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Analysis

The role artificial intelligence has to play in retail

There’s no doubt about it; the retail sector is in the middle of a revolution. While customer service has always been important, it’s customer convenience that’s now king. PwC’s 2018 consumer insights survey found that 40% of online shoppers would pay more for same-day delivery and 62% expected their orders to arrive within two days. Retailers that can provide a quick and convenient service will always have a competitive edge.

Realistically, we’re still years away from using AI for most of our retail interactions but, as the technology develops and natural language processing and understanding becomes more sophisticated, AI will become another way for retailers to compete in multiple areas of operation.

AI powering voice

Artificial intelligence is bringing new services into the mix. As people become more comfortable with having devices like Google Home and the Amazon Echo in their homes, they start to use them as virtual assistants.

We’re already seeing customers starting to use automated services provided by retailers. For example, in 2017 Amazon announced that four people used its Dash buttons every minute. It also increased the range of buttons available in the UK due to demand. The leap between using an automated tool and a virtual assistant to shop really isn’t that great.

Virtual assistants, like the Echo, are becoming popular in the UK. One survey predicts that 40% of UK households will own a device in 2018. Meanwhile in the US, it’s predicted that the use of virtual assistants will grow across generations, with Millennials leading the way – 39.3 million are predicted to be using the technology by 2019.

According to Witlingo (Amazon Alexa’s analytics partner) sales of voice devices are dominated by Baby Boomers and Generation X, with the latter generating a third of Echo’s revenue in its first two years and Boomers accounting for 31% of purchases in the same period (2015-17).

As more homes adopt voice devices, younger generations are becoming familiar, comfortable and confident with the technology. It’s likely that we’ll see Generation Z being more demanding when it comes to voice. Retailers will need to work hard to ensure that the technology they offer is the most sophisticated. After all, what’s convenient about a voice-operated virtual assistant if it doesn’t understand what you say?

If someone casually asks Siri to “buy that sick skateboard on sale at Sports Direct”, how does Siri interpret ‘sick’? Will it still place the order if it doesn’t understand part of the request? How many times will the person need to repeat themselves?

Increasing efficiency in customer communication

In 2017, Business Insider reported that most people use Amazon Echo (which controls 70% of the voice-enabled speaker market) for general queries and simple tasks. The most popular use was asking the device how to set a timer, followed by using it to play a song and to listen to news stories.

Customer communication will start getting smarter as artificial intelligence and big data works together to provide insight that powers autonomous actions. As this data is collected from across the business, any AI the retailer uses will be able to learn and apply information with greater accuracy.

The more comfortable and confident customers get with using these devices in the home, the more data the AI will have to work with. AI will be able to spot opportunities for retailers to provide proactive customer service. It’ll be able to predict what customers want before they ask for it – saving retailers time and improving customer experience.

Improving efficiency and cost-effective in day-to-day operations

Retailers will start using AI to improve logistics and customer deliveries. While automated tools can answer simple “where is my order” queries, retailers will start to use AI to track and monitor logistics and predict possible pain-points – preventing problems before they occur.

We’re already seeing more retailers adopting automation to give themselves a competitive advantage. While AI has great potential, it’s currently both prohibitively expensive to develop a tailored solution and still in a relatively early stage of understanding as far as language is concerned. So, retailers might not be rushing to experiment with a full AI just yet, but automation is paving the way for an industry that creates convenience through artificial intelligence.


By Jack Barmby, CEO and Founder, Gnatta who help retailers to deliver universal customer engagement through the use of specialised software.

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