I recently returned from a month in the US, visiting SXSW in Austin, Silicon Valley, and San Francisco as part of a targeted US business and research trip.
Spending time with US-based retailers and technology companies provided a sense of which market and consumer shifts are set to have the biggest impact over the next two to three years.
AI: From autonomous to humanized
Artificial intelligence is designing our future and will drive economic growth for years to come. It forms the basis of the most inventions as machines learn our behavior, make decisions and provide solutions.
AI shapes every aspect of Amazon’s business, powering Alexa, guiding robots in fulfillment centers, and as I experienced at Amazon Go in San Francisco, fueling the most technologically advanced shopping experience. No lines, no checkout, no cashiers — just grab and go. Around the corner, Cafe X has a robotic barista that can make up to 400 coffees per hour. Coffee orders are placed on a kiosk and picked up by entering a code. Down a few blocks, Rent the Runway has adopted frictionless shopping and opened its fifth site, featuring automated checkouts, accelerated returns and no price tags.
An empathetic approach to data
Beyond automated experiences, conversational AI has shaped the way we interact with brands. Chat and voice assistants — and other multimodal interfaces — are now our preferred form of communication. Despite technological advancements, today’s state-of-the-art systems and applications are still limited in their ability to understand context and meaning in conversation. Groundbreaking interdisciplinary approaches across science, humanities, and linguistics are working to humanize conversational AI. The next generation of human-centered AI technologies and applications will provide far superior experiences. Machines will understand the structure of language, thereby understanding meaning and context, and be able to differentiate interface, voice tone, and language in order to represent a brand accurately — changing chat and voice assistants as we know them today.
Today we see the pressure surrounding data privacy intensify, as shoppers’ expectations increase. Brands are working harder than ever to provide better products, services, and experiences, all of which require deep consumer insight that only complex data can bring. In exchange for Amazon Go providing the smartest, easiest and fastest shopping experience, I shared a lot more data in my 30-minute visit than I would ever share in a year of shopping at a local grocery store.
The challenge for brands is how to balance the need to deliver fast, personalized, intuitive experiences with a level of appropriate data protection and usage. Trust has become even more critical. Shoppers trust brands that offer transparency, brands that go “all in” on one specific area of expertise or specialization, and brands that have an eye on empathy as well as profit margins.
To garner empathy, a focus on the customer and/or user experiences is key. Most tech companies today have an anthropologist on board (termed chief research officer, head of UX or head of CX). The benefits of data scientists working closely with anthropologists are significant as we move into a new way of doing business.
Beyond organizational structure and systems, an effective way for brands to demonstrate empathy is by showing a human side, taking customers behind the scenes and sharing origin stories. Macy’s discussed the impact this can have, with their Macy’s Style Crew — a collective of employees that share Macy’s content through their social account. It’s allowed Macy’s to shift from “company selling to people” to “people selling to people”. It has put itself where the customer is and has been successful in making the customer stop and think, rather than be a linear point on their shopping journey.
Multi-faceted customer experiences
Beyond common forms of data, the use of biometric technologies continues to increase as retailers integrate applications into apparel and devices to identify and predict behavior. Lululemon has embedded different AI sensing technologies in its apparel and is experimenting with biometric data to track and correct yoga movements. Walmart is using smart shopping carts to measure temperature, heart rate, and grip strength in order to provide a better experience and to also sense and locate angry, frustrated or stressed shoppers. L’Oréal has announced a partnership with microbial genomics company uBiome to “deepen [its] research into the skin’s bacterial ecosystem in order to develop more personalized skincare solutions for individuals”.
Brand building and digital community are two of the most important things a business can invest in. Both lead to better customer experiences, which can have a considerable commercial upside. Research by Harvard Business Review found that customers who have the best experiences were shown to spend 140 percent more than those who had a bad or less than great experience.
Being able to connect through compelling, premium experiences across multiple mediums has allowed brands to become more human-like, immersive, engaging and transformative. It’s a form of pull marketing, rather than push.
For Rent the Runway, every business decision has been guided by delivering a strong brand and customer experience, and community. The company now has 90 percent of new customers coming via word of mouth — a powerful measure that not only drives down acquisition costs but also generates sustainable and profitable growth.
Outdoor Voices has blurred the lines between athleisure and lifestyle. Visiting its store in San Francisco, I discovered a multi-functional space with a distinct Zen-like decor in wood paneling and calming hues. The store is a magnet for shoppers wanting to take a yoga class, sip tea or simply hang out — then share it all on Instagram after.
As the Director of Sharley Consulting, Emma works with retailers in Australia and overseas, from early-stage start-ups to leading global brands. She has spent most of her career in retail and has a strong track record, winning multiple awards along the way. She is also the co-founder of a personalized shopping app, sits on retail and technology advisory boards, regularly speaks at conferences and is an avid contributor to industry publications.
Originally published at https://www.insideretail.com.au on May 20, 2019.