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Robots and AI in retail: 8 things you must know

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“A new coat, please,” you say to the store robot, in a bit of a hurry. It notices that you’re in no mood for chit-chat and already knows that you have little time to spare on Thursday nights. The robot immediately presents three stylish coats, of course in your perfect size. A few minutes later, you’re outside again. Yes, in 2030 you’ll even be comfortable shopping in an actual brick-and-mortar store. And all of that will be made possible thanks to artificial intelligence.

Ten years ago, we were very impressed with Siri, but now it’s become quite common to communicate with devices and programs. Retailers are eager to embrace that trend. That makes sense, too, since artificial intelligence (AI) is the perfect instrument for attracting new customers and selling even more products to current clientele.

The emergence of robots and AI is especially good news for you, the consumer: advanced artificial intelligence is a huge asset for improving the customer experience. If you’re more than just a consumer and are a retailer, these are trends that you need to pay attention to.

8 interesting developments we’re seeing in AI in retail:

1. Websites that evolve with you
Web shops use the data you have left on their website to build a profile. Based on previous purchases, search habits, click behavior, age, gender, season of the year, and various other variables, self-learning algorithms will give you suggestions for products that will keep on improving.

Over the next few years, retailer websites will become even smarter. For instance, they’ll get better at gauging your style while you shop and adapting suggestions on the fly. Elements of the site itself, such as the layout or font, will constantly evolve with user preferences.

2. From stupid chat bot to smart assistant
More and more retailers are using chat bots on websites and through chat applications such as Facebook Messenger. Potential customers can communicate with them using speech and/or text. The bots will assess and answer customer questions, provide assistance in the selection process, and execute simple tasks.

Many chat bots rely heavily on rules and automated responses. It would be a stretch to call that intelligent. But there are also bots that can learn from the data that you put into it (machine learning), that can handle more complex tasks and that are increasingly approximating more believable human interaction. Under those circumstances, virtual assistant is a more suitable term.

In the distant future, you will not have to do anything at all: you just put your ‘virtual twin’ to work. These are the types of algorithms that know you so well that they search the internet independently for products and deals that are a perfect match for your preferences.

3. AI creates opportunities for the ultimate in tailor-made marketing
Large-scale marketing campaigns through channels like TV, radio and social media are expensive and inefficient: the same message spread to the masses, but it will only truly reach some of those people. AI will reduce this waste of marketing budgets.

The more familiar a retailer is with who you are, the easier it will be to persuade you to buy their products. Artificial intelligence will accelerate this process by continually analyzing customer data. This means that retailers will be able to provide more targeted ads. 

4. Everyone gets their own deals and loyalty programs
To you as a customer, that profound personalization means promotional deals and loyalty programs that have been tailored to your preferences. For instance, the supermarket will always have the products on sale that you like, or you will be offered to try out a new flavor of your favorite beverage for free.

The loyalty programs will also become more personalized through the use of AI. As a result, each customer can earn loyalty points in their own way, as well as automatically gather more points when you visit a store more often, and the rewards will be perfect for your hobbies and interests.

5. The store robot also knows who you are

If a web shop has a detailed overview of all of your preferences, that carefully crafted profile will also benefit you when you walk into the affiliated brick-and-mortar store. A robot at the entrance will immediately recognize you and refer you to the products you might be interested in.

And of course that robot is not a cold or business-like machine; instead, it possesses human qualities. It will refer to you by name, welcome you into the store, take stock of your wishes, take your emotional state into account, and offer personal advice.

Does this sound futuristic to you? Think again! Pepper actually comes pretty close to this already. Pepper is a robot that’s currently helping customers in a number of Softbank offices in Japan. In principle, it is relatively easy to program appropriate responses for any type of customer advice and product type. Maybe every store will have such a robot assistant someday.

6. Smart mirrors, fitting rooms and walls enhance the store experience
A robot attracts quite a bit of attention, as do smart mirrors and fitting rooms. They provide style advice to customers and show you which other sizes and colors are still in stock. Other virtual mirrors project clothing and accessories onto your body, eliminating the need to take off your clothes before deciding if you want to buy.

Smart, interactive walls also add to the physical store experience. These walls make it possible for customers to browse through the range of products, view personal deals, check out the prices and even pay for their products right there and then – even if the store is closed.

7. Human staff needs to prove its added value
Human staff will not become obsolete, but the AI will ensure that underperforming employees will stand out more easily. For instance, data analysis may show that someone structurally sells fewer products and that their customers are less satisfied.

Does the data show that staff who have specific sales experience or a certain background perform even better? Then the store can take that into account when hiring new employees. The end result: you will be helped by the best, most customer-friendly staff.

8. Up-to-date product range and no empty shelves
One of the strengths that artificial intelligence has to offer lies in distilling valuable insights from large volumes of data. This makes it possible to make more accurate predictions that incorporate a variety of factors. A retailer can automatically link those projections to promotional deals.

Do rising temperatures suggest that winter is ending sooner than expected? Then a clothing store will automatically adjust the product range, introducing the spring collection earlier. Empty shelves will soon be a thing of the past, since retailers will no longer be surprised by fluctuating supply and demand.

Stay realistic
The AI era has definitely dawned. Estimates indicate that the AI market is already growing enormously, from roughly 126 billion dollars in 2015 to over 3,000 billion dollars in 2024. New applications of artificial intelligence are added almost every day. The surge in AI is felt more strongly in retail than in almost any other sector.

However, a bit of nuance is needed here. Advanced AI technology can be very expensive. For instance, a virtual mirror could easily set you back 10,000 euros at current prices, so it is not a casual investment for small-scale retailers. But of course we are talking extremes here. Many AI applications are perfectly affordable. Developers are also increasingly adding AI to technological solutions for the retail sector.

Most of the AI technology mentioned in this article has already become commonplace in this sector, or will most probably reach that point in the next few years. The conclusion is clear: the stores of the future are closer than you might think. 

Mark de Bruijn
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July 10, 2017
Mark de Bruijn

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