The Future Is Cognitive: Using AI To Meet New Retail Hurdles

The Future Is Cognitive: Using AI To Meet New Retail Hurdles
Delivery & Logistics

For our AI Retail Playbook, Bharat Popat of Microsoft speaks to PSFK about how AI can help retailers overcome new retail obstacles

PSFK Labs
  • 23 january 2018

Steeped in the language of digital commerce, today’s shoppers have developed a new standard of behaviors, preferences and expectations for all of their retail experiences. Responsible with meeting these elevated needs, retailers need to overcome the hurdles of legacy technology and captivate each of their customers on a 1:1 basis.

In the past, consumer value expectations were centered on three variables: cost, choice and convenience. With instant gratification available at the push of the button, customers are looking to have more control of their purchase journey and are seeking out personalized shopping experiences. Today’s customers want…

Real-Time Engagement 
Accustomed to the instant access of e-commerce shopping, customers are looking for opportunities to skip the line and have direct communication channels to ask, troubleshoot and, of course, shop.

Differentiated Personalization 
Always on the move and constantly tethered, today’s consumers may be transitory, but they shop as they please. They expect retailers to keep pace with their mobility and provide consistent personalization depending on where they’re shopping.

But for retailers to drive value to these new set of shopper expectations, the need to tackle the headwinds of operational headaches, legacy software and other disruptions is only more challenging. Today’s retailers need to…

Make Sense Of Their Data 
Faced with an onslaught of user data, retailers need to filter the excess and transform these information sources into consumer-first strategies.

Synchronize Offline & Online Retail 
Digital and physical shopping channels typically assume a different set of initiatives and shopper expectations, but the separateness between these channels poses a threat to operational efficiencies and adds friction to customers hoping to shop in a seamless and consistent fashion.

Maintain Logistics Networks 
In order to service a wider field of customers, retailers need to reconsider their traditional supply chain ecosystem in favor of adaptive and flexible resource management that reduces waste, yet fulfills the consumer’s purchasing behavior.

Artificial intelligence and cognitive services allow retailers to navigate a new tide of consumer trends and deliver unprecedented value to their customers, employees and organizations. For our AI Retail PlaybookBharat Popat, Industry Solutions Director of Retail & Consumer industries at Microsoft, provided PSFK with insights about these industry disruptions and how artificial intelligence can drive a sea of powerful transformation.

PSFK: What shifts are you seeing occur in terms of consumer behavior in the retail space?

Bharat:  The consumer’s shopping expectations have changed as a result of two things. One is their experience of [physical] shopping. Secondly, their experience of shopping online. [The physical shopping experience] becomes more of a friction for them, because their experience is shaped by being a lot smoother online.

Customers are also increasingly expecting [shopping to be] much more personalized around what they want and what they need. That’s being shaped, again, as other digital  services become much more personalized.

What changes are you seeing in terms of internal retailer operations?

90+% net of all transactions happen in the physical stores, so they are very important to retailers. Yet, there’s a major transition occurring partly because of all these customer expectations and how they are applied in physical retail. How can retailers deliver the expectations that customers enjoy online physically in store? Therefore, they must consider how they design their stores and the services they offer.

At the same time, retailers want to make things much more personal, inspiring and experimental. Part of the attraction of physical stores is being able to go and try things—touch, feel, smell. It’s how those experiences are enabled, but done a lot better, so that customers still feel like it’s worthwhile to actually go into the physical stores.

Being to deliver those experiences and, at the same time, tailoring merchandise to meet customer demand becomes critical.

How can an AI architecture help retailers manage these shifts occurring throughout the customer experience, internal operations or shopper marketing?

If a retailer is trying to identify their best customers, their lifetime value or life cycle stage, while trying to find the right information about all the products they have, the analysis becomes very complicated. How can a merchandiser do very complex assortment planning without having to be a data scientist?

This is where AI capabilities come in. They can have a conversation with an assortment planner about their goals and about what they’re trying to do, what knowledge bases they’re trying to utilize. AI pushes the complexity in the background, making it very easy for the assortment planner to achieve this complex exercise.

For each operations challenge, like assortment planning or inventory planning, you can remove the complexity for your workers, and apply AI in order for them to unlock the power of data.  

What are some best practices retailers can adopt in order to prepare their business for AI?

Retailers need to have a great sense of where your biggest opportunities lie. Identifying the friction points in the customer journey and doing process analyses, understanding where there’s leakage in the process and where there’s opportunity in the process.

Given that it’s new technology, retailers need to be open to experimentation. The best practice is small learning projects—then go for big things as soon as you get them under your belt.

The third aspect is really partner. AI is not a single technology. It’s a whole stack of technologies that come together and are used in order to achieve a business outcome. You’ve got to think in terms of partnering with a platform provider like Microsoft.

Use the platform so you yourself as a developer or as a business analyst push the complexity of the technology down toward those who are experts in it. Work with an ecosystem of people and use your open innovation network. Learn from the community of innovators. Be part of it so that you learn and contribute as well.

The AI Retail Playbook, presented in partnership with Microsoft, outlines a new vision for the retail experience—heavily personalized, proactive service that uses the power of artificial intelligence to place the customer at the center of operations. Download the free report here.


Lead Image: Xianjuan Hu | Unsplash

Steeped in the language of digital commerce, today’s shoppers have developed a new standard of behaviors, preferences and expectations for all of their retail experiences. Responsible with meeting these elevated needs, retailers need to overcome the hurdles of legacy technology and captivate each of their customers on a 1:1 basis.

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+sport & fitness
+technology
+Virtual Commerce
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