Brick-and-mortar retailers are looking for an edge in their fight against the e-commerce behemoths, and as the battle rages on, it’s looking like artificial intelligence might be the answer.
According to Amitabh Bose, chief practice officer for CPG, retail, and hospitality at Fractal Analytics, a firm that helps global companies power human decisions with analytics and AI, it’s becoming more common for retailers to seek out solutions that empower their customer service teams with AI.
Bose sees 2018 as a year of experimentation for retailers. Most of the brands with which Fractal works are already using AI in some capacity, and now they’re looking for new opportunities to experiment with the technology both in-store and online.
“Looking at the store as an area of customer experience and driving that experience and gaining that advantage—that’s a high focus area,” Bose says. “Earlier, [in] the store, the transaction point was a place of distributing goods … now the store is more of a place of customer experience, and [retailers are] enhancing that experience with a combination of IOT devices in the store and AI.”
According to new data from Juniper Research, global retail spending on AI will reach $2 billion this year. Within the next four years, that figure is expected to grow to an incredible $7.3 billion, as retail firms spend more heavily on AI tools that improve the services they offer.
But data quality is important, and not all AI is created equal. Scale is an issue that’s coming up more frequently as marketers increase their investments into AI. Bose says that scaling in this regard requires retailers to get access to more consumer data. When AI investment is done right, the end result could be self-serving, responsive campaign systems that are sensitive to consumers’ online and offline locations.
To realize the future of comprehensive AI-driven marketing, brands are investing more heavily in people and firms that can scale their AI initiatives. In a survey of more than 500 traditional retail, pure play, consumer goods, and branded manufacturing leaders, researchers from Deloitte found that retailers and brands expect to employ 50% more data scientists in the next three years. The same survey found that 40% of retailers are already using AI to tailor pricing and promotions in real-time, 39% are using AI to personalize content across all channels, and 31% are using it to anticipate questions that consumers will ask.
Outside of AI, Bose says another area emerging in the global retail market concerns consumer psychology. He sees forward-thinking retailers looking at ways to reimagine the entire in-store experience using choice architecture. Choice architecture involves using different ways to present choices to shoppers, and then measuring the impact that those changes have on the decisions that consumers ultimately make.
“[Choice architecture] reduces the number of choices and evens their positioning,” Bose says. “This is about more experimentation in the labs that we run and the missed number of options.”
Stephanie Miles is a senior editor at Street Fight.