Retail

One of AI’s most widespread uses is as an alternative to human service representatives. Allowing people to interact with technology as naturally as they interact with each other has been the promise.

Google had raised the game with Duplex, a voice AI that makes restaurant reservations sounding exactly like a real person. Check out the mind-blowing video below. Duplex has since moved beyond voice and has come to the web as “Google Assistant in Chrome” to facilitate buying movie tickets or renting a car.

AI-driven shopping advisors can help you more easily find and buy products. Amazon and Walmart are already letting consumers search for and purchase millions of products using simple voice commands.

“Hey Google, buy some Cheerios from Walmart.”

Domino’s launched Dom to automate over-the-phone pizza orders in a new step towards one day being 100% digital. Other big brands having joined the voice ordering revolution include Costco, Home Depot, Target, Morrisons and Best Buy, and they will not be the last.

Voice commerce is a disruptive trend and can be a lucrative new turf for retailers, one which is expected to make up $40 billion by 2022 in the U.S. alone. Initial research has shown Amazon Echo users spend 66% more than the average customer, and smart speakers are on every Christmas list.

Voice might become the iPhone of the next decade with most of customer interactions to be powered by virtual assistants.

Voice-enabled payments are getting increasingly faster and easier to use. While currently being experimented with mainly in retail banking, pilot programs like Starbucks’ partnership with Samsung’s intelligent assistant Bixby have already been launched in South Korea. Convenience is driving adoption, but the road to mainstream is long.

There are the obvious security and trust concerns to be overcome, as well as the psychological barrier of using such functionality in public, but expect voice and frictionless payments to soon be pervasive. The integration of Mastercard’s payment tech into Google Assistant and Amazon Echo will only speed up adoption.

Cashless or unattended retail lets retailers leverage their existing investments in infrastructure such as in-store cameras. A deep learning algorithm powered by computer vision can understand which customers enter the store and how much each should be charged when they exit.

Amazon Go is a prime example. Using their ‘Just Walk Out’ technology the grocery store chain enables customers to simply scan a mobile app upon entering, pick their products and leave. Scan-and-go technology consequently has the benefit of freeing up valuable real estate for merchants as it removes the need for cash registers and checkout lanes.

Algorithms can learn to predict the future based on historical information. Predictive analytics and modeling combined with AI opens up a plethora of possibilities for any retailer. Examples include:

Overall, artificial intelligence will revolutionize retail and have significant impact on the automation of the industry. Low-skilled and supply-chain jobs will be the first to be replaced, as well as any work that is repetitive or simple.

The cashier-free store is likely unavoidable and only a matter of time. Nevertheless, it’s far from doom and gloom. Whether it’s the automation of inefficient business processes or the personalization of product recommendations, AI provides plentiful opportunities for retailers of all sizes to improve the customer experience and maximize profitability.

When artificial general intelligence (AGI) will come into the picture, i.e. when the technology becomes more human-like and will exhibit traits such as intuition and moral decision making, a whole new range of possibilities will be opened up.

Blockchain technology can track products from the moment of production to when they leave the warehouse and arrive at the customer’s doorstep.

In a food safety initiative, Walmart and a number of other retail giants are partnering with IBM to track food through the supply chain, from farm to fork. The Food Trust blockchain aims to change how food is tracked globally and improve product recalls in case of contamination to prevent a food crisis.

Walmart has also recently filed a number of blockchain patents among them one for a ‘Smart Package’ system designed to track environmental conditions, location and package contents to help reduce waste and contamination. It will let the company to cut the time it takes to track produce from six days to two seconds.

Starbucks is trying to do the same for the tracking of its coffee beans, while Carrefour is using blockchain to increase the transparency of its free-range chickens.

A transparent supply chain with proof of product originality and traceability at its core will also reduce counterfeiting, combat fraud and strengthen consumer confidence. This is particularly useful for the luxury goods market. De Beers Group was one of the first companies that moved beyond a prototype when they digitally tracked a diamond’s journey from the mine to the jeweler, providing customers with the much-needed trust that their product is natural and conflict-free.

Increased transparency of store stock levels will help prevent over-ordering and minimize lost sales. Smart contracts can be implemented to automatically execute orders and payments once certain conditions are met and so remove the burden of a retailer’s heavy administrative duties.

More efficient logistics will also allow for smart product recalls as a retailer will know in real-time where a product was made and by whom. As data cannot be deleted or altered, any risk of fraud is minimized.

