While it was touch-and-go for a while after e-commerce arrived on the scene, rumors of brick-and-mortar’s demise from the retail landscape have not just been greatly exaggerated — in many marketplaces, it is certifiably fake news.
Retail is definitely changing, but it’s not going to disappear anytime soon, commented Jeff Yapp, the CEO of Portland, Oregon-based consulting agency Wutznxt and a successful marketing professional. He states that a key driving force that is powering this long overdue evolution is AI. Retailers that embrace this new normal and position themselves as early adopters will benefit the most. Conversely, retailers that are dragged kicking and screaming onto the AI landscape will be lucky to survive.
While the convergence of AI and retail is only getting started — annual worldwide AI revenues are projected to climb more than 5,000% percent through 2025 and reach a whopping $36.8 billion — here are five ways that forward-looking retailers are using AI to re-invent retail and significantly improve both their competitive advantage and bottom line:
1. Optimize Customer Experience
Retailers like Macy’s are using virtual agents built on the Microsoft Dynamics 365 platform to provide in-store customers with contextualized, real-time responses to common inquiries, as well as provide recommendations and customized offers. Research shows that 75 percent of consumers are more likely to do business with a retailer that recognizes them by name, offers relevant recommendations based on past purchases and is aware of their purchase history.
Jeff Yapp claims that by fully integrating the virtual assistant into their API, Macy’s is leveraging AI to deliver exceptional customer service that is seamlessly scalable, whether there are 50 customers on the floor or 500, each customer is a VIP and at the center of the ecosystem.
2. Drive Strategic Business Operations
Retailers like the Fragrance Shop are using Microsoft Azure and Microsoft Cloud Technologies to capture real-time customer meta data — such as how many customers enter vs. walk past a specific store or group of stores, the connection between sale frequencies and conversions, and more. Ultimately, this data provides penetrating, unprecedented insights into strategic business operations such as what items should be carried and when, what roles employees should play to optimize customer experience and sales and how many employees should be available in specific stores on specific times/days.
By leveraging Microsoft Cloud Technologies, the Fragrance Shop is offloading several core IT functions — which not only saves money, but it also enables executives to focus on strategy instead of getting bogged down with a myriad of day-to-day digital transformation issues and problems.
3. Establishing and Maintaining Standards
Retailers like Mars Drinks are using multiple Microsoft technologies such as Cortana Intelligence Suite, Azure IoT Suite and Power BI to compare sales data with contextualized market research information (e.g. weather, holidays, customer sentiment), in order to establish and maintain consistent standards across locations such as inventory levels and optimal purchase paths.
Jeff Yapp claims that McKinsey has highlighted what all successful retailers know, and what unsuccessful retailers wish they had learned: the three keys of customer satisfaction are consistency, consistency, and consistency. AI is helping companies achieve uniform standards across all retail touchpoints, which is absolutely critical. It only takes one negative experience at a single location for many customers to boycott a company entirely and go from inspired brand evangelist and ambassador to incensed anti-marketer.