Retail’s ongoing digital and cloud-first transformation was on full display at ShopTalk 2019, and the Microsoft Industry Experiences team was there. This is the third in a series (read part 1 and part 2) of three blogs where we delve a little deeper into five topics that were dominant in discussions. This article focuses on this trend:
- The next stage, in the data and analytics journey of retailers, is artificial intelligence (AI) but retailers need to help customers and employees understand the value of AI
Solving traditional retail problems with AI
Out-of-stock is still a trillion-dollar problem in retail and consumer goods. Seventy percent of customers still leave a store without making a purchase, and an average retailer reports 60% demand forecast accuracy, at best. These are business problems that remain unsolved. Artificial intelligence (AI) is the tool that will unlock these problems.
There are three top areas where retailers indicate AI can begin to solve problems:
- Accurate inventory planning
- Precision merchandising and assortments
- Actionable consumer insights
However, none of these problems have been definitively solved using legacy retail applications and enterprise resource planning (ERP)-based approaches.
Some leading retailers using AI are Target (predicting pregnancy), Walmart (anticipating customer needs and where/what products should be stocked, and predictive fulfillment kiosks), Lowes (store robot for customer assistance), North Face (robotic sales associate), Alibaba (making big data accessible for smaller retailers), and Netflix (always providing curated and personalized entertainment).
AI can assist in balancing human and machine-delivered tasks and provide predictive patterns to deliver better customer experiences and a more efficient supply chain. Based on early deployments and use cases described above, while AI finds a place in the adoption of voice-enabled customer service in stores, virtual and personalized inventory search, and demand optimization, the driving force of AI will be its convergence with the blockchain distribution network, Internet of Things (IoT) and retail data.
AI can additionally aid in the demand-supply network and last mile (direct-to-store deliveries and fulfillment). It can also provide predictive personalization patterns to deliver better customer experiences in the store and across digital channels. Delivering the right level of customer engagement and the right experience is the goal, but before seeing the real results of AI, retailers need to address data challenges and it is vital that retailers spell out the value to customers/employees.
One thought emerging is that retailers should recognize themselves as data and technology companies. But the looming problem is dealing with the potential flood of data and diversion from core customer-centric and operational goals. Only AI can manage the wide scope and variety of data, ingesting it in real-time, and finding insights hidden to humans. Instead of humans acting on vague and inadequate data, AI is presenting the choices and capabilities available to customers and employees alike so they can make better decisions in the stores, at the headquarters and in the supply chain.
At ShopTalk 2019, technologies and discourse revolved around a series of some new and some old ideas, but strong emphasis was made on execution—retailers must adjust and stay the course. The fact that digital, data and artificial intelligence are trying to find the harmony and acceptance of retail customers and employees is a new normal that retailers will be addressing for years to come.
To learn more about retailers are using AI, download our latest playbook covering artifical intelligence (AI).