Rewards programs attribute for a significant portion of a retailer’s revenue, but they have not fundamentally changed since their creation. Startups are now looking into the tokenization of such programs to overcome some of their shortcomings and give control back to their members.

Users will benefit from much more easy tracking and management of points across the many loyalty programs in their pocket and will more effortlessly be able to transfer them between friends and brands.

EZToken Rewards is one of the early initiatives and currently the world’s biggest blockchain loyalty program with over 80 Australian retailers participating. Lolli – a rewards application that gives you bitcoin when you shop – expanded into 900 retail locations.

With points more easily to be earned and redeemed, a retailer can only benefit.

In a time of regular data breaches, stolen identities and scandals like Facebook-Cambridge Analytica, there’s increased consumer concern about the security of our digital identity. Having full control over how our personal information is being collected and used has become of the utmost importance.

Startups like Carry give shoppers direct ownership of the transaction data they create and let them sell some or all of this anonymized data directly to marketers.

Blockchain technology will help us take back control of our privacy, thereby changing the power in the relationship between brand and consumer.

AI and IoT both play a key role in redefining brick-and-mortar retail and creating a cashier-less and checkout-less store like the Amazon Go example referenced before. Queue management will also improve as wait times can be better monitored and predicted.

Sensors on shopping bags and carts will provide insight into footfall patterns and high traffic areas which can be used to design the optimal store layout.
Guided shopping can direct customers and help them find items more quickly.

The automated counting of inventory eliminates any distortion caused by manual (human) checks. The Internet of Things can also aid sales assistants in checking product availability, tracking goods which moved around the store and understanding when shelves need to be restocked.

Location tracking systems can be used to estimate shipment arrival, optimize route planning, make better decisions on product availability, monitor driver behavior and even improve fuel efficiency through better load management. Overall, smart trucking will make a retailer’s operations more cost-effective and green.

Intelligent energy management devices such as smart HVAC (Heating, Ventilation and Air Conditioning) and lighting systems can collect and store building data in real-time and automatically adjust energy use during peak and off-peak hours.

Smart refrigerators and temperature sensors can keep ingredients fresh and minimize food spoilage by tracking environmental conditions in the warehouse, throughout the store and in delivery trucks.

Retailers are dealing with a rising cost of fraud. The combination of real-time data coming from camera surveillance systems, sensors and product tags allows for better security and theft prevention and will help minimize any associated losses.

The continuous collection of data lets retailers analyze equipment performance indicators in real-time. Preventive maintenance might be a much bigger benefit of IoT for the manufacturing industry but will also help avoid any machines breaking down when customers are in-store.

The power of machine learning can be combined with rich data collected through beacons, sensors and other IoT-enabled devices to deliver real-time personalized content for shoppers. For example, when passing by a digital display a promotion could be showcased based on the customer’s past browsing or purchase behavior.

Better shopper insights can also be used for product recommendations. Rebecca Minkoff tracks which items customers bring into the dressing room, while interactive mirrors allow the customer to request additional items without leaving the dressing room.The brand also launched a collection of #AlwaysOn ‘smart’ handbags which have tags that, when scanned with a mobile, let the owner receive product recommendations, exclusive offers and video content.

Generally, Extended Reality (an umbrella term for AR, VR & MR – Mixed Reality) lets consumers explore and engage with products and brands at a deeper level. These technologies have the ability to blur the line between physical (analog) and virtual (digital) and add an experience layer on top of brick-and-mortar in real-time.

Product functionality and features can be showcased either in-store or the ‘store’ can be brought home.

Augmented reality apps can show what products will look like in a real-life environment before purchasing and help avoid buyer regret. IKEA Place for example allows you to visualize its flat-pack furniture in your living room, while Amazon AR View does the same for thousands of products from the retail giant’s collection.

Women might be eager to check out Sephora Virtual Artist and instantly try on any eye, lip and cheek makeup (try the web version). Even internet giant Google has entered the game with YouTube’s virtual makeup try-on experience. And who wouldn’t want to view their favorite garms IRL with Asos’ Virtual Catwalk?

There’s a long way to go before virtual reality will replace the retail store experience as we know it, but a handful of brands have been experimenting with the emerging technology.

Chinese retail giant Alibaba, for example, launched Buy+, a virtual shopping mall. Using a VR headset (or a mobile device and a $0.15 cardboard frame) consumers can explore Times Square and its high-end department stores, shop till they drop and have purchases delivered at home later.

