The Evolution of AI in a Post-Covid-19 World
Artificial Intelligence (AI) has undoubtedly become one of the biggest buzzwords of the 21st century and its use within retail has grown, not just for large market-leading retailers, but for retailers of all shapes and sizes across many sectors. Driven predominantly by the success and maturity of AI and Machine Learning (ML) platforms/solution providers and the pervasive growth and adoption of Cloud Service Providers, retailers are beginning to move past the marketing flurry that AI once was. Today, retailers are beginning to develop a legitimate appreciation of what it takes to properly evaluate, prepare and produce AI and ML-enabled solutions of the future.
Despite the progress that has been made, retailers still need to ask themselves: what do we want to achieve with AI? What can AI really deliver – and what will this mean for consumers? Craig Summers, UK Managing Director, Manhattan Associates warns against falling for AI ‘buzzwords’ if retailers are to leverage AI to its full potential, promoting predictability and above all, delivering a killer customer experience.
Online, in-store, in the warehouse, the opportunities to leverage AI and ML to improve retail operations are compelling – no wonder research predicts that retailers will spend $15.3billion on AI by 2025, $8billion more than forecasted in by the end of 2022. However, before AI can be truly effective in the sector, the challenge of data quality, quantity and privacy must be addressed.
Even with the volumes of data currently captured by many retailers, they often still struggle with capturing and keeping enough of the ‘better stuff’ – historical data that is accurate, complete and textual – to fully take advantage of the benefits AI can bring. Additionally, many customers are becoming less willing to share their data, and with the introduction of GDPR, data is getting harder to get hold of, which is compulsory to make AI and ML models the best they can be. In the rush to embrace innovation, it is easy to overlook these challenges and move focus away from the bottom-line objectives, which should be: where is the ROI, and what is the implication for the customer experience?
And this is the key: a once highly competitive retail environment, which has been under threat from COVID-19 as consumers have faced seismic challenges between the offline and digital world. More than ever, customers will drift over to different retailers within the overloaded omnichannel marketplace if products can be delivered quickly and cheaper. Strong customer experience and satisfaction is not achieved through gimmicks, but through ensuring customers quickly get their hands on the products they’re seeking, something that many have been halted in recent months. In practice, this means maximising stock availability – where it is needed, at the right time, and at the right location. It means achieving a slick warehouse and distribution centre operation that can fulfil both to store and to the consumer's front door without unaffordable – and often hard to find – additional workers. With this approach, retailers need to be prepared to resume higher levels of sales post COVID-19, the continued Black Friday buzz, as long as customer experience continues to be a high priority on retailers’ agenda!
Retailers that have embraced AI in the warehouse are already driving tangible improvements in efficiency and accuracy. By combining deep, high quality order history data with AI and ML to better understand the characteristics of order trends, including direct to consumer ecommerce orders, retailers can reconsider the pick, pack and ship processes. Schedules are being reorganised; resources redeployed; while orders can be seamlessly prioritised, and new delivery options enabled.
Furthermore, AI enables retailers to better manage the changing sales peaks, such as back to school or the unexpected April heatwave, as well as problems with shipping or haulage. Essentially, AI delivers more accurate and granular predictions that can be used to smooth out the entire logistics process in real-time. With differentiation and innovation at the core of AI, there has never been a better time for all types and sizes of retailers to leverage AI and ML to level the playing field with major retailers, not only to help neutralise and compete, but to differentiate and innovate. Retailers have shown in the past how they can embrace innovation, rise to a challenge and adopt the technology available – so now is the time for them to do it again.
In the future, AI will offer the chance to transform customer personalisation. It will support the most extraordinary innovations – both externally and internally – and support huge changes in the way retailers and customers interact. Aside from AI-driven, personalised and on-demand product creation (imagine the ‘personalisation’ we see today but heightened ten-fold), AI will enable highly accurate behavioural analysis that will ensure the retailer knows what a customer wants long before the customer has any idea.
Imagine virtual shopping networks with intelligent shopping assistants, with visual and conversational digital assistants for both consumers and retail staff; imagine just how interactive and innovative retailers can make the experience for their customers. But that is the future. And, let’s be clear, such behavioural insight is of zero value if it cannot be backed up by a retail operation that is efficient and effective – and can automatically and consistently deliver every aspect of the customer experience.
AI is taking retail by storm but put the gimmicks aside: the real and attainable value of AI right now is to be gained by applying proven algorithms to drive essential supply chain improvements.