How AI Will Change Retail

Imagine that shopping online feels less like browsing the aisles of Costco or Sam’s Club and more like being whisked into an appointment with a personal shopper in a small boutique that somehow seems to stock everything you like and need. If it sounds far-fetched, it’s not: In fact, it’s likely to feel increasingly like plain-old reality as Artificial Intelligence technologies continue to evolve.

AI is already changing the nature of retail by changing the online shopping experience. A recent report on Frontierless Retail explains: “As tech giants have developed deep learning algorithms, big data is increasingly being used to power insights in retail that formerly would have only emerged from human intuition.”

Big data is being used to power insights that formerly would have only emerged from human intuition.

 

And this should matter to retailers, that same report concludes: “Consumers are interested in how AI will be used in retail: 70% of US millennials, and 62% of millennials in the UK, say they would appreciate a brand or retailer using AI technology to show more interesting products. Furthermore, 72% and 64%, respectively, believe that as the technology develops, brands using AI will be able to accurately predict what they want.” AI has the potential to change retail in two main ways in 2017 and beyond: first, by revolutionizing personalization; second, by revolutionizing customer service.

How AI Changes Personalization

Here’s how it works, according to Andy Narayanan, vice-president of visual intelligence at Sentient, an artificial intelligence provider. He wrote on totalretail.com that he believes AI can be used to provide “real personalization” for consumers. So let’s go back to our shopping daydream: Imagine that you’re shoe shopping. Instead of just pulling up a page of shoes at any given retailer that lists shoes according to popularity, AI instead: “can be used to personalize that page exclusively to the specific consumer based on the exact pair of shoes they might have clicked on, which can be used to filter for things like color, shade trim, toe type and other uniquely subtle flourishes that might make some of the other types of shoes more preferable to the consumer than the product recommendation pages of retailers not currently using AI.”

It works because the AI will be reading the image itself, not the copy tags associated with it. AI can examine the subtle shade you choose, the type of toe shape you prefer—any number of small preferences. And perhaps most impressively? The more you shop, the smarter it gets: “With each subsequent click, the AI learns what it is you're interested in. It creates threads through your choices. It understands what you want, right then, in the moment,” Narayanan explains.

With each subsequent click, the AI learns what you're interested in.

 

And not only can AI offer better product recommendations, it can do so in style: The North Face, for example, recently made waves with their personal shopper powered by IBM Watson. We took it for a test spin, telling it we wanted a jacket for running in Austin in the winter-time. It served up several specific options—plus a shot of sass in its copy. (“I wish computers could run.”)

How AI Changes Customer Service

Of course it follows then that if AI can help with product, it can also revolutionize service. Many retailers are working toward using AI to develop chatbots that can carry on very-nearly life-like conversation, helping push them toward the shopping cart and that ever-critical purchase button. These reps can also help assuage concerns. As Babak Hodjat explains in TechCrunch: “[Chatbots] have the potential to create a pleasant experience for the user, one that is directed at identifying exactly what best suits their needs, while promoting the brand identity through the chatbot persona itself.”

And it’s important to underscore that much of this work in AI is not years ahead on the horizon—it’s around the corner. “The pertinent question isn’t necessarily when but where you’ll see AI deployed. And the truth of the matter is that AI can benefit essentially every step and process of eCommerce, from site layout to personalization to — and this part is extremely important — customer happiness,” Andy Narayanan, vice president of visual intelligence at Sentient, an artificial intelligence software provider, wrote in Total Retail. And it may, in fact, already be here. As Narayanan wrote: “Image recognition systems, product recommendations and chat functionality are already being powered, at least in part, by AI systems.”

What trends do you see emerging in retail AI? How will 2017 shape the market—and beyond?

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Jaime Netzer is Content Marketing Strategist, leading content operations in marketing at Spredfast. A Lawrence, Kansas native, she traded seasons for breakfast tacos seven years ago and hasn't looked back since. Also a fiction writer and journalist, Jaime tweets semi-regularly.