The retail industry is changing, driven by transformations in customer behavior and evolving expectations. E-tailers are upgrading their retail business solutions to bolster the digital storefronts with the help of innovative, experience-centric physical stores, thereby, moving further ahead of brick-and-mortar stores. A great example of this is Amazon Go; the next-gen store requires shoppers to scan their smartphones as soon as they arrive. The ‘just walk out’ technology deployed by the company identifies the point when products are taken off, and keeps track of the virtual cart. Once customers are done shopping and walk out of the store, the payments are charged from their Amazon.com accounts.
Retailers are investing heavily into tech. More than any other technology, artificial intelligence (AI) is undoubtedly dominating the emerging retail business solutions.
Investments in AI Will Create Retail of the Future
Retailers are losing buyers because of inefficient manual processes and customer service executives with limited knowledge. Artificial intelligence in retail comes to the rescue with its algorithms, machine learning, and memory-based reasoning systems to sense, act, and adapt automatically. The emerging AI applications in smart retail include real-time merchandise trials, customer recommendations based on history, color preference, and natural language dialogue interfaces.
Virtual Customer Assistants (VCAs) and Virtual Personal Assistants (VPAs) are assisting retailers in elevating the customer experience, apart from automating basic tasks such as locating products. An example of VCA’s impact on the retail industry is smart mirrors, which are gaining rapid momentum. Smart mirrors essentially allow a customer try various costumes virtually and compare the looks. So, the need to physically try each and every outfit is done away with.
“By 2020, 25% of customer service and support operations will integrate virtual customer assistant technology across engagement channels, up from less than 2% in 2015.” (Prediction by a renowned research firm)
Amazon Echo is a VPA that performs multiple tasks such as reminding customers about their product replenishment date — without being commanding — and playing music from services such as Amazon Music, Spotify, Pandora, iHeartRadio, and TuneIn.
AI is helping in Customer Engagements
It is common to receive text messages sent out by stores from where you had bought products earlier, notifying about their promotions and discounts. However, it is not an effective way to improve customer loyalty as text message communications lack intelligence. Building relevant and powerful customer communications and effective promotions is a challenge encountered by most retailers.
Artificial intelligence in retail such as experiential memory-based reasoning, CRM, customer journey, customer personality, and social analytics seem to fill the gap between retailers and customers by help curate apt communications. The solutions allow retailers to use insights and provide personalized recommendations, informed loyalty programs, invest in appropriate sales channels and pursue smart retail through an improved customer experience. Emerging sales channels include auto replenish systems, social commerce, mobile commerce, and VPA-enabled wireless speakers such as Amazon Echo. Social commerce is undoubtedly a compelling way to order products by sending a message to a vendor on Facebook.
Decision model for AI adoption
Deploying artificial intelligence in retail for traditional stores is often daunting as disruptive technologies will need to overhaul the existing systems to build an analytics-based framework. Retailers are slowly moving towards adopting an ad hoc approach to leverage and nurture the power of AI. However, the maturity levels are yet to be identified.
Enterprise-wide vision is fundamental to curating an AI strategy that aptly identifies transformation goals and the level of outcomes expected. Existing organization capabilities assets should be monitored carefully, along with examining the requirement to acquire new ones. However, to accomplish this, accepting and adopting the vision by various business units is paramount. Executive buy-in and support is highly valued when implementing an ambitious and complex business strategy involving technology as a core component. Given the broad relevance of AI, roles within each of the towers should be included in the governing body. Buy-in should come from the CEO, Chief Operating Officer (COO), Chief Information Officer (CIO) and/or the Chief Technology Officer (CTO) as technology deployment should be aligned with the business objectives. Leaders should be actively involved in developing the vision and being the driving force enforcing AI technologies across the organization.
With growing competition and changing market dynamics, AI is slowly becoming imperative to the business strategy. ‘Are we there’ is not the question that needs attention. Rather, one should proceed with a ‘how do we get there’ approach.