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Retail in Transition: Artificial intelligence in action

In the first part of our series “Retail in Transition” you have witnessed how strongly artificial intelligence is already penetrating the industry and in which areas the interaction of Business Intelligence and AI can be particularly profitable.

In today’s article, we will delve into the actual practice involved. We have compiled here examples of the use of artificial intelligence in retail for you. These make clear where AI seems to be particularly promising, which includes:

  • human interaction,
  • the optimisation of the shopping experience,
  • decision support and guidance, as well as
  • the development of forecasts and targeted advertising.

Artificial intelligence in eCommerce: Focus on the customer

Artificial intelligence is becoming more and more important where decisions have to be made on the basis of data. Especially in online retail, which has a large volume of (customer) data at its disposal, the evaluation of this can bring enormous advantages with it. AI, after all, is able to link up all of the information available about the customer in a meaningful way.

Everything talks with Amazon

One of the absolute top users of artificial intelligence in eCommerce is the retail giant Amazon, which employs it along the entire value chain. From route optimisation in logistics to product recommendations for online purchases, the focus of the application is always on the customer.

Everything about us is subject to one main question: What leads to the best customer experience? We believe in more choice, more convenience and lower prices”, Ralf Herbrich, Head of Artificial Intelligence Research at Amazon, told the Tagesspiegel.

The use of Amazon’s AI audio system Echo is also becoming more and more popular. In the form of Alexa, the virtual assistant not only controls music, lights and thermostats, but also orders items from the Amazon shop. Alexa now supports some 20,000 devices for the networked home. Amazon has also recently launched Echo Input and Echo Auto. With a small mobile device or application inside the car, the company is closing an important strategic gap. In contrast to its competitors Google and Apple, the retail giant has not yet marketed its own smartphone that enables the mobile use of Alexa. Amazon uses the popularity of the language assistant above all in its core business of advertising:

“Thanks to Alexa, Amazon knows better than anyone what customers want, what they are looking for”, explains Gartner analyst Werner Goertz.

Intelligent product presentation

A new way of optimising product presentations has recently been introduced by the Chinese retailing platform Alibaba. The company has been investing in the research and development of new technologies for years and has now developed a tool that uses artificial intelligence to create content, which can produce 20,000 lines of content per second. This allows retailers to generate product information without even having to invest a lot of time themselves.

The Aggregated Reviews tool from the Otto group is a form of intelligent sorting function for ratings, making it easier on the consumer side. Customers can filter according to personal priorities (such as the cut of clothing) and only see the information that is really relevant to them.

Visual product search

One of the pioneers of the visual search is Zalando. The online retailer already started a test phase for image recognition in its German app in 2014. In the meantime, customers can quickly and easily search for similar products, colours or patterns in the Zalando shop via the photo search.

The online marketplace eBay is also working at full speed on the further development of intelligent systems for speech and image recognition, machine learning and data analysis. The company already integrated the AI-based photo finder “Image Search” and the search function “Find it on ebay” into its app in 2017, with which a product search via image becomes possible.

In 2017, eBay integrated the "Find it on eBay" function into its app. Since then, users have been able to use a photo to search for similar products on the platform and then buy them directly.

In 2017, eBay integrated the “Find it on eBay” function into its app. Since then, users have been able to use a photo to search for similar products on the platform and then buy them directly. (Source: eBay)

Service and purchase advice

In the area of customer service, AI can support “digital consultations” in the form of chatbots. This is software that communicates with the user via text or voice messages in natural language and/or with the help of graphical control elements. A bot is available around the clock and delivers constant performance, which makes it much easier to solve in particular simple customer queries.
At the end of 2016, the German Lufthansa launched a beta version of their chatbot Mildred, which has since helped corporate customers find the cheapest possible price for a scheduled flight.

The cosmetics company L’Oréal is also working on providing customers with optimum advice. In 2017, the company developed, in collaboration with service provider Automat from Canada, a chatbot for Facebook Messenger, which is designed to help users find suitable gifts for friends and family. The so-called “Beauty Gifter” asks for a range of information in order to create a profile of the person receiving the gift and then make suitable suggestions at the end.

In 2017, L'Oréal presented the so-called "Beauty Gifter". On request, it creates a profile of the recipient and then suggests suitable products. (Source: L’Oréal)

In 2017, L’Oréal presented the so-called “Beauty Gifter”. On request, it creates a profile of the recipient and then suggests suitable products. (Source: L’Oréal)

AI in stationary retail: A more attractive shopping experience

It is also worthwhile for stationary retailers to take a look at the concepts of Amazon and Co. Today’s digital-savvy customers can thus be offered the best experience from both worlds. Artificial intelligence, after all, can also be used in shops to the advantage of both customers and employees.

Targeted product suggestions

The fashion label Rebecca Minkoff has been testing intelligent mirrors from Oak Labs since 2014. The AI working in the background scans the ID of the clothing and displays information and options, such as a different colours or sizes, on a touch screen of the mirror.
Sensape’s Brand Ambassador intelligent image processing system is following a similar direction. The Brand Ambassador is almost a digital sales assistant for stationary retail. Gender, age or emotions are analysed on in-store screens and suitable advertising or product offers are then displayed to the customer.

The supermarket chain Real has also tested a system from IDA Indoor Advertising in 2017, which analyses the faces of customers in the checkout queue and displays suitable advertising on a monitor, depending upon their age and gender. The use of these intelligent advertising displays, however, was discontinued. A company report states that the customer benefit of the use of technological developments must be comprehensible to them at all times. This was not felt to be guaranteed in the case at hand.

Shopping assistants and customer advisors

Similar to chatbots in online retailing, artificial intelligence also enables digital consulting in stationary retail. In the Saturn store in Ingolstadt, for the first time, a robot was used as a customer advisor. This robot asks incoming customers about their wishes and then guides them to the product upon request.

Macy’s mobile shopping assistant On Call also helps consumers shop in department stores. On Call uses here IBM’s Watson technology of machine learning and cognitive computing.

Customers are also supported by Adidas and Microsoft Kinect when shopping. The two companies have developed a body scanner that can be found in their local shops. With the help of a trained employee, customers are scanned from head to toe, thus enabling them to try on their clothes virtually.

Cashierless and cashless payments

In the “shop of the future”, checkout staff will be increasingly replaced by self-checkout systems or digital payments.

How this works is what Amazon is already doing. In Amazon Go stores, customers only have to start the Amazon Go app, which then automatically recognises which items are packed into their shopping carts. By means of AI and cameras, there are no more cashiers or tills.

The electronics chain Media-Saturn is also experimenting with cashierless and cashless shopping. The company has recently been testing a procedure that allows buyers to pay directly at the shelves. What’s special about this is that the necessary app is also used to deactivate anti-theft devices.

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