First published by PatelMiller 26th January 2018
If you are struggling to really get your head around A.I. then you are not alone. It is proving very difficult to define what A.I. is let alone guess the impact it might have on businesses. Only one thing is clear; A.I. is young but growing quickly and its potential is unbounded, it will no doubt play a big part in the future Retail landscape.
In order to get clear on this we will briefly try to define A.I. before speculating on the impact we think it might have on Retail.
A.I. is essentially a machine brain which can make decisions based on inputs – more sophisticated A.I. will also be able to learn and develop strategies over time. This definition is still very broad and covers a wide number of potential uses for A.I. – potentially why it gets so confusing. It leaves you thinking about driverless cars, Siri & Alexa, and … SkyNet*.
A.I. will impact Retail in these three ways:
Automation – A.I. machines which can move stock in a real world environment
Human interaction – communicating with customers as your colleagues do
Decision making – receiving data inputs and making intelligent decisions
There are lots of Retail case studies but we will cover one example of each and discuss the value added.
Automation – Sainsbury’s are trialling delivery robots in certain areas of the country. The machines can navigate their way around the streets a 30 minute walk from their store and provide a quick and efficient fulfilment option for up to 3 bags worth of shopping. It’s the ultimate convenience for the quick top up shop requiring only the electricity to power the robot. This is AI as it can handle obstacles and pedestrian crossings in much the same way a human can.
Human interaction – Very.co.uk offers the ‘Very Assistant’; a conversational, WhatsApp style Chatbot within the Very app. It uses AI fuelled natural language which allows queries to be answered quickly and accurately. Most simply, the tool can be used to track an order, make a payment and check they payment dates.
Decision making – Morrisons implemented Blue Yonder’s replenishment optimisation solution in just 12 months, following a 3 month trial. It has now been rolled out to 130 categories, 26,000 SKUs and in all 491 Morrisons stores. The results are considerable: Shelf gaps have reduced by 30% & fewer stock touches has increased employee productivity and allows staff to focus on the customer.
Companies like Google DeepMind are on the cutting edge of developing cognitive A.I. and in the past month they have bested the best at Go and now also Chess. We believe the impact A.I. could have on Retail could be far reaching and will expand on one use case – merchandising.
Merchandising is the mathematics of getting the right product in the right place at the right time. It requires a solid grasp of the numbers and diligence to ensure that product is in the right place to sell through.
A.I. could be the merchandiser of the future – it could happily monitor all the numbers and learn what is selling where to optimise stock locations. It would be able to do this continuously to efficiently move products around the business to ensure availability and reduce markdown with greater accuracy and likely lower cost than a merchandising team. If A.I. is now the greatest Chess mind on the planet it is not too far a stretch to believe it could be the most effective merchandiser.
At the moment A.I. applications are in their fledging stages – but they will continue to develop and we have no doubt that A.I. will be a core element in the future Retail landscape.
*Artificial general intelligence system that features centrally in the Terminator franchise and serves as the franchise's main and true antagonist