Artificial Intelligence in Retail
So what’s the big picture look like for the future of retail?
AI in retail has long been the holy grail of E-commerce and brick-and-mortar optimization. However long it takes for true personalization to occur in retail marketing and advertising, each year AI becomes more important in the retail industry.
According to some analysts, AI will boost profitability in retail and wholesale by nearly 60% by 2035!
According to Retail Dive, retail spending on AI will reach $7.3 Billion by 2022.
Think about it though, Retail as an industry is expected to top $3.8 Trillion in 2019, according to the NRF.
Retail AI is still a Product that’s Immature
Even with all this hype, in 2019 AI is still really not likely moving the needle for retailers as much as one might think. Brands know that relationships matter. Advertising on Instagram is still trending.
However AmazonGo-like stores are coming, and they will generally usher out the age of the cashier, and slowly but surely retail sales agents as well. This really is thanks to AI, deep learning, LiDAR, facial recognition and computer vision, among other things.
In a study released in early 2019 by IBM at the National Retail Federation’s big show in New York, IBM identified the following six ways the retail industry plans on utilizing AI, based on respondents’ feedback:
- Supply chain planning (85%)
- Demand forecasting (85%)
- Customer intelligence (79%)
- Marketing, advertising, and campaign management (75%)
- Store operations (73%)
- Pricing and promotion (73%)
- AI is impacting the retail industry across the board, but especially in logistics and business intelligence.
Retail is worth $3.8 Trillion in 2019
U.S. retail sales are expected to rise between 3.8 percent and 4.4 percent to more than $3.8 trillion in 2019.
Meanwhile trends like buying online and picking up in store (BOPIS) are really catching on with brands like Costco, Walmart and so forth. E-commerce penetration in China and India means their retail sectors are prone to super-apps that are truly innovative for customer centric convenience.
In the U.S. we are bloated with physical retail. Yet in recent years even the likes of Alibaba, Amazon and JD.com are hitting brick-and-mortar stores with a new level of AI and machine intelligence. Retail experiences are changing due to AI each and every day. We just don’t necessarily “see” it.
The Retail Apocalypse Just Means Retail is at the Intersection of Human Activity
Retail is a symbol of how transformative the marketplace can be in human technology. Think about it, even with more than 6,000 stores slated to close in 2019, AI will also create new jobs in the retinal industry even as cashiers, shelf scanners, cleaners and other jobs are automated away by AI and robots.
The only thing that’s really a retail apocalypse is how disruptive AI is becoming in all human activities, and this includes all aspects of consumerism and capitalism broadly speaking. If you make below $20 an hour and your work is repetitive, it likely won’t exist in 2030 or 2035. The retail cashier and sales person might be having their last appearance in the next few decades ahead.
The Holy Grail of Retail Personalization
Consumers say that a personalized shopping experience can inspire loyalty and increases in spending. AI is augmenting and enhancing our retail experiences. This is why things like advertising for brands on Amazon also have such an incredible future, even as Google’s hold on advertising is showing signs of diminishing.
It’s business as usual though in retail, brick-and-mortar retailers aren’t meeting consumers’ in-store personalization expectations. It’s very hard to augment the physical store experience. But the impact of VR and AR on retail is really very minimal. The impact of apps on shopping however is still huge and might be just getting started.
Some believe with regards to AI in retail that AI will have its biggest impact on personalization, search and chatbots. Deep learning and machine intelligence are rather new to retail, and it will take some time to see the fruits of some of these experiments and innovations.
The Lure of Real Retail Stores
Consumers still want to shop in stores, they just want to shop in a different way. AI is helping to facilitate what the new consumer wants and enjoys the most about the retail experience.
As shoppers move their spending online and foot traffic to malls declines, legacy retailers have been forced to rethink their strategies and begin to adopt the winning ways of AI, personalization, and digital experiences that work and show a proven track record with Millennials and GenZ consumers.
According to a study by Juniper Research, in the coming years retailers will spend heavily on AI tools that will enable them to differentiate and improve the services they offer customers. These will include automated marketing platforms that generate tailored, timely offers, and chatbots that provide instant customer service.
Automation & AI Means a Different Life
The truth is however, AI might lead to re imagining the very concept of shopping, work and human relationships, just as blockchain will help us rethink how we see money. All this to say that AI integration in retail is an important step in the 4th industrial revolution and our move to a more connected Internet-of-Things smart home-smart city scenario. Retail drone and robot delivery is coming.
AI will enhance the marketplace. These things just tend to take more time than we assume. AI needs a certain maturation of the Cloud, Point of Sale, Payments and so many other sub verticals for it to fully manifest. Having smarter robots and a neural interface instead of clunky smartphones will also help.