How will AI innovation change the retail industry, and whose job is it to push the envelope?
Who better to ask than Nick Lansley, self-styled ‘innovation insider’ – a title that is comfortable backed up by his career to date.
Since helping launch Tesco’s online service in the mid-1990s, he set up the retailer’s first innovation team in 200. Now ex-Tesco, he helps businesses adopt their own pragmatic innovation techniques.
Nick is part of our all-star panel at Retail Connections’ upcoming event – Artificial Intelligence: the new game changer in retail – on November 16th. Ahead of the event, we chatted to Nick about the retail AI landscape.
How significantly will AI change retail in the next few years?
In retail, AI is making it easier and simpler for customers to find products they’re looking for, taking some of the pain and frustration out of their shopping experience.
Retailers need to help customers realise that if they give up a little of their privacy, they’ll be rewarded with a much better experience. Data can be used to minutely personalise the customer relationship and help build a stronger engagement strategy.
Grocery is a great example of this. The average online grocery shopper purchases around 50 items a week, and that buying experience isn’t particularly exciting or inspirational. AI algorithms have the potential to automatically select and deliver items based on customers’ previous purchases, so they never need to do their online shop again.
From a time-poor customer’s perspective, AI can simplify and potentially even eliminate the need to keep inputting grocery orders. Associated with that, stores can decide when deliveries will take place, so they can deploy vans in an environmentally-friendly manner.
Are there any more interesting AI use case you’ve seen among retailers?
I’ve seen a lot of lab work from various retailers who are exploring AI possibilities, but no live examples just yet.
For example, one major European GM retailer is looking at a system that sends mobile phone notifications to customers as they walk past their store. The software uses AI to analyse the customer’s previous online shopping baskets, see what products they may be interested in, and then promotes relevant products in-store.
This software can also be linked to digital window displays, tailoring content to show customers products that they have searched for online. That data is also transmitted to store associates with tablets, who immediately know what the customer has been researching when they walk into the store.
Clearly AI will have a huge impact on the customer experience, but what kind of operational benefits does it offer?
There are lots of ways AI can help on an operational level. I’ve seen one system which creates patterns for each product at barcode level on an hourly, daily and weekly basis. When a particular barcode goes through the checkout, it can create gap scan warnings to store staff.
In addition, Asda is already working with an AI company to establish normal electricity consumption patterns for different types of in-store equipment. So if a freezer starts to act unusually, for example, an engineer can be called to fix it before it breaks down and stock is lost.
Where do you think the responsibility for exploring the business potential of AI lies – in the innovation lab, or at the heart of the business?
Actually, the answer is neither! The business case for AI comes from the consumer, whether they realise it or not. All retailers have brand reviews; a no-holds-barred report showing what consumers think of the retailer at every single touchpoint. This establishes where a company should be performing better, and therefore where AI can be strategically deployed.
In terms of testing out the capabilities of AI, labs can very quickly put concepts into pilot. This will help retailers to identify quick and creative wins that can improve the customer experience.
On that basis, who will accelerate the AI adoption curve: the retailer or the consumer?
The consumer. If they trust a retailer they will be prepared to share their data, which retailers can then use to look for patterns and personalise the experience, removing any pain and frustration.
One area I’m particularly interested in is the idea of approved data sharing, to create an industry-wide persona profile for each customer. If consumers consent to their data being shared and used, retailers will be able to access information about the way they shop across all retailers, not just with them. But to achieve this, we will need to establish certain industry standards up-front.
Hear further insights from Nick Lansley at Artificial Intelligence: the new game changer in retail, our next event on 16th November. Registration is free of charge for this event.