Retailers and brands across Asia are embracing AI at an unprecedented speed, and this is leading to improved customer experiences and increased sales.
A recent survey conducted by Forrester on behalf of Appier revealed that 56 percent of respondents from the retail sector in Asia Pacific have either implemented, or are expanding their AI-oriented initiatives.
In another survey by KPMG, most retailers interviewed are either exploring or implementing AI in various areas of their operations, with several executives noting that the rate of uptake is surpassing any previous technology.
The most widespread application of AI is enhancing the relevance and accuracy of product recommendations. In the surveyed markets, including Mainland China, Vietnam, Indonesia, Singapore, India, and the Philippines, a majority of consumers expressed satisfaction with AI-based recommendations. However, consumers also voiced concerns around privacy and lack of human interaction.
What are retailers using AI for?
Front-of-house, AI is being used to refine customer experiences in automated chat platforms, helping develop a more refined understanding of consumer expectations and behaviour in order to provide more accurate responses and information.
E-commerce company Shopee provides small businesses selling on their platform access to an array of AI-powered tools that help cross-border sellers overcome language barriers in new markets and make it easier for them to build their online presence. This includes collating data on shoppers’ purchasing patterns and using this to push relevant products towards them.
AI-powered chatbots help facilitate millions of conversations daily on Shopee and are particularly helpful during high-traffic events like midnight sales.
Another area where AI is helpful for retailers is in getting more shoppers to use their own app. For example, Japan’s largest handmade marketplace Minne leveraged AI to identify and target high-value audiences more likely to download its app, and optimize campaigns to target users who are more likely to make additional in-app purchases.
One Vietnamese retailer, Nutifood used AI to create a virtual live streamer to sell premium infant formulas to mothers tending to infants in the small hours of the morning. The company is working to further develop its virtual character by incorporating expertise from qualified nutritionists to be able to provide accurate advice to parents when professionals are not available to consult.
Back-of-house, AI has become an indispensable tool in functions such as demand forecasting, supply chain management, and developing marketing content.
Once their products reach the supermarkets and retail channels, both retailers and brands now depend on AI tools to understand what is happening at the shelf. Traditionally this was done through POS data collected during checkout and through infrequent manual audits.
But today, some consumer-packaged-goods brands like Coca Cola are adopting image recognition and augmented reality solutions to understand how fast their products are moving, when to restock fast-selling items and which products and promotions are performing best.
Among the many applications of AI in retail companies, marketing is perhaps the function that stands to gain most. The same Forrester survey reported that 60 percent of retailers consider productivity enhancements and improvements in marketing functions as the key benefit from adopting AI-oriented tools.
Marketers have traditionally relied on general demographic data like age, gender and location to understand who their customers are. There is a need today among retailers to gain better insights into customer interests and for more precise profiling.
With AI-powered marketing automation tools, retailers can analyse how users interact online, including the time of the day and devices used, to segmenting them into categories based on interests and behaviour. Armed with this deeper level of insight, they are able to personalize marketing campaigns at scale.
What’s the consumer / shopper sentiment with respect to AI?
By 2025, Generation Alpha is expected to reach 2 billion, with the highest population in India, China and Indonesia. This AI generation craves immediate access to communication and instant gratification. Online chat applications, e-commerce platforms and digital wallets reign supreme among youths in Asia.
Apps such as WeChat in China, KakaoTalk in South Korea and WhatsApp in Southeast Asian countries are used for everyday interaction. E-commerce platforms namely JD.com, Lazada, Shopee, Tmall, Tokopedia and Zalora are very popular in this region where features like next-day delivery and buy-now-pay-later options are widely available.
These young consumers are drawn toward a shopping journey that is interactive and authentic. Growing up surrounded by social media, they have mastered the art of navigating through the algorithms of tech companies. AI can substantially improve the operational efficiency of both online and offline retail stores and fine-tune the consumer experience at crucial points in the shopping journey.
However, we must be conscious of the divide – within and across markets.
A significant number of consumers in markets like Japan (46 percent) Korea (42 percent) and Thailand (48 percent) reported that they have never tried AI-driven product recommendations. A deeper analysis suggests that many consumers who use product recommendations may not be aware that these are now powered by the technology.
Across surveyed markets, the majority of those who acknowledged using AI-based recommendations expressed satisfaction with their experiences. At the same time, it is worth noting that consumers in Malaysia and Singapore exhibited the highest levels of dissatisfaction.
Today’s consumers are spending more time deliberating over their purchase decisions.
It is therefore becoming essential to enhance the consumer experience to help buyers recognize a product’s value. AI is already playing a significant role in this by enriching the shopping experience across various sectors such as food and beverage, beauty, home furniture, and apparel.
Ampersand Advisory’s campaign for CALPIS, a leading cultured milk yoghurt brand facing a sales slump, leveraged Aina Sabrina, an A.I. influencer who perfectly matched the brand’s fun and youthful vibe. The initiative spanned digital and traditional platforms, featuring a unique TV commercial, a playful news-style video, engaging radio segments, dynamic social media content, and striking OOH ads.
The results? The campaign soared to success, earning two Malaysia Book of Records titles.
CALPIS achieved record titles for the first A.I. radio DJ as a brand ambassador and the first A.I. radio DJ overall. CALPIS Chewy Grape outpaced Yakult sixfold in convenience retail, drove 16% brand growth, and garnered over 1.1 million social media impressions, 1.2 million video views, and RM 5 million in PR coverage. As a pioneering example of the effective use of AI influencers, the campaign picked up several local and regional awards.
The level of interaction and emotional connectedness with virtual influencers emphasises that users prioritise their relationship with influencers over their functionality. Studies also suggests that virtual influencers directly impact purchase intention when the trust and credibility between consumers and influencers are established.
Through their interactions, customers can form solid social relationships with virtual influencers, contributing to the company’s brand value. The continuous engagement and interaction between virtual influencers and customers allow the retailer’s artificial intelligence engines to adapt quickly to customer preferences, increasing the credibility and trustworthiness of virtual influencers.
Learn more about using AI to supercharge brand building at Kunal Sinha’s workshop The Codes of Asian Branding on November 6 & 7 at Eastin Hotel, Kuala Lumpur.
Kunal Sinha is Chief Knowledge Officer at Ampersand Advisory, Kuala Lumpur. He has built brands across China, India and Indonesia, is the author of six books on creativity, consumers and marketing, and has spoken at the world’s top business schools, including Harvard, Cambridge, London Business School, University of New South Wales and CEIBS.
