Traditional retail has come under a lot of pressure lately. From a massive consumer shift towards online, through an increased competition from online shopping behemoths like Amazon. The new reality has meant that a lot of brick and mortar retailers had to close down, with one brokerage firm forecasting that a record 8,600 store might close down in 2017 in the US.
Amidst this epic downturn, AI may hold the key to, at least, partial, revival of the offline retail as we know it.
A report by BI Intelligence, Business Insider’s research service, shows that a number of retailers plan to implement AI as a way of boosting their competitiveness.
challenges that retailers may face as they implement AI, specifically focusing on technical and organizational challenges.
AI can help them in “personalizing online interfaces, tailoring product recommendations, increasing the relevance of shoppers search results, and providing immediate and useful customer service”, the report says.
AI-powered retail however, comes at a high cost for retailers, most of which are utterly unprepared for it. The main challenges are related to “data storage systems being outdated and inflexible, as well as organizational barriers that prevent personalization strategies from being executed effectively”.
According to the report, a total 77% of the retailers who took part in the study plan to invest in big data solutions for Internet of Things (IoT) data by 2021. In addition, 72% plan to invest in cognitive computing and/or machine learning projects.
While many traditional retailers are still lagging behind or on the sidelines when it comes to AI, new technologies are inherent in online shopping environment. For quite a while now, online store have been using AI actively to offer shoppers recommendations based on their interests, preferences and search history.
Data published by management consulting firm Boston Consulting Group (BCG) speaks clearly about the power of retail tailored to customers’ individual tastes.
According to the company, “brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6% to 10%, according to our research—two to three times faster than those that don’t”.
BCG forecasts that “personalization will push a revenue shift of some $800 billion” to the 15% of the companies in retail, healthcare and finance who are able to capitalize on personalized commerce in the most effective way.
Even though the so cold “digital natives” like Netflix and Amazon have a clear advantage, the company says many traditional retailers are catching up fast. It gives example with Starbucks and Walt Disney who have managed to engaged their customers with mobile games and a number of other digital activities.
Among the myriad of ways AI is helping retailers and shoppers alike, consumer behavior analysis, marketing data processing, product discovery based on past purchases, browsing history and other interest-related factors.
US startup Markable for instance, is offering its image recognition technology to fashion retailers, helping their customers find a match to a piece of clothing they’re looking for. When a shopper goes to a retailer’s website, using Markable’s technology, the customer can choose an option called “camera search” where they would upload a photo of an item they like and have the site return similar products for purchasing.
Another example is US home improvement chain Orchard Supply Hardware. A few years ago, the company installed a robots in some of its stores to meet and greet customers and help them with some basic information about inventory.
Japanese consumer electronics retailer Yamada-Denki is another store which has employed similar assistants.
These and other companies use technology developed by Mountain View, CA based robotics company Fellow Robots which builds inventory management and customer service solutions.
Meanwhile, there are companies like Fetch Robotics robotizing warehouses, commercial and industrial space operations, while others like Starship Technologies plan to use robots in food delivery. Earlier in 2017, Starship Technologies, a company by the co-founders of Skype’s, launched a trial program with Dominos’s Pizza to deliver pizza across a few cities in Europe. Amazon and the like are also testing deliveries by drones and other robots in the US.