Artificial intelligence (AI) is significantly impacting businesses as well as our daily lives, and as AI-based innovation continues to develop, it will only continue to uncover new opportunities. According to PWC, 72% of executives believe AI represents the business advantage of the future, and McKinsey findings show that the retail industry has the potential to create $1.7 trillion of value, or 12.39% of total sales, due to AI. This means that for any forward-looking company, it isn’t a question of if you’ll be implementing artificial intelligence, but when.
Retail and eCommerce have already seen extraordinary benefits from AI, but what about non-screen retail? What about deeper usage?
We live, breath, eat and sleep eCommerce at Fast Simon, and from our inside-baseball vantage point, it appears that AI will surpass today’s uses in ways that we can’t even imagine over the next decade. But much like the portrayal of “futuristic” video calls on The Jetsons 50 years ago, the effects of AI will become just as commonplace and integrate just as seamlessly into our increasingly automated lives. AI and related technology will impact retail and change the landscape as we know it, with the following outcomes to consider.
As AI technology iterates to increasingly predict customer desires, merchants have access to more insight into ‘moments that matter’ for each individual customer. First, merchants must audit their tech stack to ensure they are combining accurate signals about optimal times to push shoppers to buy, to trigger appropriate offerings at the optimal moment, for higher average order value (AOV) and fewer returns. According to Forrester, “Systems of intelligence need to take a customer journey analytics approach, which factors in qualitative and quantitative data across touchpoints to plan customer interactions in the context of a relationship and the entire journey.”
Today, most signals end with the purchase of a product, but the internet of things (IoT) has the capacity to enable products to communicate with the manufacturer, seller, and consumer, to offer more value. By transferring data, such as when, where and how the item is being used, merchants will have the opportunity to impact customer experience and loyalty by providing unprecedented convenience. Consider this: a consumer buys connected running shoes, which transmit information about how they are being used, from how often, to details about impact, etc., delivering the necessary data to predict when new shoes are needed, or what else the customer may want based on use patterns. Combining tech like AI and IoT will become significant for ensuring that the products people want are offered at the time of need, helping to support the customer, encouraging loyalty, great experience, and even a higher AOV.
Image: Great customer experience through personalized product suggestions.
“Augmented reality (AR) has evolved in the past 10 years from being an unstable gimmick to a legitimate way for consumers to experience products and services before they purchase them,” per Forrester. While AR holds a lot of interesting potential, it’s the combination of AI and AR that comprises the secret sauce for success. The technology promises to enable shoppers to experience virtual shelves, customized specifically for them, including personalized offers and items, delivered with strategic timing. This will drive shoppers to browse what they’re most likely to purchase making an interactive retail experience considerably easier, faster, and ultimately, more successful.
Image: Tailor-made collection view per customer’s preferences.
Due to the success of internet shopping, consumers are able to compare prices between vendors in a matter of seconds. According to a recent survey by KPMG of U.S. online users, 70% of respondents state that competitive pricing is the most important factor influencing them to shop with a particular online retailer, resulting in retailers finding ways to cut down on costs. One option is to offer “Ready to Assemble” vs “Assembled” products to lower price points. Today, assembled items are more expensive than ready to assemble items due to the extra time needed to construct them at the manufacturer, and shipping costs. Offering consumers AR-enhanced instructions can offer a way to simplify the assembly process for manufacturers by simulating assembly operations and the corresponding interactions, and by eliminating the need for assembly manuals, a tedious and time-consuming task. AR support for assembly tasks will prove a factor for competing in the increasingly fierce world of retail (and manufacturing).
3D printing will move warehouses and complex logistics to instant delivery. In the not-so-distant-future, AI will feature the ability to personalize designs and deliver them to the customer’s closest 3D printing facility, where the product will be printed in as little as a few hours (or less). This virtually eliminates shipping time and impacts the production cost for items, significant factors that influence consumer behavior.
Imagine a world in which large items (like a sofa) can be replicated when the original runs its course, by applying technology that can control and synthesize product touch, feel, look, and even smell. In a virtual, extended reality world, a sofa would look and feel like real leather, only this look and feel will be generated by a 3D multi-sensor transmitter, outfitting a generic base-model sofa with sensors to fuel look and feel, like leather, velvet, or wool, etc. with an added bonus that significantly reduces the use of planet resources. Some basic building blocks for this already exist today, including military optical cloaking that makes a tank look like a jeep, programmable shock absorbers that make a car drive in different modes, and more.
Though these incredible advancements in technology feel a long way off, AI is quickly forging ahead in the world of retail, making the impossible a reality. In a matter of years, the entire shopping experience will be transformed to one that feeds our desires for instant gratification and personalization. The promise of AI is staggering, and the retail industry will reap benefits that will transform it forever.