Comment: Smarter retail

Twenty years ago, artificial intelligence (AI) was mainly the stuff of science fiction films and research labs. Ten years ago, it started appearing on the radars of the most forward-thinking companies in the world. And over the past five years, it has entered our homes and our daily lives. AI is the new UI, is one of five trends identified in this year’s Accenture Technology Vision 2017. Today, AI-powered technology, such as Amazon’s Alexa and Google Home, is an increasingly familiar feature of everyday life.

Established retail chains have recognised the growing importance of AI and the innovative ways it has been adopted by their online rivals. Many are looking to incorporate it into their own customer experience. Soon, the mark of a retailer that is committed to giving customers a great experience is likely to be the way they use AI.

But what does this mean in practice? In a world where AI is becoming part and parcel of the consumer experience, what should retailers do to keep up?

Streamline search and curate the experience

First, retailers can use AI to help customers choose what to purchase. That means using it for two distinct purposes: first, helping customers find what they are looking for; second, helping customers find things they don’t yet know they’re looking for.

For large online retailers, the range of products is so huge that the ability to guide customers smoothly in the direction of what they want is a serious competitive advantage. Many leading online brands have also been quick to recognise the value of the second purpose, pioneering the use of machine learning to anticipate customer need and nudge them toward further purchases. The more that consumers use streaming platforms like Spotify and Netflix, which use AI to curate content for subscribers, the more they will expect retailers to do the same.

AI can provide solutions on both counts. It can help customers find what they need by improving reviews and providing more sophisticated recommendations on the website. Retailers can also use it to customise their homepage to each user. We are already familiar with the idea that each visitor to a site will see different, tailored adverts. Why not tailor their experience of the whole site?

Google already uses AI to do this with its search results, and some online retailers are using structured data to adapt what they show customers according to what they have searched for in the past. Used sensitively, it can help customers feel that retailers understand them and what they want.

Get to know your customers

Second, AI can be used to find out even more about how customers behave and what they are looking for – helping chains ensure they are stocking the right goods and targeting them at the right consumers.

Retailers already use the data from their online shopping platforms to develop richer and more accurate customer profiles. Such insight does not, however, need to be restricted to the world of online shopping. Imagine a store in which sensors detect which products customers take off the shelves but then put back. This would offer retailers valuable information about which nudges to give customers and at what times.

Improve the experience

Third, retailers can use AI to give customers an experience they enjoy. As AI and the Internet of Things (IoT) makes online shopping easier in the home, customers are increasingly likely to purchase 'commodity' items, such as laundry detergent, through their connected devices at home. Stores will remain a crucial part of the retail experience, and retailers must focus on giving customers the best possible in-store experience and service. This will also keep customers loyal to the brand – both online and offline.

Coop Italia, for example, has led the way with a system that breaks boundaries. Wave a hand over a box of grapes and information about their origin and nutritional information appears on a monitor above them. The supermarket also displays information on “vertical shelving” – panels that enable customers to search for other products and find out more about them. Customers can bring up information about related products, promotions, and even advice on waste-disposal simply by pointing at products. We can also expect retailers to increasingly exploit AI to carry out multidimensional conversations with customers: text-based chats, spoken conversations, gestures and virtual reality.

In the coming years, the most innovative retailers will incorporate all of these aspects of AI and make it the face of a company’s digital brand and its key differentiator, moving beyond a one-off tool to the essence of a business. Those that do it most effectively will win the retailer’s ultimate prize: turning their customers into fans.

Rob Barnes, is a managing director in Accenture’s retail practice.