As the applications for Artificial Intelligence (AI) become broader, we are told to expect a brave new world. In spite of the hype around smart machines, the truth is that we don’t know how an onslaught of robot workers will change the planet, and for retailers, how that will directly affect their business. What we do know is that it’s going to happen fast, and in some cases it has already begun. Here’s how retail brands can leverage artificial intelligence, starting today.
Current uses of artificial intelligence in the retail market fall into three buckets: one is backend operations such as inventory management. Using AI to handle simple, repetitive tasks, is arguably a no-brainer.
The second is as a triage tool to address basic customer needs and pass off more complex tasks to humans. Triage tasks include answering frequently asked questions or guiding customers to find the product they want in-store, such as the Lowe-Bot. As AI improves, it will be able to handle more challenging requests.
The third use of artificial intelligence in retail is to sift through consumer data with the goal of delivering more targeted experiences.
It’s a simple idea. Track details about consumers’ individual tastes, buying behavior and needs, and then tailor offerings that truly meet their desires. Personalization has become the holy grail of retail, with brands spending $5.9B in 2019 according to IDC. How can retail brands leverage artificial intelligence to customize the customer journey?
Here are a two key questions brands must answer:
1. What information should we seek?
Many retail brands have a lot of consumer data but can’t utilize it because it’s not the right information. Under Armour’s Record App is a best-in-class example of how to get it right. The app collects information about the various daily physical activities of the user, including heart rate, calorie burn, sleep time and nutrition. The app has its own value as a tool to help people stay healthy. The information collected is highly specific to what the consumer needs that Under Armour can provide, and is therefore useful to the brand.
2. How will we use this data to create a meaningful experience for the consumer?
Simply using an algorithm to make suggestions based on previous purchases is old news. How many times have you seen an ad pop up in a social feed for something you recently bought and therefore no longer need? Cross-selling and up-selling are a step forward, but there are bigger and better ideas to be realized. Brands need to experiment and innovate. Setting up test-and-learn lab stores to figure out how AI can be integrated into your retail brand strategy is a cost-effective way to nurture innovation. Brands that go beyond selling products and move towards engaging the consumer in their lifestyle needs and experiences will win in the retail sector.
What applications of artificial intelligence in the retail market are not going to stick?
Some brands are engaging consumers with physical robots. This use of artificial intelligence may not have lasting impact. In fact, it may actually be perceived as a negative. Talking to a robot may be a fun novelty but as job losses to AI become more significant, there is a strong possibility of a backlash. The novelty will also quickly wear off and feel dated. There are simply better ways for retailers to harness artificial intelligence.
A critical point: do not use robots, chatbots or other AI-enabled frontline strategies that decrease the value you deliver to the consumer. Think about self-checkouts, which have been controversial. Many shoppers dislike having to bag items themselves and feel like they are being asked to do work that the grocer previously paid an employee to perform. Rather than making the checkout process smoother, it became a bigger pain point. On the other hand, AmazonGo’s pick-up and walk-out technology solves a problem for the consumer by helping them avoid a line-up. When this technology becomes more widely available, it is likely to be more successful.
The time has come for retail brands to think broadly about how to leverage artificial intelligence to support their retail store experience and customer journey. Once your retail brand has some foundational ideas about how AI might support your business, test-and-learn environments are an ideal lower-cost, low-risk way to put those ideas into action.