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Council Post: Evolving spectrum of Data Analytics and AI in Retail Sector

Generative AI is bringing new promise to the field by enabling faster service to customers.

The retail sector’s journey through the adoption and integration of data analytics is a compelling narrative of transformation, innovation, and strategic revolution, reshaping the landscape of retail operations, customer engagement, and market competition. As one of the early adopters of data and analytics techniques, the retail industry has leveraged these tools to drive competitive advantage.

With the worldwide retail market expected to reach over 30+ Trillion USD in 2024 and projected growth of approximately 4% annually, the evolution of data analytics use cases in this sector is significant. This evolution goes beyond mere technology adoption, revealing a story of how analytics has transitioned from foundational applications to cutting-edge, frontier technologies that redefine the shopping experience. As we examine the developments over the past several years, it’s clear that while only a small portion of this evolution is attributed to Generative AI, the broader impact of data analytics on the industry is profound, marking a new era in retail that focuses on innovative engagement and strategic market positioning.

Evolution of Retail Analytics 

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Foundational Analytics: Shaping Early Strategies

In the early stages of its analytics journey, the retail industry focused on leveraging data to enhance core business processes: acquiring customers, increasing user engagement, and improving retention rates. These foundational uses of analytics were driven by the need to better understand customer behaviors and preferences, optimize marketing efforts, and efficiently allocate resources.

Acquiring Customers: Retailers initially utilized data analytics for segmenting customers and identifying potential new markets. Techniques such as look-alike modeling allowed businesses to find and target new customers who shared characteristics with their best-performing segments. By analyzing data on customer demographics, purchase history, and online behavior, retailers could more accurately predict the Lifetime Value (LTV) of a customer, enabling smarter, ROI-focused marketing strategies.

Enhancing User Engagement: Engagement strategies were centered around understanding and predicting what, when, and how customers would make purchases. Data analytics facilitated a deeper dive into customer preferences, enabling personalized product recommendations and targeted promotions. Techniques such as market basket analysis and price elasticity modeling helped retailers optimize their assortments, promotions, and pricing strategies to maximize sales and customer satisfaction.

User Retention: The ability to predict customer churn and understand the factors influencing loyalty became a focal point for retaining customers. Analytics enabled retailers to identify at-risk customers and implement targeted retention strategies, such as personalized offers or loyalty programs, to keep them engaged and prevent churn.

Use cases for Retail Analytics

Frontier Analytics: Revolutionizing with Modern Data and AI

As the retail industry matured in its use of data analytics, the advent of new technologies and the explosion of data sources brought about a new era of analytics—frontier analytics. This phase is characterized by the integration of advanced technologies, such as AI and machine learning, and the use of diverse data sources to drive innovation and create a more personalized, efficient, and responsive retail environment.

Advanced Data Platforms and Technologies: The introduction of sophisticated data management and analytics platforms, such as CDPs, DMPs, and CMSs, enabled retailers to aggregate and analyze vast amounts of data from various sources in real-time. These platforms provided a unified view of the customer, enhancing the ability to deliver personalized experiences across multiple channels.

Real-Time Insights and Predictive Analytics: Modern analytics tools have made it possible to collect and analyze data in real time, leading to more dynamic and agile decision-making. Predictive analytics, powered by machine learning algorithms, has allowed retailers to anticipate future customer behaviors, market trends, and operational challenges, enabling proactive rather than reactive strategies.

Hyper-Personalization and Customer Experience: The use of AI in analyzing customer data has led to hyper-personalized shopping experiences. Retailers can now tailor product recommendations, promotions, and content to the individual level, creating a more engaging and satisfying customer experience.

Innovative Applications: Frontier analytics has also enabled innovative applications such as video analytics for optimizing store layouts, geospatial analytics for targeted promotions based on location, and AI-driven fraud detection systems. These applications have not only improved operational efficiency but also enhanced the customer journey in both physical and digital retail spaces.

Now the Elephant in the room, Gen AI use cases in Retail Sector

The advent of Generative AI (Gen AI) in the retail sector marks a pivotal turn in the industry’s ongoing evolution, particularly in the realms of marketing and customer service. These two areas stand out as prime examples of how Gen AI is being harnessed to revolutionize traditional practices and offer innovative solutions.

Marketing Content Generation: The capabilities of Gen AI to convert text to image and text to video have opened new vistas for retailers. They are now venturing into the realm of automated marketing content generation, aiming to target very specific micro-segments of their customer base. This approach allows for highly personalized and tailored marketing strategies that can speak directly to the nuanced preferences of different consumer groups, enhancing engagement and potential conversion rates.

Customer Service: The use of Large Language Models (LLMs) in customer service has introduced a significant shift in how retail businesses interact with their customers. LLMs are at the core of various applications such as chatbots, email autoresponders, dynamic Frequently Asked Questions (FAQ) systems, and contact center agent assist tools. These technologies enable retailers to provide instant, 24/7 support and assistance to their customers, streamlining service operations and improving the overall customer experience. By efficiently handling inquiries and resolving issues, retailers can foster a more positive relationship with their customers, contributing to customer loyalty and satisfaction.


Retail analytics is evolving rapidly. This evolution is largely driven by advancements in data privacy and personal data protection mechanisms. For example, Google plans to end third-party cookies for all Chrome users in 2024. This change is pushing the industry towards innovative tracking methods, such as device fingerprinting, pixel tracking, and URL tracking parameters.

Moreover, emerging data sources like sensor data, location data, and in-app event data are facilitating new insights. Omni-channel retailers are leveraging these comprehensive data sets to gain a competitive edge.

Additionally, new software platforms are being developed to automate multiple A/B testing experiments. These platforms allow businesses to test recommendations on a smaller population before rolling them out to larger audiences or geographies.

Generative AI is bringing new promise to the field by enabling faster service to customers. It provides more accurate information and creates customized content. This technology is particularly effective in attracting new customers and enticing existing ones with relevant, personalized CRM content and offers.

Indeed, it’s an exciting time for retail analytics, as these developments open up new possibilities for understanding and engaging customers.

This article is written by a member of the AIM Leaders Council. AIM Leaders Council is an invitation-only forum of senior executives in the Data Science and Analytics industry. To check if you are eligible for a membership, please fill the form here.

Biswanath Banik
Biswanath Banik
Biswanath is an innovative data analytics leader with 15+ years of experience in shaping and delivering transformative business impact across finance, insurance, and healthcare sectors in APAC and North America. A former management consultant with Oliver Wyman and PwC, currently Biswanath heads the Data Analytics team at Kredivo, a leading FinTech unicorn in SEA. He holds a prestigious MS in Analytics from Northwestern University, USA. Biswanath’s work revolve around the intersection of Data, Strategy, Product, and Customer Experience to deliver sustainable business impact. He has proven track record in application of Data Science with consumer facing companies on transformation, value creation and growth topics. He has lived in 3 different countries and worked in 10 countries so far. Currently he is based in Singapore (PEP holder)
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