November 21, 2019
Since 2016, the use of artificial intelligence within the retail sector grew by 600%. In other words, 4% of retailers used some form of artificial intelligence in 2016, and that number rose to 28% in 2018. Ehsan Ardjmand is an Assistant Professor of Analytics and Information Systems at Ohio University. The expert says, “[Artificial Intelligence] allows for an integrated supply chain that starts from customers’ decisions and goes all the way to operational, strategy and tactical decisions… [and] could mean lower operational costs, lower lost sales and better planning. Saying this, the future of the consumer goods market is undergoing technological renovation. By 2023, an estimated 95% of supply chain vendors will rely on artificial intelligence learning. The initiative behind implementation is to improve day-to-day operations by forecasting error sales, structuring planning for productivity, and reducing cost by tracking product shipment timing.
Within the retail sector, multi-category department stores use the most artificial intelligence. In fact, 42% of retailers using artificial intelligence are multi-category department stores. Following this, 33% of apparel and footwear retailers are using AI, 29% of food and grocery stores, and 26% of home improvement stores. Even further, 15% of companies report that their organization is spearheading the investment and adoption of artificially intelligent systems. Saying this, the technology is on the rise.
Overall, even the largest retailers do not typically spend more than 10% of their IT budget on artificial intelligence technology. Among large retail chains: 1 in 4 invest up to 10% of their budget on AI technology. Only 7% of all other retailers spend that same amount of their budget on AI technology.
Moving on, 74% of retailers use their artificial intelligence technology for operational tasks, as this is where the most money is to be reaped from. This includes putting AI to work in warehouse, product development, and other behind-the-scenes tasks before delivering the product to the consumer. The remaining 26% of AI technology is used for customer-facing interactions. Customer-facing AI can improve customer satisfaction by 9%, reduce complaints by 8%, and lower customer churn by 5%. This includes putting AI to work in the form of direct customer interaction: kiosks, chatbots, personalized recommendations, bot cashiers/checkout systems, and other technologies.
Knowing this information, the future of customer service will involve a higher usage of chatbots and virtual assistants. For example, Walmart’s AI-based “Intelligent Retail Lab” has the information processing capability equivalent to downloading 27,000 hours of music per second. Similarly, Brown-Forman Whiskey launched “Whisperer,” an app recommending products, providing cocktail recipes, and teaches consumers about whiskey. H&M has in-store kiosks available for customer-use: sending a link to the customer’s favorite item and their automated system will build an outfit around it.
On the other hand, the use of AI in the form of cameras and robotics can be expected to be seen in the future of customer service, as well. AmazonGo’s “No checkout” system uses cameras and sensors to identify purchased items to automatically charge to the customer’s Amazon account. Similarly, Target uses bots equipped with a stereoscopic camera to efficiently roam store aisles and mark inventory. Walmart reenters the conversation as they are tinkering with camera and robotics, partnering with Bossa Nova to bring customer service bots to 50 trial locations. Even more, Coty has virtual reality technology capable of bringing fragrances to life – pairing scented and textured stones with 3D visuals and sound.
Furthermore in conversation of the future of AI and consumer goods, personalized recommendations will see great improvement. 73% of consumers prefer brands that use their personal data to improve their shopping experience. To cater, retailers are keenly redefining their personalized recommendation systems. Macy’s partnered with IBM Watson to power their On Call bots. The On Call bot can provide suggestions, directions, and alert employees to angry customers by detecting tone of voice. Like this, Nestle is piloting a program using artificial intelligence and genetic testing to design new health foods, targeting the needs of the customer. Rare Carat uses an AI algorithm to sort options across various diamond wholesale websites to allows customers to compare clarity, size, and price.
By 2021, customer service interactions handled by AI will grow an additional 400%. McDonald’s and Kroger have even implemented AI technology to improve predictivity and efficiency for the customer. Gordon Benzie is the Founder of GB Marketing & Consultation. He says, “AI has now come of age. Behaviors can now be predicted once sufficient data has been collected, to then consistently predict and suggest responses and next steps, anticipated to deliver rewards to those who understand AI, and who recognize the role that it can play in today’s modern organizations.” Making the most of your data is important. Finish the reading below for more insights on the future integration of AI within the customer goods market.