Glynn and Matthew spar over AI in retail! Brace yourself for a riveting exploration of a strategy that’s reshaping the retail landscape.
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The fact AI is being referred to in some quarters as potentially a bigger deal than the internet suggests it presents off-the-scale opportunities for mankind in general, never mind just the retail sector.
For some people this comparison might be worrying because we can all see that the internet does have its downsides. Anybody with children knows the addictiveness of social media is a worry but overall I reckon most people would undoubtedly say the internet has overall been revolutionary in a positive way.
We are still in the incredibly early days of AI and already the retail sector is seeing many upsides to its adoption. At the basic level those annoying chatbots have turned into rather more intelligent beings and are pulling in data from myriad sources in order to deliver meaningful interactions with customers.
This has gone down well with shoppers, with 52% now believing AI has improved their retail experiences, according to research from SAP Emarsys, which represents a leap up from the 40% recorded in 2023. As a result of the improvements it has brought to shoppers such as making shopping easier and more personal, as well as helping them to find new products, only 20% of customers now oppose greater integration of AI into retail.
The reality is, I’m not even going to scratch the surface of what AI can bring to the retail sector within the word count of this column. Let’s just take this week for starters, we had another example of the supermarkets turning to AI as Morrison’s revealed it is to install thousands of AI-powered cameras in its stores to track shelf restocking.
Meanwhile, IKEA has referenced the fact it is using AI tools across its business, including a co-pilot tool developed in collaboration Microsoft that helps its employees with image creation and generating ideas. This is the sort of thing that has naysayers running for the hills shouting that the robots are coming for our jobs. This is not the way I see it, nor the way IKEA sees it. Parag Parekh, chief digital officer at Ikea Retail (Ingka Group), stated: “Our vision is clear, it’s about enhancing the capabilities of co-workers through technology, ensuring that IKEA continues to be the place where innovation and compassion go hand in hand…it is a testament to the Ikea belief in the power of its people to harness technology for greater creativity, efficiency, and results.”
To back up this view the company is to provide AI literacy training to around 3,000 employees and 500 senior staff. The courses include ‘AI fundamentals’, which will be available to all employees, along with specialised training including ‘responsible AI’, ‘mastering Gen AI”, and ‘algorithmic training for ethics’.
This is the sensible approach and I expect other retailers to handle the incredibly powerful technology that is AI in this same measured way. As AI becomes embedded in retail and at the same time its capabilities broaden out then it is hardly surprising that there is some nervousness around it. This has been the case with every ultimately seismic technology that has been introduced in the past. Invariably there will be some teething problems but overall I expect the outcome of AI to be similar to that of the internet in being a positive revolutionary force overall.
There is a lot of good news for retail in the development of AI. When it comes to optimising processes, improving supply chain efficiencies, and spotting patterns in areas such as shrinkage, the technology is constantly improving and offers the promise of a real boost to the bottom line.
For ecommerce functions, AI is just the latest step forward in a tradition of relying on clever algorithms and programmes. It should make online shopping smoother, faster and more profitable.
Red flags are only waved when AI is introduced in creative or customer-facing roles, where what the customer wants to be facing is a human being. As online technology improves, visiting a physical store, or even telephoning a call centre, increasingly meets a customer’s need to get away from machines.
As we are increasingly able to fill our basic shopping needs online, the very act of going to a physical store is in part a search for something beyond those basic needs. We want to speak to people.
No matter how tech companies boast, dealing with an AI chatbot is a dispiriting experience – especially if you are trying to resolve a complicated issue. If the implementation of AI means fewer retail staff in physical stores, that experience will only be replicated in another venue.
It is a rare industry that is not experimenting with AI. The abilities of the technology can be jaw dropping – but they can also leave us feeling cold. For example, the advertising sector has been quick to try out AI, which can now create content that includes images or videos at a speed and cost which makes old methods look prehistoric.
But the AI technology learns from what has gone before and ‘reverts to the mean’.
“If you want to make the most average advertisements in the world, AI is the tool for it,” a senior ad exec told me recently. The creative leaps that make a brand stand out from its rivals will come from humans, not from AI.
AI learns by trawling through relevant content that can be accessed online. If you are a retailer, it will learn from your rivals as much as from you. Leaving aside the real concerns that are raised around intellectual property, it will accelerate the trend for retailers to look more like one another.
It is already true that shoppers can be bored when all of the high street fashion chains have collections that are too similar to one another. AI will be highly effective at closing the gaps between them still further.
Research also shows that, when customers know that a campaign – or even a product – has been designed by AI, they consider it to be less valuable.
AI is terrific at processes. It can take the donkey work out of repetitive tasks, spot efficiencies and speed up development. But it could also blur the differences between retailers, dull the enjoyment of shopping and leave customers feeling short-changed.
Use it with caution.
