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Changing Retail Landscape on the back of Advanced AI & ML

Changing Retail Landscape on the back of Advanced AI & ML
Ajai Kumar - Vice President - Engineering R&D | March 1, 2018
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Lauren Desegur, VP of customer experience engineering at WalmartLabs said,

“We’re essentially creating a bridge where we are enhancing the shopping experience through machine learning. We want to make sure there is a seamless experience between what customers do online and what they do in our stores.”

Ivano Ortis, VP at IDC recently predicted:

“Artificial intelligence will take analytics to the next level, and will be the foundation for retail innovation, as reported by one out of every two retailers globally. AI enables scale, automation, and unprecedented precision, and will drive customer experience innovation when applied to both hyper micro customer segmentation and contextual interaction.”

Isn’t it cumbersome for us to access shopping websites on the internet and needing to fill our details over and over again? Don’t we expect software to come to our rescue and chart our shopping tastes, choice patterns, and brand preferences? When it comes to Artificial Intelligence (AI) and Machine Learning (ML), we have come a long way without even realizing how AI and ML have percolated our lives and made our habits evolve. When IBM’s supercomputer, Deep Blue defeated Gary Kasparov, the then reigning world chess champion, nearly two decades back, we got a glimpse of how machine knowledge can be incubated and at some point be used to make our lives easier and better. Artificial Intelligence (AI) and Machine Learning (ML) have been around for quite some time now, and their evolutions have only opened up further avenues of industrial proliferation.

While Artificial Intelligence (AI) and Machine Learning (ML) are enriching our lives every day, the retail industry has woken up to the potential of the technologies, and how they could be key components of doing business going forward. The thought behind incorporating AI and ML in retail is to ensure that the processes are standardized and have a greater reliance on machines to execute repetitive jobs and free up the workforce for more specific, executive jobs.

Modernizing the Retail Roots

Back in 1861, at Philadelphia, one John Wanamaker brought to the market the virgin concept of ‘fixed price’ price tags on products. This, among many other new ideas, revolutionized the retail landscape and disrupted the ecosystem in a big way. Cut to the digitalized present and the John Wanamaker of today, Jeff Bezos, web commerce has been catalyzed to the extent that the fortunes of the retail industry now depend squarely on it.

Bezos’ innovative retailing ideas have long been revered as path-breaking and stats across the board show that Amazon is not just a trendsetter, but also a key driver of the retail industry globally. Apart from acquiring the patent for packaged delivery by drone, the organization is now at the cusp of another retail revolution in the form of Amazon Go. This smart store enables shoppers to scan products of their choice and pay for them directly from their devices. All they need is the Amazon Go app and it would save them precious time and unnecessary hassle of queuing up for delivery. By ensuring time reduction of transactions, the organization will manage to bring down its OpEx substantially, while also offering its customers a hassle-free, improved shopping experience.

Smarter Machines, Easier Shopping

In order to improve customer experience, organizations are proactively using disruptive technologies like sensor fusion,computer vision cognitive computing and deep learning. The stores are fitted with gadgets that can record a customer’s view and, through Artificial Intelligence (AI), ensure that the products the customer is viewing can be made accessible to them for probable purchase. Companies have been using smart methods like free Wi-Fi in order to check how many people pass by their stores, how many of them come in, the average time they spend, and their amount of purchase. Popular technologies in use for customer tracking include heat mapping and video analytics. But Amazon Go has gone head and shoulder above all such methods by bringing the products closer to customers and letting them select, procure, and pay with little hassle and at minimum possible time.

To improve customer experience, organizations are proactively using disruptive technologies like sensor fusion, computer vision, cognitive computing, and deep learning.

However, deploying AI for linking products to shoppers comes with a set of realistic challenges. For one, a customer’s greater exposure to products and the mobile payment option make the ‘just-walk-out’ technology vulnerable to digital error and human malice. Ensuring that customers are not walking out without paying for products they have picked is a perpetual concern, as is the possibility of charging customers for a product that they haven’t purchased. In both cases, the company stands to take a beating, in form of pilferage losses or loss of customers due to erroneous charging. Also, while grocery shopping, customers often place products back at wrong sections and aisles, which could lead to certain products, especially the ones that are priced per their weights, not being charged accurately. These are small but critical issues that retailers must address effectively in order to make shopping enjoyable and glitch-free, while not incurring foreseeable losses.

A Holistic Industrial Engineering Approach

While Amazon is the most prominent innovator in the retail space, their technologies are custom-developed and commercially protected. The company is expected to license the Amazon Go technology to other retailers as they did with the Amazon Web Services technology earlier. Walmart too incubates and develops, in partnership with start-ups and academia, its own proprietary robotics, virtual and augmented reality, ML, and AI technologies.

With Gartner predicting a high 85% customer interaction being reliant on AI by 2020, the time has come when the retail industry steps up its efforts in creating a highly digitalized ecosystem that keeps customer experience at the center. The entire retail ecosystem including Payment companies (young and legacy), Merchants (online and retail) will need to adjust their business models just to remain in the game. The key would be for them to have an engineering mindset to traverse this path and keep them on the cutting edge. Another alternative for them would be to partner with an engineering service provider who can help them transform to become a true “21st Century Technologies” organization.

The retail industry is staring at a sea change in operations over the next 12-24 months, and nothing rings truer than what the legendary Canadian ice hockey player, Gordie Howe, once said: “The secret to success in hockey is not being where the puck is; it is being where the puck is going to be.”

Sources:

https://www.forbes.com/sites/quora/2016/12/06/amazon-go-ends-checkout-lines-and-shoplifting-begins-a-new-era-in-retail/3/#34125756436b

https://www.amazon.com/b?node=16008589011

https://www.bloomberg.com/news/articles/2015-02-03/i-ll-be-back-the-return-of-artificial-intelligence


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