The Artificial Intelligence revolution: a welcome boost for retail
By Tridip Saha, Head - Europe and US, Sonata Software
Resembling a ‘small fridge with a strobing light to warn pedestrians, drivers or animals of its presence’, the Amazon Scout is a new robot delivery service that uses self-driving technology to navigate through neighbourhoods to deliver packages to Prime customers. The first deliveries are taking place as part of a test near Amazon's HQ in Seattle and underline the emerging presence of robotics and AI in our day-to-day lives.
Scout isn’t an exception and multiple technology companies are already rolling out autonomous delivery robots to service the last mile to the customer. Robots bolstered by AI are also finding their way into other retail environments – humanoids able to greet and interact with customers as they enter a store, answering questions and offering sales advice.
AI spending in retail is forecast to hit $5.2 billion in Europe in 2019, a 49% increase over 2018 according to International Data Corporation. Worldwide spending is expected to reach $35.8 billion in 2019, an increase of 44% over the amount spent in 2018.
Retailers are clearly moving beyond experimentation and onto real implementation cases. The ability to increase footfall, generate higher revenues and deliver a personalised experience are all catapulting the usage of AI.
How is retail being affected?
AI has been personalising the retail journey. While there has been some unease about how personal data is being captured and used, where consent has been granted, AI algorithms have been efficiently dissecting and making sense of data collected by retailers to help them improve their services.
Data reveals how a customer behaves, what they do, what they like and dislike and how they like to be contacted. AI interprets the raw information into actionable insights and learns the best ways to encourage a person to buy.
The supply chain is also benefitting from innovations. Understanding shopping habits to predict what is likely to sell helps retailers with stocking the right products in their inventories. Retailers can already track what items are on the shelf, what is going to be shipped and what things are still in the warehouse allowing customers to order any item at any time.
"Retailers are clearly moving beyond experimentation and onto real implementation cases. The ability to increase footfall, generate higher revenues and deliver a personalised experience are all catapulting the usage of AI"
Away from the shopfloor, AI is being leveraged to better understand trends. Systems are monitoring social media posts to pick out what the public or celebrity circles are discussing. In a similar way to how AI machines are used to monitor global news sites to gauge sentiment on companies and whether they are worth investing in, retailers are using the technology in the same way to predict new trends.
AI-driven supply chain management is also finding a way to revolutionise traditional bricks and mortar retail. Open-concept stores are giving online-only stores a physical presence. Consumers who wish to buy online, but also want to touch and feel the product before buying, now have the means to do so (although they might have done this previously by ‘showrooming’).
Online retailers with a huge range of products, or a limited wish to have a physical presence, can use open-concept to show off samples of their products. AI combined with data gathered on customer interests could narrow the products on show to the ones most in demand.
AI is revolutionising marketing and communications. Retailers can interrogate large data sets to create targeted advertising where location-based push notifications are sent to apps or smart advertising boards. Stores apply self-learning algorithms on customers' previous purchases, search habits, age, gender and other variables to make personalised and effective customer campaigns. While online retailers have done this for years AI has supercharged the effort.
Chatbots are revolutionising online customer service and there is already widespread use of them on social media platforms, messaging apps and digital assistants like Amazon’s Alexa or Microsoft’s Cortana.
Every retailer has experimented with chatbot technology. Customers can get immediate responses to questions that retail representatives may not have the answers to as readily. They can ‘talk’ to a brand at the time of their choosing, via the messaging services they already use – something that would be difficult to do on a massive scale with staff.
In years to come, expect to see some ground-breaking innovations. Virtual AI assistants have been surfacing all over the world and we can expect to see better and more advanced versions, that will provide us with automated real-time help with the AI machines learning from each human interaction to further broaden their knowledge, to improve the accuracy of their responses.
Digital ecosystems help businesses build connections between people, departments, organisations, partners, adjacent industries – and even the competition. Ecosystems are already helping retailers get closer to customers. An interconnected platform can gather and analyse huge amounts of data generated by an ecosystem to enable more intelligent transactions and decisions to be made i.e. customer and vendor reviews, personalised recommendations, offers and predictive supply. As a retailer you can either create your own ecosystem with someone else’s help or hop onto an existing one that boosts what you have to offer. And it might also pave the way for new and unexpected business opportunities.
Remember the robot making its deliveries earlier? Well, AI-driven robots are going to get ever more intelligent, engaging and personal. Maybe they’ll recognise you as you step foot inside a shop, offer specific sales advice, answer complex pricing enquiries, discuss sales options or take different types of payments from you – in other words, everything that a real store representative does but more efficiently, which is probably a discussion best left for another day.