How AI-Powered Service is Making Retailers Smile

AI in Retail: A Game-Changer for Customer Service

The retail industry has always been fast-paced, with shifting customer expectations and seasonal spikes in demand. As businesses look for ways to improve efficiency while delivering a top-tier customer experience, AI has emerged as a powerful solution. The Freshworks Global AI Workplace Report 2024 highlights how AI is transforming retail operations, making both employees and customers happier. While some customers remain skeptical about AI, forward-thinking retailers are proving that AI-powered tools can drive efficiency, enhance customer interactions, and ultimately boost revenue. Let’s dive into how AI is changing the game in retail customer service.

Overcoming AI Skepticism in Retail

Retailers face unique challenges when implementing AI. Bain research found that nearly half (47%) of customers are satisfied with conventional shopping and service technologies, while 39% don’t see the need for AI at all. Additionally, customer support teams in retail tend to lag behind other business units in AI adoption. Unlike B2B companies, retail businesses deal with much higher volumes of customer queries, making scalable, high-quality service automation difficult to achieve. Yet, despite these obstacles, early adopters of AI in retail are seeing significant benefits.

According to Freshworks’ 2024 report:

71% of retail employees use AI weekly, one of the highest adoption rates among industries.
57% say AI chatbots have become instrumental in managing workloads.
61% believe their department is more successful due to AI.

Clearly, AI is helping retail support teams tackle increasing workloads while improving overall efficiency.

AI-Powered Customer Support in Action

Companies that have embraced AI in retail are already seeing tangible results. Take Swiggy, a popular food delivery service, which faced a 30% surge in ticket volume during the holiday season. By leveraging Freshworks’ AI-powered support tools, Swiggy managed to speed up ticket resolutions by 20% while boosting customer satisfaction by 25%. Another surveyed retailer reported a 25% increase in team productivity during peak shopping seasons. Retailers are using AI in various ways beyond just chatbots. Sales associates in stores rely on AI-driven mobile devices to check product availability, marketing teams use AI to create targeted sales pitches, and warehouse workers optimize logistics using AI-powered tools. According to the Freshworks report, 82% of retail customer service professionals now believe AI is essential for business success. These numbers indicate a clear shift from AI skepticism to AI dependency in the retail world.

AI’s Role in Employee Training and Retention

One of the biggest struggles in retail is high employee turnover, particularly in customer support roles. AI is now playing a critical role in addressing this issue.

AI-powered training bots help new employees get up to speed faster.
AI enables smoother onboarding and skill-building for customer service representatives.
Younger, digital-native workers are more engaged with AI-driven training, making recruitment and retention easier.

“AI has great potential to make retail jobs less mundane and more fulfilling,” says Bryan Gildenberg, Managing Director of Retail Cities. AI is shifting retail’s traditional high-turnover model toward a retention-centric approach, where employees feel empowered and productive.

AI Chatbots: The Key to Customer Satisfaction

The Freshworks report reveals a direct correlation between AI adoption and customer satisfaction in retail. 61% of customer support representatives and IT professionals say that AI chatbots have positively transformed their daily work. Additionally, 57% of support teams find AI chatbots crucial to managing customer inquiries efficiently. With results like these, it’s no surprise that 40% of retail customer service teams plan to increase AI spending in 2025.

Key Takeaways for Retail Leaders

Retailers looking to maximize the benefits of AI should focus on three key strategies:

Find the Right AI for the Right Job Not all AI tools are created equal. Many customer support workers have struggled with outdated chatbots that often create more frustration than solutions. Today’s AI-powered copilots, however, assist human agents rather than replace them, enhancing productivity and improving customer satisfaction.
Invest in AI Upskilling and Training To maximize AI’s potential, retail businesses need to prioritize employee training. Many workers still feel skeptical or overwhelmed by AI’s capabilities. Providing structured AI training sessions can help bridge knowledge gaps and foster confidence in using AI tools effectively.
Set Clear AI Usage Policies

Retailers must define clear AI usage policies to ensure employees understand when and how to use AI. AI excels at handling routine inquiries, automating repetitive tasks, and summarizing customer interactions. By setting clear guidelines, businesses can ensure AI is used to enhance—not replace—human engagement.

The Future of AI in Retail

The conversation around AI in retail has shifted dramatically. Instead of fearing job replacement, employees now view AI as a productivity enhancer. AI-powered tools are enabling support teams to focus on high-value customer interactions, rather than getting bogged down by repetitive tasks.

Retail businesses that invest in AI now will gain a competitive edge, ensuring faster response times, higher customer satisfaction, and a more engaged workforce.

With more companies recognizing AI’s value, the next few years will see a significant transformation in how retailers operate. And if the Freshworks report is any indication, AI isn’t just the future of retail—it’s the present.

Are you ready to embrace AI and revolutionize your retail customer service? Now’s the time to take action.

Final Thoughts AI is no longer a futuristic concept—it’s a necessary tool for success in today’s competitive retail landscape. Businesses that adopt AI-powered customer service solutions can expect higher efficiency, happier employees, and more satisfied customers. The question isn’t whether retail businesses should adopt AI—it’s how fast they can do it.

This blog is crafted based on the insights from the Freshworks Global AI Workplace Report 2024. To explore the full report, click here.

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