Generative AI as a game changer in customer service: how retailers are benefiting from the AI revolution

Chatbots, digital assistants and mixed reality applications at Douglas, Zalando, Carrefour and IKEA

07.01.2025

by Jennifer Meyer

The rapid developments in the field of generative artificial intelligence (GenAI) are opening up completely new possibilities for customer service in the retail sector. From personalized interactions to automated solutions, generative AI is not only changing the way companies interact with their customers, but also shaping their expectations of service.

What is generative AI?

Generative AI is a technology that independently creates content such as texts, images or videos – similar to a creative, human process. In retail, GenAI can automatically answer customer inquiries, create individual product descriptions and generate advertising materials in a short space of time. Its strengths lie in the automation of routine tasks and the personalization of experiences that are tailored to individual customer needs. This gives companies more time for strategic tasks and optimal customer care.

How can generative AI support retailers in customer service?

Generative AI is revolutionizing customer service by automating tasks while ensuring high quality and personalization. It understands natural language, creates human-like content and scales service processes efficiently. This enables more effective customer care, even outside of business hours, and an attractive service design – a clear added value for companies and their customers. The following applications demonstrate the potential of this technology:

24/7 customer communication: AI-supported chatbots and virtual assistants are available around the clock and answer queries in natural language.
Personalized interactions: GenAI creates customized responses and product recommendations based on customer data.
Creation of training material: The AI generates scenarios and content such as customer inquiries that can be used to train employees.
Live translations: GenAI assists in translating requests and responses to enable seamless global customer service.
Automation of routine tasks: Frequently asked questions and simple requests can be processed quickly and efficiently.
Generation of texts and content: Whether emails, FAQs or customer service materials - generative AI delivers high-quality content in the shortest possible time.
Feedback analysis: AI summarizes customer feedback and provides actionable insights to continuously improve the service.

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Innovative customer service: How brands are successfully using generative AI

More and more brands and companies are using GenAI to optimize their customer service and create personalized experiences. This ranges from the use of intelligent chatbots to creative tools designed to strengthen customer loyalty.

Beauty advice at Douglas

Douglas is internally testing an AI-supported Beauty Advisor chatbot based on Google Cloud. This chatbot answers beauty questions, provides personalized product recommendations and assists customers with their decisions – around the clock. The combination of AI and specific beauty knowledge enables Douglas to offer its customers the kind of expert beauty advice they would otherwise only expect in stores.

Several screenshots of the Zalando app with integrated digital fashion assistant that suggests personalized garments and styling tips; copyright: Zalando

Zalando provides personalized fashion tips

Generative AI based on ChatGPT, on the other hand, is used by Zalando with the new Fashion Assistant, which enables customers to search for fashion items in their own words. The tool interprets context such as events or weather and provides personalized product recommendations, which further improves the shopping experience. In addition, the Zalando Trend Spotter offers an AI that recognizes trends and translates them directly into personalized suggestions. These functions make shopping more entertaining and increase the relevance of the suggested products.

Recipe ideas and product suggestions at Carrefour

The Carrefour Hopla chatbot acts as a virtual shopping assistant that creates shopping suggestions based on customer preferences and shopping habits. Integrated into Carrefour's French website, customers can tell the bot their budget, allergies, available ingredients or menu ideas. Hopla offers article suggestions and recipes tailored to the search query.

A virtual AI assistant from IKEA helps with the planning and design of a modern kitchen in a walnut look; copyright: INGKA / IKEA

Individual furnishing advice with IKEA Kreativ

IKEA goes one step further and enables customers to create a realistic preview of their rooms using the AI-supported IKEA Kreativ platform. By using state-of-the-art technologies such as mixed reality and machine learning, customers can design their rooms individually, place products virtually and seamlessly combine planning with shopping. And of course, IKEA also relies on Large Language Models (LLM) for furnishing advice. With the IKEA AI Assistant, users can ask their questions and requests about furnishings and receive personalized recommendations.

Generative AI as a game changer for customer service in retail

Generative AI is transforming retail customer service by combining efficiency with personalization and paving the way for innovative applications. Whether automated communication, creative tools or data-based personalization – companies that use generative AI can not only improve their service quality, but also strengthen customer loyalty. The key to success lies in the intelligent combination of technology and human expertise to create a seamless customer experience.

Source of the survey data: 2024 AI Agents and Customer Service Index by Kustomer