The Growing Role of AI in the Store

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The Growing Role of AI in the Store

By Joe Skorupa - 09/17/2018

More has changed in retail in the last 10 years than in the previous 100. Nowhere is this more evident than in brick-and-mortar stores, which are currently undergoing reinvention. They are morphing from their current sluggish, caterpillar state into a richly automated and augmented butterfly that soars on the wings of exciting in-store experiences and omnichannel opportunities.

The future of the ‘new’ retail store is actually taking shape today as fast-moving leaders respond to the rapid-fire introduction of new competitors and technologies. Retail leaders who have outperformed their competitors in comp store sales have done so by disrupting traditional retail thinking. With few exceptions, they have capitalized on the use of emerging and innovative store technologies including one of the most important – artificial intelligence (AI) and machine learning.

In the Targeted Research report, “AI in the Brick-and-Mortar Store,” the growing role of AI, machine learning and innovative technologies in today’s brick-and-mortar stores is examined. Here are some key takeaways from the study.

AI in the Store

As more technology is introduced into the store environment it is clear that autonomous management, instead of manual management by store staff, will become a requirement. In many cases this will involve artificial intelligence (AI) and machine-to-machine capabilities.

Stores that are automated and augmented in this way are thought of as “future stores,” but this future is not far off. When we asked retailers to predict what technologies they would like to see become mainstream within the next three years we found that providing in-store recommendations to shoppers through AI engines topped the list. In addition, the recommendations will not be based solely on previous purchases, but also on recent actions and choices made by shoppers in the store.

Determining what actions and choices shoppers are taking in the store will be done through geolocation or geo-fencing capability, which will be managed by AI. This function appears in second place on the AI-in-the-store list. This means that once the shopper is located and identified, messages and recommendations will be sent directly to shopper in the store either through an IoT device or to the shopper’s smartphone.

Other advanced technologies that will be enhanced by AI at the store level include voice command apps for store managers, associates and shoppers, the ability to track shoppers in real-time, and managing virtual mirrors for clothing and cosmetics.

When we asked retailers to tell us what technologies they would like to see managed by AI today, as opposed to the future, they chose shopper personalization in real-time. Other top areas where AI monitoring and managing can help support retail systems in stores immediately include security, WiFi, and WAN.

The study found that the average cost of technology per store is $53,000, which for a large regional or national retailer can add up big dollars. And, importantly the cost is going up – rising 53% over the last three years.

Tech-savvy shoppers are driving this trend and ubiquitous mobility is the tip of the transformational spear. In the current phase, retailers are in a reactionary mode, making upgrades as fast as they can, but in the near future AI and machine learning will enable stores to operate faster and more productively than ever before.

As stores continue to augment the shopping experience by adding a host of new IT capabilities, AI will become a pivotal tool that enables hardware and software to perform in a way that is reliable, self-healing, self-reporting and virtually invisible to the shopper.

To reach the full Targeted Research report, with a complete set of charts and analysis, click here.

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