The New Retail Customer Service Landscape: AI Is Transforming the Agent and Customer Experience

The New Retail Customer Service Landscape: AI Is Transforming the Agent and Customer Experience

9 min read

What is Customer Experience in Retail and Why Does it Matter?

Retail customer service has evolved considerably over the years. At its core, a brand’s retail customer experience lays the foundation for how it interacts with its customers. From in-store help desks to remote customer support to fully automated digital channels that resolve customer issues using the latest conversational AI technology—the retail customer experience continues to change to meet the changing needs of those it serves. Sometimes, these changes occur slowly (consider the decades-long rise of self-checkout kiosks). Other times, they emerge seemingly overnight—as was the case during the 2020 global pandemic.

Why Retail Customer Experience Matters Now More Than Ever

As the pandemic forced consumers to adopt new shopping behaviors, retailers had to instantly react, updating their technology, business model, operational strategies, marketing and more. Consumers who were previously averse to online shopping suddenly embraced it, and many never plan to return to their old behaviors.

For many businesses though, the retail customer experience failed to meet changing consumer expectations and behaviors. Some retailers were unprepared for the increase in customer service volume resulting from closed stores and the challenges consumers new to click-and-collect (purchasing online and picking up either curbside or in-store) encountered during the process. Problems with online shopping, back orders and returns plagued retail customer service and alienated more than a few frustrated customers.

Customers weren’t shy about their feelings towards customer service for retail either. Nearly half (47%) of consumers reported that high-quality customer service was most important to them when shopping online¹. And in a survey on retail customer service during the pandemic, 75% of respondents said their experiences had worsened, citing an inability to connect with agents, emails not being answered and multiple attempts to address a single question or issue.²

Nearly half of consumers reported that:

high-quality customer service was most important when shopping online1

Rethinking Customer Service for Retail in a Post-Pandemic World

Retailers know that they can’t afford to continually disappoint their customers. In an industry where competition is fierce, brands must live up to their customer service promises or risk losing customers to companies with better retail customer experiences.

Overcoming the many challenges resulting from the pandemic will require brands to rethink their retail customer experience strategy. They must be prepared to invest in new technology platforms that remove the points of friction in the customer journey and optimize the customer service experience. That’s exactly what savvy retailers are doing by embracing conversational artificial intelligence (AI). And it’s paying off in a big way.

What Is Most Important to Online Shoppers?

For consumers buying online, the top three most important aspects of the experience are:

Timely issue resolution
A bar graph showing retail data with a red arrow pointing upward.
High-quality customer service
A bar graph with a red and orange arrow, depicting data for Agent Experience.
The ability to quickly find contact information³
A pink and orange arrow displaying a 35% discount.

Advantages of Great Retail Customer Service

There are many benefits of providing great customer service for retail operations. Some are obvious: customers who feel heard and cared for are more likely to repurchase from a retailer, choosing them over similar brands. Others are more nuanced: great retail customer service often encourages customers to advocate on a brand’s behalf online, on social media and among their friends and family.

Even before the pandemic forced companies to rethink their retail customer experience, brands that offered next-level customer service routinely outperformed their peers. Today, as the global retail industry continues its digital transformation, those that are first to deploy AI-enabled customer service retail solutions have a significant advantage over brands that are late to the game.

5 Examples of Great Customer Service in Retail

Brands don’t need to reinvent the wheel to deliver great retail customer service. Even a few improvements here and there can make a world of difference. Here are five small changes that make a big difference to retail customer experience:

Personalize each interaction

With conversational AI, retailers have access to deeper customer insights than ever before. This data can then be used to create hyper-personalized touchpoints that engage customers and forge stronger brand connections.

Automate follow-up actions

Following up on promises made during customer support calls is a hallmark of great retail customer service. Brands that automate follow-up actions fulfill customer expectations for timely, accurate post-call service.

Offer proactive service

Few things frustrate customers more than inventory and delivery issues. Brands that communicate proactively with customers (i.e. automated order updates, notifications, etc.) can sidestep common frustrations and keep customers satisfied.

Connect all retail customer service channels

Today’s leading brands all have one thing in common: they offer a seamless retail customer experience from end to end. So, whether a customer engages with self-service or a live agent, they can expect a consistent experience that carries through each customer service channel.

Empower customer service agents

With more customers purchasing from retailers online, customer service agents are fast becoming the face of a brand. With AI-driven agent assistance solutions, brands can empower their agents to deliver consistently high-level retail customer service with real-time analytics and performance coaching.

The Challenges of Reinventing Retail Customer Service

It’s more difficult than ever for businesses to deliver on consumer expectations about retail customer service given the rapid changes across the industry. This difficulty is further compounded by the ongoing economic, labor and supply chain repercussions of the pandemic. (For more, read our article, “5 Challenges Affecting Retail Contact Centers Today“.)

First, there was the great migration to digital shopping which exposed shortcomings in many brands’ existing retail customer service approach. Consumers new to online shopping needed assistance to find and purchase what they needed. Other shoppers experienced friction points in the customer journey that hadn’t occurred before — changes to return policies, widespread out-of-stock situations, longer shipping times, unexpected delivery delays and, finally, lack of response from an overwhelmed retail customer service department.

