While robots may seem like the stuff of SciFi movies, they’re starting to take over the retail space too.
Implementing artificial intelligence and machine learning can unlock some significant benefits for retailers. For example, a study conducted by Capgemini claims that AI technology could save retailers as much as USD$340 billion by 2020.
In addition to directly impacting your bottom line, AI can also build brand loyalty, enhance customer satisfaction, and help behind the scenes with aspects like supply chain planning, demand forecasting and customer intelligence.
AI & Customer Intelligence
AI technology has significant potential to increase customer’s loyalty and brand awareness by providing retailers with in-depth insights into customers behaviours, inside and outside the store, that were unthinkable even five years ago.
With such potential, it’s not surprising that 79% of retailers plan to use the technology to unlock customer insights.
By better understanding customers, retailers can deliver personalised marketing and promotions, assist customers stuck in the sales funnel and understand purchasing drivers.
With this data in-hand, brick-and-mortar businesses are better equipped to compete against online giants like Amazon and create an omnichannel strategy that delivers.
The Value of Smart People
While AI certainly holds some interesting potential, to truly achieve the best results, retailers also need to rely heavily on talented employees that understand how to operate and leverage the technology.
These AI-savvy people can take the aggregated data produced by AI technology and turn it into business strategies that drive conversions. For example, creating optimised demand planning or personalising promotions for shoppers.
By combining human and machine learning, retailers can gain a competitive edge and propel their businesses into the future.
How AI Benefits Retailers
Retailers occupy a unique position when it comes to implementing AI technology, as most already have access to a vast amount of in-store data.
If analysed and processed correctly, this information could provide deeper insights into how customers behave. For example, what products they prefer or often substitute, their reactions to prices and promotions, where customers get stuck in the online shopping experience and their preferences for brand engagement.
Manually analysing this information is time-consuming and prone to errors. However, AI technology streamlines this process as it’s particularly skilled at handling and making sense of large databases.
Once unlocked, AI can help retailers improve demand forecasts, optimise current stock, enhance marketing campaigns and provide more effective communications. As AI provides such granular data, it can also be used to learn what offers work for individual customers and help retailers to adapt accordingly.
Challenges of Implementing AI
To achieve the greatest impact, retailers need to source data from their existing customers and then use this information to tailor campaigns to build brand loyalty and annual spend.
However, unique challenges arise as retailers gain access to even cheaper data storage and better collection process.
Implementing AI. As AI technology often comes as part of a technological solution, it can be difficult for retailers to customise the technology for their unique needs. And, sometimes the technology will need to be trained before it can yield results. So, AI developers and other tech-savvy employees are required to help companies unlock the technology’s full potential and make sure it’s fully integrated into daily business practices.
Understanding AI. Similarly, AI technology can provide in-depth insights, but many retailers struggle to understand how to leverage these insights. Older AI solutions may provide answers, without the relevant context, as they’ve been designed to protect users from being confused, overwhelmed or distracted by the data. For the best results, retailers will need to train employees, so they understand the data and reasons behind outputs. Training employees can also help overcome the current skill shortage in the AI field.
Identifying Relevant Data. While retailers certainly have access to large databases, this doesn’t mean that all the data is relevant or useful. Data could be missing important components that help retailers match attributes, might be too general to identify specific trends or data may not be accurate in the first place. Achieving the best results with AI technology means that retailers will need to guarantee the quality of their data before unleashing their newest AI device.
Retailers Currently Using AI Technology
It’s not surprising that retailers are already adopting AI technology, from helping customers locate items in warehouse environments to automating the sales operation process.
- Sales Assistant Software. Software like Conversica helps retailers to automate and enhance their sales operations by generating and engaging with leads.
- Robot Delivery. Amazon uses drones to deliver small parcels while Segway’s ‘Loomo Delivery’ bot can deliver takeaway food straight to your desk and Ocado has robots in their warehouse.
- Smart Shelves. AI technology can be used to improve the in-store experience by informing retailers when shelves are low, help customers locate products and even provide personal recommendations. The American-based grocery chain Kroger uses a smart shelves app to highlight products customers might enjoy like gluten-free or vegetarian items.
Will Robots Steal Our Jobs?
Some CIOs and business leaders argue that taking humans out of the decision-making process will help cut costs, streamline services and provide significant commercial benefits. And, while these benefits certainly exist, humans are unlikely to be replaced in retail.
Customers still want to build human-connections with store personnel and retailers will need human employees to unlock and understand AI-gathered customer insights. Human intelligence is required to transform AI insights into data that can drive the right business actions and outcomes and avoid harming sales.
As such, we believe that AI technology should not exist in isolation. So, instead of outright replacing employees, low-skilled employees should be re-trained so they can work alongside robots to work smarter, access deeper insights in less time and maximise results.
The Future For Retailers
By jumping on the AI bandwagon now, retailers will be better equipped to improve their AI strategy as the technology advances.
With more advanced AI technology, retailers will be able to build more personal relationships and provide individually tailored recommendations for customers, which will ultimately drive sales and help brick-and-mortar retailers maximise sales in an omnichannel world.
For example, customers may one day be able to create a shopping list, and AI technology will then make recommendations based on their dietary, economic, environmental, and brand preferences. It may even provide suggestions on where customers can find the best price and then use robots to deliver the products straight to their door.
To truly thrive, retailers will need to not just react to this new technology, but embrace it by identifying real-time opportunities. Is your business ready?