Is Retail Ready for AI? – Lessons from IRCE @ RetailX
Artificial intelligence (AI) continues to be the biggest buzzword in 2019. Whether it be personalizing product recommendations on your eCommerce site to deliver better customer experience or detecting anomalies on your manufacturing line, AI can and should be used to empower everyone to make better-informed decisions with data. In fact, HBR reports that AI will add up to $13 trillion to the global economy over the next ten years, and it looks like the retail industry is leading the investment in AI to capture new opportunities.
A study from IDC predicts that the worldwide spendings on AI will reach $35.8 billion this year and $79.2 billion by 2022. In 2019, the retail industry is expected to invest $5.9 billion, two-thirds coming from the U.S. retailers. Based on Capgemini’s report, the retail industry will see savings of $340 billion just from the operations by 2022. Simple linear math tells us that in 2022, retailers will achieve roughly 2600% ROI. The number is fantastic! But these are all predictions. Can we expect the retail industry to actually invest and implement AI? Are retailers ready to use AI?
To find answers, we attended IRCE @ RetailX 2019 to meet with industry experts and learn the current landscape.
TLDR - Use AI now to enhance the customer experience!
Getting more from your data now by using artificial intelligence to enhance customer experience applies to all industries and all companies doing business with one another. A great quote from one of the sessions was that “Each time a consumer is exposed to an improved digital experience, their expectations for all experiences are rest to a new higher level.” For retailers, this means that they need to strengthen the omnichannel experience. Forrester found that in 2018, 51% of US total retail sales were digitally influenced - meaning customers connected online to check prices, for example. So what does this mean to a business? You need to be able to influence a customer’s buying intention throughout the purchase journey, which includes both offline and online. Where does AI come in? Everywhere beyond your imagination. AI is really good at finding patterns, going beyond making predictions. Let’s follow an example.
XYZ is a boutique clothing retailer and Karen is a loyalty club member of XYZ. When she receives a newsletter with a coupon, she browses through XYZ’s website, checks what she likes, and visits XYZ’s offline store. Karen prefers to visit the brick-and-mortar store before making the purchase to try clothes on because every brand’s size differs. She usually ends up purchasing pants and skirts at the store but buys shirts online when she comes back because she likes to see more colors. Karen might not be the only customer who goes through such a complex journey and XYZ can definitely utilize AI to enhance customers like Karen.
1) Customer segmentation - XYZ can use AI to identify customers like Karen who surfs the web before visiting a store. Once found, XYZ could send a different email to encourage them to visit a store by offering them a complimentary 30-minute style coordinating assistance.
2) Size recommendation - XYZ can analyze that data of all brands’ sizes and the purchase/return history to match and recommend sizes to increase a customer’s purchase experience and reduce returns. For example, when Karen visits a page of a new pair of pants, the retailer can recommend her to try 4 instead of 5 because it runs large.
3) Personalized experience - XYZ can serve different products to each customer based on the customer’s previous purchasing behavior. For Karen, the retailer can open product pages with Karen’s favorite colors to enrich her experience. If a new customer visits the website, the retailer can show items that are getting the most view and purchases.
Artificial Intelligence can also improve operational efficiencies too as mentioned in Capgemini’s report. Retail companies can implement AI in Quality Control, Stock Management, Delivery Route Optimization, and more. These are just a few examples, but AI can help your business right now.
Watch our Founder & CEO, Pedro Alves, speak at RetailX where he talked about how every business should be thinking about ROAI (Return on AI) with small wins and not moonshot projects.