Korean retail industry using AI to provide customized services to consumers

Thehandsome.com logo [Courtesy of Thehandsome.com]

The Korean retail industry, from fashion to cosmetics, is actively using artificial intelligence technology to lure consumers by actively introducing “hyper-personalization” services to their online shopping malls to quickly meet consumer needs.

Fashion brands, which have already introduced such services, are enjoying the increased inflows into their online malls. Hyper-personalization refers to companies using big data to provide customers with benefits tailored to their personal circumstances and needs. For example, when a woman in her 20s searches for a jacket for spring, AI recommends not only brands but also products she may want, making shopping easier, as AI serves as a personal shopper that helps consumers shop, as well as a stylist that recommends matching fashion items.

According to Hyundai Department Store Group, a South Korean retail conglomerate, on Sunday, the influx of young generations is rapidly increasing after its outlets introduced hyper-personalization services. Hansome Corp., fashion house under Hyundai Department Store Group that operates thehandsome.com, H Fashion Mall and EQL, saw the number of visitors to these online malls increase by 46 percent in the first quarter from the same period last year.

“When consumers access the thehansome.com app, they will see a different main screen,” an Hansome official said. “We are using not only the past purchase records of consumers but also their simple inquiries as big data.”

Lotte Duty Free logo [Courtesy of Lotte Duty Free]

The fashion industry is not alone. Duty-free shops are also seeking to increase sales through hyper-personalization services. Until now, duty-free shops have marketed their products to customers individually by utilizing their membership ratings and departure schedules. Lotte Duty Free, for example, provides customers with shopping information tailored to their individual tastes based on data such as the characteristics of products they purchased in the past, time spent online and their event response rate.

After introducing this system, Lotte Duty Free saw the influx of consumers increase sixfold from the past and the actual purchase rate when encouraged to make additional purchases reached as much as 75 percent, the company said.

Gmarket Inc., a local e-commerce website, also reorganized its mobile app in February with a focus on hyper-personalization, and like Thehandsome.com, had a different screen appear to each consumer. The company also plans to reorganize Its super deal service, which recommends special products every day, so that products of high interest are prioritized to induce consumers to stay long and make actual purchases.

“We are operating a beta version for 10 percent of all our consumers and we plan to expand it to all consumers within this year,” a Gmarket official said.

The beauty industry is also launching a series of cosmetics customized for consumers’ personal taste and skin conditions using AI technology. Korean cosmetics giant Amorepacific Corp. recently launched its customized skincare brand, Custom.Me. When consumers take a picture of their face using their smartphone camera, the brand analyzes such features as wrinkles, pores and sensitivity as well as questionnaires about their lifestyle it receives from consumers before making their customized cosmetics.

“Hyper-personalized cosmetics, which are tailored to consumer concerns and needs, are becoming a trend in the industry,” an official from the beauty industry said. “This is the result of the popularity of personalized services, which was considered exclusive to the wealthy, by using AI technology.”