Unlocking Loyalty in the AI Era: How Generative AI is Redefining Customer Retention

Have you ever found yourself browsing through social media and impulsively making a purchase? This common scenario highlights the growing influence of digital experiences and tools on our shopping behavior. The retail industry is undergoing a significant transformation, driven by advancements in technology, changing consumer preferences, and the need for retailers to adapt and innovate to stay competitive.

The Changing Landscape of Retail

Salesforce recently conducted a survey with 2,400 consumers and 1,125 retail executives from 17 countries to understand the key trends shaping the industry. The findings of the report reveal that the use of generative artificial intelligence (AI) is revolutionizing retail and influencing consumers' purchase decisions. Despite its relatively recent introduction, 17% of shoppers are already using generative AI for purchase inspiration, indicating its rapid adoption.

Generative AI is not the only technology reshaping retail. The digital transformation journey, which includes both online and in-store experiences, has seen dramatic shifts over the past two decades. In 2021, 59% of all transactions were digital, a number that dipped to 51% this year but is projected to rise to 56% by 2025. To respond to this dynamic, 60% of retailers are either strategizing or executing unified platform integrations to facilitate seamless consumer experiences and boost brand loyalty.

Emerging Trends in Digital Shopping

While traditional ecommerce platforms continue to dominate the digital space, emerging channels like social media, messaging apps, and live streaming are gaining ground. A notable 59% of shoppers have completed purchases via social media platforms, a significant increase from 15% in 2021.

The role of brick-and-mortar stores is also evolving with the integration of digital elements. Nowadays, 60% of in-store shoppers use mobile devices while shopping, predominantly for online product research (36%), scanning QR codes (32%), and facilitating "scan and go" purchases (18%). Retailers are responding by equipping their associates with mobile devices and transforming stores into e-commerce fulfillment centers.

Challenges and Opportunities in Loyalty Programs

Earning customer loyalty has always been a top priority for retailers, but new challenges have emerged. The average number of loyalty program memberships per shopper has decreased from 4.3 in 2021 to 3.4 today. However, 75% of retailers now offer loyalty programs, and an additional 22% plan to launch one within the next two years. The challenge lies in creating innovative and differentiated perks as traditional point-based systems no longer resonate with many shoppers.

Consumers are traversing a number of physical and digital touchpoints throughout the shopping journey – from browsing in stores to buying on social. Generative AI will be a game changer for retailers to increase personalization and decrease friction – ultimately driving loyalty and increasing share of wallet.