Impact of technology (AI and AR) on consumer behavior

Abstract

The aim of the study was to understand whether AI based product recommendations provided to customers in offline stores by the salesperson lead to an increase in spending by consumers. To test this hypothesis, we designed an experiment in the form of an experiment through which customers were first asked about their regular buying behavior. The same set of customers were then exposed to a stimulus wherein they were made to imagine a situation where the salesperson is providing recommendations to them for a product extensively based on their past purchase history. We then asked them how their buying behavior would change now. The survey result was then analyzed with the help of statistical tools and the results were derived from this experiment. Several major findings were established as a part of this research. 1. The purchase intention of customers decreases significantly if the customers realize that the salesperson has data of their past purchases. 2. Unlike online channels, where product recommendations have a positive impact on customer spending, offline stores do not follow the same trend. 3. Human intervention, in the form of recommendations provided by the salesperson, can lead to a decrease in purchase intention of the customers. Brick and mortar stores should not invest in technologies such as AI to process customers’ past purchase behavior and provide customized recommendations to them. However, if the recommendations are provided such that the customer does not realize that the salesperson has his/her data, the purchase intention might increase (hypothesis can be tested in future).