The traditional retail industry is no longer sufficient to meet today’s evolving consumer demands. As a result, a new retail model must be developed to keep up with the times. With the rapid advancement of artificial intelligence (AI) and augmented reality (AR), these technologies have become key drivers in transforming the retail landscape. Forward-thinking manufacturers are now integrating AI and AR into the retail sector, pushing the industry toward greater intelligence and efficiency.
Major tech companies have been heavily investing in AI research for years. In July, during the Baidu AI Developers Conference, Baidu President and COO Lu Qi announced that the company would fully commit to AI development. Similarly, Tencent, which had previously remained relatively quiet about its AI initiatives, recently emphasized its “All-In AI†strategy at the Tencent Global Partner Conference. Although China's AI capabilities still lag behind those of the United States, its growth potential is immense. This is evident from the establishment of Baidu’s Silicon Valley Artificial Intelligence Laboratory and the involvement of world-renowned AI expert Andrew Ng.
The ultimate goal of AI is to be applied across industries to deliver real value. Finding the right use cases is essential to unlocking AI’s full potential. As AI continues to evolve, major technology companies and retailers are increasingly looking to integrate it into various sectors, aiming to secure their place in the future of commerce. The retail industry, being one of the largest in the ecosystem, has naturally become a prime target for innovation.
**AR enhances real shopping experiences**
Recently, Nanjing Jianye Wanda Department Store held a unique "Shoe Mask Dance Party" that attracted widespread attention. Participants could wear different masks, creating a fun and engaging experience. The masks were designed based on face recognition technology, which matched the appropriate style according to the user’s gender and age. This kind of interactive gameplay not only provided an immersive experience but also boosted customer interest and purchase intent.
E-commerce giants like Alibaba and JD.com have already started experimenting with AR. In November last year, Taobao launched its VR shopping platform, BUY+, allowing users to explore products in a virtual environment. While the experience was still basic, it added a new dimension to online shopping. JD.com also introduced an AR shopping app called JD Dream, though it was still in the testing phase.
With the rise of online shopping, consumers are becoming more discerning. Many feel that traditional e-commerce platforms fail to provide the same level of engagement as physical stores. The lack of trust, combined with the gap between online product images and actual items, often leads to shopping fatigue. To address this, AR technology offers a solution by enabling users to visualize products in real-world settings before purchasing.
For example, when buying furniture, users can scan their home environment using AR to see how a piece of furniture would look in their space. For beauty enthusiasts, AR allows them to try on makeup virtually before making a purchase. These applications not only enhance the shopping experience but also increase the likelihood of conversion.
Similarly, combining AR and AI in offline retail can make traditional stores smarter and more efficient. Amazon’s “Future Supermarket†and Amazon Go have set new standards in retail by eliminating the need for checkout lines. Though the technology is still in early stages, these innovations demonstrate the growing role of AI in shaping the future of retail.
**The essence of AI is to solve user needs**
So, how does the integration of AR and AI make traditional retail smarter?
First, upon entering a store, cameras equipped with facial recognition technology can identify customers, capturing details such as gender and age. Throughout the shopping process, the system records customer behavior, including product interactions and expressions. This data is then used to build a personal profile. When the customer returns, the AR display can recommend products tailored to their preferences.
AI in retail can be categorized into three main areas: knowing people, knowing things, and knowing the scene. Knowing people is the easiest to implement through facial recognition. However, understanding products and environments requires more data collected over time.
Whether online or offline, the core purpose of AI is to fulfill user needs—both functional and experiential. Functional needs involve quickly finding and purchasing the right product, while experiential needs focus on delivering an enjoyable and personalized shopping journey.
Every year, events like Double 11 generate massive amounts of data, including user behavior, transaction records, and logistics information. In 2015, the total sales reached 126 billion yuan, and by 2020, it had surged to 168.2 billion. Thanks to AI, companies like Alibaba can handle this volume efficiently, ensuring smooth operations even under extreme pressure.
**AI predicts user behavior to optimize logistics**
One of the most critical aspects of Double 11 is logistics. AI helps analyze user purchasing patterns, predicting demand and optimizing inventory distribution. Products are pre-shipped to regional warehouses, reducing delivery times and improving overall efficiency. This ensures faster fulfillment and a better customer experience.
This year, some orders were delivered within minutes, thanks to smart warehouse systems that automate sorting and packaging using AI algorithms. Such advancements highlight the transformative power of AI in retail.
While the integration of AI and AR holds great promise, there are still challenges, especially with AR technology, which is still in its early stages. Continued research and experimentation will be necessary to fully realize the potential of these technologies in retail.
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