ons: Bridging digital and physical retail

One of the most impactful applications of generative AI is the virtual try-on experience, which merges the convenience of digital tools with the tactile nature of in-store shopping. In e-commerce, virtual try-ons empower shoppers to accurately visualize products — such as lipstick shades or eyewear frames — increasing their confidence in purchasing decisions.

In physical retail, smart mirrors and AI-powered kiosks bring this technology into stores. Smart mirrors allow customers to "try on" outfits without changing clothes, while kiosks offer personalized recommendations and styling advice based on the items shoppers select. These innovations create seamless, interactive shopping experiences that blend digital and physical touch points.

Beyond convenience, virtual try-ons address a critical industry challenge: returns. A 2022 report by the National Retail Federation revealed that product fit and style mismatches are among the top causes of e-commerce returns, costing retailers billions annually. Virtual try-ons help reduce the risk for returns, enhancing customer satisfaction while lowering operational costs. It's a win-win for consumers and retailers alike.

Enhancing supply chain efficiency and sustainability

Generative AI is not only transforming the shopping experience but also the supply chains that support it. By leveraging advanced data analysis, AI helps retailers improve inventory accuracy, reduce stockouts, and predict demand with greater precision. For shoppers, this means fewer "out-of-stock" notifications and more consistent access to products.

Streamlining logistics, AI also optimizes delivery routes and schedules, resulting in faster shipping and lower costs. By analyzing purchasing trends and regional preferences, generative AI keeps supply chains agile and responsive, ensuring retailers meet consumer demands efficiently.

On the sustainability front, generative AI plays a vital role in reducing overproduction and waste. By aligning production volumes with actual demand, businesses minimize their environmental impact while catering to eco-conscious consumers. Retailers who integrate smarter forecasting and inventory management enhance their operational efficiency while fostering stronger relationships with sustainability-minded shoppers.

Collaborative ecosystems for AI success

To fully realize the benefits of generative AI, retailers must collaborate across the supply chain. Standardized data, master data quality, and interoperability are essential for seamless AI integration, ensuring that all stakeholders — from suppliers to logistics providers — work from a single source of truth.

High-quality master data forms the backbone of AI-driven operations, enabling consistent and accurate insights. Without reliable data, even the most advanced AI systems can produce inaccurate results, leading to inefficiencies and missed opportunities. Thorough review and cleanup of master data ensure that generative AI systems have a strong foundation to provide meaningful outputs.

GS1 Standards, widely used in retail, provide the framework for this collaboration. For example, the Global Trade Item Number ensures standardized product identification, while Global Location Numbers pinpoint specific locations like warehouses or stores. These standards ensure data consistency across supply chain partners, minimizing errors and enabling smooth integration of AI-powered solutions.

By prioritizing master data quality and fostering a collaborative ecosystem, retailers can maximize the impact of generative AI—from improving supply chain operations to enhancing customer-facing experiences. Reliable, standardized data not only supports operational excellence but also ensures the seamless adoption of emerging technologies.

Shaping the future of retail

Generative AI is more than just a trend — it's a transformative force reshaping retail. By delivering personalized shopping experiences, optimizing supply chains, and advancing sustainability, it redefines how customers interact with brands and how retailers operate behind the scenes.

For retailers ready to embrace this innovation, the rewards are immense: deeper customer loyalty, increased sales, and a significant competitive edge. As generative AI continues to evolve, one thing is clear: the future of retail is not just digital — it's intelligent, sustainable and customer-centric.

About Melanie Nuce-Hilton

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