Artificial Intelligence (AI) is making serious waves as the next big thing in the retail industry, with experts predicting it will fully automate many areas of the sector in the coming years.
Up until AI has mainly been technology operating behind the scenes or applied to e-commerce, but that trend is rapidly changing as real-world retail trials new and innovative ways to make the most of algorithm-driven advancements.
Here are four ways AI is being used in real retail and what it will mean in the coming years.
A quick overview
Artificial intelligence is algorithm-driven data that provides a greater insight into consumer’s shopping habits. It gathers and assimilates data on what people have searched for, social media trends, and even the weather conditions to provide the ultimate window into what people might wish to buy, when.
According to Business Insider using AI to personalise the customer journey is where the greatest potential lies.
“Retailers that have implemented personalisation strategies see sales gains of 6-10%, a rate two to three times faster than other retailers, according to a report by Boston Consulting Group (BCG). It could also boost profitability rates 59% in the wholesale and retail industries by 2035, according to Accenture.”
They further note: “By mimicking the use of AI among e-commerce pureplays, brick-and-mortars can implement similar levels of personalisation. AI can be used to provide personalised websites, tailored product recommendations, more relevant product search results, as well as immediate and useful customer service.”
And the Australian retail industry is ahead of their US and UK peers when it comes to embracing the trend, according to RetailBiz who notes many are harnessing the value of artificial intelligence (AI) for their marketing strategies.
“A global study found that 65 per cent of Australian retailers said their organisations have a clearly defined and articulated marketing strategy in place, compared to 58 per cent in the UK and 55 per cent in the US.”
And here’s just an insight into what they’re doing…
Inventory and consumer analytics
By and large the application of AI in real world retail has so far largely been restricted to analytics behind the scenes mainly focusing on inventory. However that landscape is swiftly shifting as the tools at hand allow a better insight into shopper behaviour.
Beacons have been able to glean information about consumer interest, while apps have also provided valuable data, and even heat mapping and RFID can tell where a consumer goes and what item they pick and put down.
The mobile Point of Sale allows further data access, informing about consumer loyalty details, their spending habits and even preferred payment method.
AI can quickly assimilate this information allowing retailers to predict what will garner interest based on the trends seen so far.
Who could resist the services of a personal shopping assistant, and that’s just one of the functions AI may be likely to perform instore. Retail Leader notes American retailer Macy’s is already trialling a system at five locations where shoppers use a mobile app to interact with a shopping assistant.
At five other locations they’re using the app for interactive self-service within the store.
Meanwhile Starbucks has announced plans for a My Starbucks Barista app, allowing consumer to place orders via voice command.
“It also announced plans to use AI to power a suggested-selling, voice-command recommendation function that will offer item pairings or add-ons,” Retail Leader continues.
According to Nextweb many believe in the future retail will be fully automated by AI “eliminating long lines and obviating the need for checkouts altogether”.
Already Amazon Go is testing a concept store in this vein, but the method is far from mature.
“Go uses computer vision, machine learning algorithms and IoT sensors to understand customers interactions across the store. The technology automatically updates the shopping cart in an associated mobile app whenever a customer picks up or returns an item from a store shelf,” Nextweb notes.
In June this year the ABC highlighted a new trend that may soon make its way from e-commerce into real retail, where algorithms determine the price consumers are willing to pay.
It could potentially lead to a move away from fixed pricing that the ABC explains works a little like this:
“Dynamic pricing takes a customer's ever-increasing data trail and uses it to predict what they're willing to pay. Data used by pricing algorithms is gathered from seemingly benign sources such as loyalty cards and even post codes. But it also increasingly incorporates prior behaviour.”
These emerging uses are just some of the new ways AI will impact retail in the coming years. The key for retailers will be working out what suits their market, shopfront and structure to harness AI effectively in the modern retail world.