From targeting promotions to product personalization, retail businesses are turning to AI technology to enhance customer experiences — and sales.

A recent poll of retailers showed that 89 percent are either actively using AI in their operations or assessing AI projects in trials and pilots, according to a report released by tech firm NVIDIA.

Further, according to the company's State of AI in Retail and CPG survey report, 94 percent of respondents told the survey that AI has helped reduce annual operational costs, and 87 percent said using artificial intelligence applications had a positive impact on their annual revenue.

Here are just three ways retailers are using AI in their businesses.

Product Recommendations 

More than 40 percent of retailers use personalized marketing and advertising powered by AI, including generation of product recommendations, says the NVIDIA study.

"Retail AI enhances personalized shopping experiences by suggesting products based on customer data, boosting sales, and improving customer satisfaction," explains a blog by Shopify, which gives its stores access to AI-powered customer experience apps such as Nosto.

AI-driven applications can provide large amounts of customer data to retailers, such as browsing and purchase history, items added to a cart and demographics, enabling customized product recommendations.

"This level of  advanced analytics and analysis means that brands can offer product recommendations tailored to customer's tastes and preferences," says a post by Neontri, a software company that focuses on banking, fintech and ecommerce.

By providing personalized recommendations, retailers simplify shopping for the customer and make it more enjoyable. Plus, it drives repeat business -- 75 percent of retail customers are more likely to buy again from brands that personalize their experience, according to the blog. 

Inventory Management

AI-powered software can help retailers streamline inventory management processes by using real-time tracking, demand forecasting and inventory optimizations.

In the poll by NVIDIA, inventory management was the most used AI tech for retailers with physical stores. 

"AI inventory management software helps ecommerce and retail businesses maintain control over stock by replacing guesswork with intelligent automation," explains Sean Flannigan, senior editor for The Retail Exec.

"These tools reduce human error, streamline supply chain workflows, and improve decision-making with data-driven insights and predictive analytics," he writes in a product review blog.

The site's Top 10 included NetStock as a best pick for small businesses, Zoho Inventory as budget-friendly, and Inventory Planner by Sage for ecommerce businesses. Cited as worthy options were Katana for real-time tracking Eazy Stock for small distributors.

Leveled-Up Personalized Browsing

In the ecommerce space, retailers are discovering more ways for AI to further personalize and tailor experiences for shoppers.

For example, eBay announced in May the rollout of its new AI "shopping agent," which will "show up wherever the user is in their buying journey, either by reacting to a user's request or through predictive messaging inline on the page the user is visiting."

"This marks a milestone in eBay's advancement of agentic AI, which has evolved from simple chatbots to conversational and interactive agents that are equipped to understand, interact, and anticipate user needs," the company said.

Also, Etsy recently enhanced its personalized browsing and discovery for shoppers. In April, the online marketplace unveiled a new "AI-powered discovery experience" that combines human and artificial intelligence to "curate collections" for customers based on recent purchases and previously viewed items.

"We call this blend of human and AI-powered recommendations 'algotorial' curation,"

 writes Etsy chief product officer Nick Daniel on the company website.

 "Rather than removing human expertise from our merchandising work as AI becomes more powerful, we're leveraging these tools to amplify the expertise of our team and create a more personalized experience."

 For more ideas on AI applications for your small business, see how using AI-powered tools for advertising could help level the playing field against larger competitors, or learn about AI software that could save you time, money and stress.