A Study of Consumer Behavioral Responses to AI-Driven Sales Promotion in Physical Retail Stores

Abstract

The introduction of Artificial Intelligence (AI) in retailing marketing has greatly changed the way retailers make and execute sales promotion strategies. AI technologies can help retailers analyze high amounts of consumer data, forecast buying behaviors, and send personalized promotional messages in their real-time. AI-based sales promotion, including personalized discounts, smart suggestions, digital displays, and location-based offers, has gained significant dimensions in the physical retail stores and has become more crucial in driving consumer behavior. This paper provides secondary research where the researcher analyzes the consumer behavioral reaction to AI-based sales promotion in the physical retail setting. The study relies on the systematic review and thematic analysis of the literature on peer-reviewed journals, books, and industry reports that are published between 2016 and 2024. The results indicate that AI-inspired promotion tactics increase consumer interest, perceived value, intention to purchase and impulse buying. Individual promotions with the help of AI enhance customer experience, providing customers with pertinent offers, depending on personal preferences and buying history. Nevertheless, the issues concerning privacy, transparency of the data, and the use of algorithms to make decisions can contribute to consumer distrust in marketing via AI. The research is relevant to the existing literature as it incorporates knowledge on artificial intelligence, sales promotion, and consumer behavior in relation to the physical retail stores. The results are also related to the managerial implications of retailers who are willing to implement AI-based promotional approaches to promote consumer satisfaction and competitive strength in the dynamic retailing environment.