Augmented reality can help customers navigate a store to find the exact shelf or product they’re looking for. Home improvement retailer Lowe’s, one of the most innovative companies in AR/VR, was one of the first to introduce such enhanced in-store navigation.

Beyond the store environment, ‘vision picking’ can benefit warehouse workers by freeing up their hands and thus work more efficiently. DHL rolled out a smart glasses solution that can display visual order picking instructions and product location information. Vision picking can also help drivers more easily locate the right parcel in their truck for next delivery.

Training in a virtual environment allows you to expose people to situations which are typically too expensive or dangerous to replicate in the real world. Although more actively used in engineering and manufacturing, retailers like Walmart have used VR to train over 150,000 employees in a next gen learning program.

Lowe’s is testing pretty much all of the above-mentioned use cases – going from VR and AR product showcases to in-store navigation as well as training programs for its staff and customers. For the latter group, the retailer launched VR-based skills training clinics in its stores where visitors can learn basic DIY skills like how to tile a shower or test drive power tools in a virtual backyard. The company is reinventing the ‘try before you buy’ experience with an aim to boost consumer confidence and ease the buying decision.

“We went from selling sheet rock and hammers to completely transforming the entire company. Everyone now sees what seemed insane at the time and how this sets us up for the future in a dramatic way. And it took only three years to get there.”

— Kyle Nel, Founder and Executive Director of Lowe’s Innovation Labs

Extended Reality (XR) has a wide range of benefits serving diverse audiences, but essentially allows organizations to meet their customers where they are while adding a much richer experience and interactive story to the company’s products and services.

Additive manufacturing allows for unique product designs to be created and developed at increased speed and at lower cost. Luxury brand Chanel will for example be producing up to 1 million 3D printed mascara brushes a month, while Adidas opened ‘Speedfactory’ in Germany aiming to print 500,000 shoes a year and accelerate its footwear production.

A retailer’s Visual Merchandising department could also use the technology to print props like chairs, tables and clothing racks, as well as use it for creative window displays. 3D printing will reduce such production costs, too. For example, it costs 90% less to 3D print fashion mannequins.

Consumers have started playing a more active role in product creation. As 3D printing allows full freedom of design and personalization, build-to-order (BTO) with mass customization options to meet individual demands is becoming more and more popular.

A German wedding ring manufacturer co-creates 3D printed prototypes with the customer before the final design is shared with the goldsmith. Someone even created a three-axis tourbillon, one of the most complex watch complications in the world, and uploaded the design free for others to use.

Performance improvements in manufacturing allow for the small batch production of products and the printing of inventory on demand. Eventually this could result in less stock held by the retailer and the rise of ‘virtual warehouses’ storing CAD print files.

Long-term this could even impact the role of eCommerce with customers downloading digital product files from online marketplaces (which aggregate products from a wide array of brands) and print their purchase at home or in a nearby ‘print shop’.

Amazon (video) is probably the most well-known example of a retailer deploying an army of robots for order fulfilment, and today has a fleet of over 100,000 machines supplementing its human workforce. Robots travel on the ground and can lift up to 1,200 pounds.

Supermarket chain Kroger is trying to compete by building 20 automated warehouses.

Fun fact: Amazon’s robots went haywire after they ran over some spilt popcorn butter. Shall we just stock up in the event of the much feared robo-apocalypse? 🤷

Besides speeding up order picking and delivery, robots are being used by retailers to audit their stores, for example by checking products for missing price tags and wrong price listings. They are also helping find misplaced items and identify damaged goods.

Walmart rolled out smart robots across 50 store locations to do exactly that.

Home improvement retailer Lowe’s LoweBot greets customers and helps shoppers more quickly find merchandise in its large stores. The multi-purpose and multi-lingual robot can also answer simple questions through speech recognition.

Amazon took it a step further and has filed a patent to deploy drones which will help guide customers to the items on their shopping list.

Self-driving delivery robots are tackling the last-mile delivery space.

eCommerce player AHA in Iceland is even deploying drones for its product delivery due to the very tough geography of the country (video). Another main use case of cargo drones will be for time-sensitive deliveries as road traffic is no longer a burden.

Drone delivery can decrease the cost per delivery but is a long way from entering our daily lives, and might face difficulty finding its place in congested cities simply as many of its residents don’t have a backyard.

Collaborative robots (cobots) are moving out from the factory into the store and warehouse. Besides supporting staff by automating tasks that are repetitive, predictable and manual, robotic co-workers can help with heavy work like truck loading and unloading.