Retail: Walk-In, Pick, Leave

There is something therapeutic about shopping. Do you also feel that? Perhaps it brings a sense of serenity or maybe it is the systematically stacked, colour coded shelves — opinions are divided. And taking a cue from this, Artificial Intelligence (AI) is changing the way one shops. Specifically, it’s driving a change in two areas — search and customer service.   

Shopping smart

The promise of AI has seemingly been just on the horizon for years, with little evidence of change in the lives of most consumers. A few years ago, buzzwords like “big data” hinted at the potential, but ending up generating little actual impact. Advancements in AI like deep learning and machine learning combined with the rise in mobile commerce are now being put to use by retailers and e-commerce sites such as Amazon to improve the lives of online consumers. Both are software that learns to perform complex tasks without active supervision by humans.  

Taking a leaf from Jeff Bezos’s Amazon Go, a startup opened an artificial intelligence-powered retail store Watasale in Kochi last year, which allows consumers a cashier-less grocery shopping experience. A consumer can download an Amazon Go-like app and scan the QR code on the turnstile to enter the store, where he can pick up an item off the shelf, and his account gets charged. In case he changes his mind and puts the item back, his money will be reverted back into his account. 

It is interesting that while the cashier-less experience attracted consumers through convenience and the fact that it saves time, it also causes errors and increases the chances of loss for retailers. This was in part due to consumers forgetting to scan their merchandise, theft and mis-scanning of items among other things. Reports last year from retailers across the US and the UK reported that for every 10 per cent business done through a scan and go methods, 1 per cent could well be product loss.

However, a Juniper Research’s study has found that the AI technology will be adopted by over 325,000 retailers by 2023 and global spending by retailers on AI services will reach $12 billion during the same period.

India, the fourth-largest retail market in the world, is expected to reach Rs 76.9 lakh crore ($1.1 trillion) by 2020 as per the IBEF report. Revenues of India’s brick and mortar retailers is expected to increase by Rs 10,000-12,000 crore ($1.4-2.8 billion) in FY20, where as online retail is projected to increase by $60 billion by 2020.

Right click

India has one of the youngest working populations, which is set to increase the working population percentage in the country over the next few years. This will without a doubt lead to more income in the hands of the consumer and be a growth driver for the retail industry.

With the recent adoption of AI in retail, the impact of AI in retail can be seen in increased personalization, eliminating the need for users to wait by making services available 24/7 and allowing for preference-based browsing among other benefits. Demand forecasting is another key area that benefited by AI, which allows retailers to decide how to allocate stocks and resources.

As per the findings of the 2019 IBM report, ‘The Coming AI Revolution in Retail and Consumer Products, 85 per cent of retail and 79 per cent of consumer products companies are planning to use intelligent automation for supply chain by 2021.

Over 79 per cent of retail and consumer products companies are expected to use intelligent automation for customer intelligence by 2021. Retail and consumer products executives project that intelligent automation capabilities could help increase annual revenue growth by up to 10 per cent.

Changing trends

At the online grocery store bigbasket, AI is a pivotal part of the solution toolkit that helps deliver good consumer experience. According to MS Subramanian, Head of Analytics, bigbasket, AI solutions are used at the company for optimization of delivery routes to maintain on-time delivery performances, refinement of the pricing strategy to offer best-in-class prices and finally, to build shopping solutions such as recommendations and the ‘smartbasket’ to help customers shop with minimal effort.

Vasanth Kumar, MD, Lifestyle International, belives technology has been a key growth driver for the retail sector with machine learning and AI playing a major role in accurately predicting the consumer’s next move. “At Lifestyle, we want to make our customer’s journey more experiential, memorable and personalised. Using AI through various touchpoints has helped us predict and automate user experiences at scale, create better customer engagement, drive store footfalls and increase sales on the website and apps.”

This is seconded by Vineet Gautam, CEO, Bestseller India, who stresses on the fact that AI-powered tools help in analyzing large amounts of data to convert them into substantial insights, which helps in making precise product-centric decisions. Explaining further, he stated, “For our womenswear brand, Vero Moda, we partnered with Stylumnia Intelligence to employ an AI-powered tool called Stylumnia Market Intelligence, which interprets data collected via different digital platforms and shares insights in terms of consumer preferences, buying behaviour patterns as well as trends in terms of colours, patterns, styles, etc. Backed by these robust insights, we could align our manufacturing and product design team to develop products based on the trends that were preferred by consumers, which ultimately led to an increase in conversions and sales.”

Speaking about the Lifestyle Buddy app, Kumar explained, that it uses AI and IoT to increase customer conversions and purchase value. “Lifestyle Buddy helps customers get personalised offers and style recommendations using a virtual stylist, ‘Complete the Look Recommendations’ and earn surprise rewards. Our ‘Beauty Bot’ offers a personalised beauty buying experience and is linked to a series of DIY tutorials that our customers can view at their convenience.”

Gautam stated that their brand was investing in ‘Smart Mirrors’, which would enhance in-store experience for consumers. These smart mirrors make use of AI-powered algorithms to analyse data and can assist consumers like a personal shopping assistant. Based on an outfit/product that a consumer is trying out, the smart mirror shares styling tips and recommendations in terms of colours, better suggestions on pairing the right products and fits among other aspects. This provides an interactive experience for consumers in the store and helps in making more informed purchase decisions. AI applications have helped brands increase consumer engagement and in turn increase business. 

According to Dhruv Bogra, Country Manager, Forever New, “At Forever New, we are cognisant of this emerging trend and are in process of providing targeted and clutter-free AI applications to consumers on the basis of differentiated consumer clusters. AI tools have enabled us to potentially drive 30 per cent higher and incremental business from our loyal customers, who are part of the ‘Forever You’ programme.”

While the importance of AI cannot be overlooked in the current business scenario, Amitabh Pande, Country Marketing Manager, IKEA India, believes the right combination of human intelligence and AI is the winning formula. “We have learnt that human intelligence is important and a precursor to AI in customer acquisition and building brands.” He believes that both Human Intelligence and Artificial Intelligence are imperative through the entire journey of understanding the potential consumer, target audience, their needs and translating that into a strategy of short-term and long-term consumer acquisition. He further stated that the right combination of both HI and AI help reaching the right consumer segments with the right brand message, in the right moment. “Without HI, AI would be not only meaningless but also low return on investment.”

On firm ground

With the consumer becoming tech-savvy, retailers are replacing the traditional mass-market approach with targeted strategies formed using insights gleaned from consumer data states the Deloitte 2019 ‘Know Your Consumer’ report. The report further highlights Tribetailing, a method of hyper personalising an offering, which allows retailers to use AI, machine learning, and social media analytics to gain information about consumers’ shopping history, behaviour, preferences, and online activities to present him with an offering suited just to him.

Hyper personalisation is a key outcome of effective use of AI. Narsimhan Eshawar, Senior VP & MD, RB Hygiene & Home, South Asia, pointed out that the personalised packages of Durex condoms Reckitt Benckiser introduced in China, which were based on consumer horoscopes would not have been possible without AI.

While AI has transformed the retail sector, privacy remains a key issue. How can retailers use AI while preserving shopper privacy?

Anil Talreja, Partner, Deloitte India, stated that in addition to the legal guidelines for maintaining consumer privacy, a few simple steps can be taken: better communication from the brands as to where and how consumer data can be used. Also, for organisations that have different verticals, data collected for one vertical should not be shared with the other vertical without consumer consent.

Privacy remains a serious issue and one that we need to pay attention to as we move forward with improved AI services.