A second challenge that continues to dog customer service in retail in particular is the Great Resignation. In the wake of the 2020 pandemic, an unprecedented number of retail customer service workers decided to quit their current jobs and do something different. Talent shortages continue to exacerbate staffing struggles, particularly during holiday peaks, with demand far outpacing supply for workers. In fact, the number of retail job openings in the U.S. hit a record 1.2 million in July of 2021. In addition to traditional in-store jobs, big box stores such as Target are looking to hire more retail customer service and supply chain staff.

Supply chain issues represent yet another challenge—for businesses as a whole as well as for retail customer service departments. Ongoing stock outs and order delays are causing more customers to call the contact center to find out when products will be available again. They’re also fueling more and more customer defections. In fact, out-of-stock situations at retailers are one of the top reasons consumers are increasingly turning to their favorite brands to purchase goods directly.

However, direct-to-consumer (DTC) brands are by no means immune to today’s customer service challenges. Many manufacturers that decided to ramp up their DTC channel have since been flooded with new customers—without having the customer service infrastructure in place to handle the volume. Like their retail customer service peers, they’ve struggled to handle the onslaught while simultaneously embracing a new business model and attempting to build relationships directly with customers.

Conversational AI and Automation Are the Answer

Finding new ways to improve the retail customer experience has never been more critical—nor has it ever been more difficult, given the current challenges. However, there is a way for companies to transform their contact center operations to deliver a differentiated retail customer experience that drives satisfaction, loyalty, and revenue.

It begins by using conversational AI to understand and optimize every conversation before, during and after a customer interaction — from self-service to agent assistance to after-call follow-up and fulfilling promises made during the call. A conversational automation platform powered by conversational AI, machine learning and automation technology can automate the entire retail customer experience, augment agents to help them deliver more efficient and empathetic service and uncover hidden insights into the voice of the customer.

Some of the top retail customer experience use cases for deploying conversational AI and automation include:

Challenge Solution/Use Case Benefits
Ramping up quickly/ Training new agents In-call agent assistance that provides real-time alerts and guidance based on AI understanding of the conversation

After-call work automation that eliminates manual, time-consuming agent tasks
  • Helps agents become proficient faster
  • Provides information in real time so the agent can focus on the conversation
  • Streamlines processes to reduce training time
  • Reduces the number of screens that agents need to log into during the workflow
Increasing sales In-call agent assistance that personalizes the next best action recommendation using predictive analytics

Interaction analytics with automatic monitoring, scoring, and feedback on quality.
  • Drives higher conversion rates
  • Optimizes upselling and cross-selling opportunities
  • Drives performance improvements
  • Reduces quality management costs while improving quality
Reducing agent attrition In-call agent assistance with automatic insights and guidance to agents, letting them focus on the conversation

After-call work automation that frees agents from tedious, manual efforts
  • Optimizes and enhances the customer’s and the agent’s experience
  • Frees the agent to spend more time interacting with customers
Deflecting contact center interactions to maintain quality of service during seasonal spikes Conversational self-service using an intelligent virtual assistant to deliver easy, convenient help
  • Offloads interactions and reduces contact center volume
  • Delivers a seamless, consistent experience via voice, web, and mobile
  • Accelerates resolution, improving customer satisfaction
Retaining customers and growing customer lifetime value Interaction analytics that help retailers understand pain points and patterns in the customer journey.
  • Sheds light on ways to optimize the customer experience to improve customer satisfaction
  • Uncovers trends and patterns that inform data-driven operational decisions to streamline the customer journey
Improving customer satisfaction and loyalty Conversational self-service that delivers an intuitive, fast, and frictionless experience.

Automated promises management that recognizes, logs, and enriches promises and then manages the fulfillment of those promises automatically.
  • Sheds light on ways to optimize the customer experience to improve customer satisfaction
  • Uncovers trends and patterns that inform data-driven operational decisions to streamline the customer journey
  • Shortens processing time


Today, retail customer experience is a make-or-break endeavor. Brands that routinely deliver good customer service for retail see higher conversion rates, more opportunities for upselling and cross-selling, stronger brand loyalty and higher customer lifetime value. Those that fall short of customer expectations risk losing revenue, reputation and, ultimately, market share.

Smart businesses are investing in customer service retail solutions that leverage conversational AI to optimize, analyze and automate every conversation. By transforming the consumer and agent experience across the entire customer conversation—from self-service to post-interaction analytics—they’re consistently delivering a positive, personalized and frictionless experience. And the results speak for themselves: better call metrics, improved agent performance and retention and—most importantly—higher customer satisfaction and brand loyalty. Talk about a strong return on investment.


1.) Online Retailers Bridge the Offline Divide with Customer Service Features,” Stephanie Crets, Digital Commerce 360, October 2021

2.) “COVID-19 Has Given Rise to Mass Chatbot Adoption in the Retail Space,” Bob Grohs, TotalRetail, October 2021

3.) “Online Retailers Bridge the Offline Divide With Customer Service Features,” Stephanie Crets, Digital Commerce 360, October 2021

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