It might feel as though artificial intelligence has reached a critical mass, but it hasn’t. In fact, it’s only starting to make an impact in some sectors, including retail. But, according to findings collected by KPMG, retail AI has room to grow — and a lot of it. And by 2027, AI in retail will balloon to $19.9 billion from around $7.3 billion in predicted spending in 2022, per Meticulous Research.

All this, and only half of the retail professionals believe they’ve scratched the surface of what’s possible when the technology meets in-person shopping. So why the lag time despite AI’s potential? Blame it on the confusion around AI in general.

What AI Is — and Isn’t

Many people don’t understand AI conceptually. This leaves them less likely to invest in the emerging technology, even as they see it working for e-commerce. Or, they feel like AI is limited to robots that stock shelves.

AI is more straightforward than what many retailers imagine, though.

In essence, AI algorithms are mere “if-then” statements. As long as outcome parameters are set, the programming collects, evaluates, and uses data appropriately. And if-then situations happen all the time in retail.

An Example of “if-then” in retail

Say a grocery store manager stands at the checkout lines. When more than three customers are backlogged, the manager opens a new register to make customers happier.

In other words, there are hundreds, if not more, issues that arise on the retail scene that have to be addressed by managers to keep the customers happy and the process running smoothly.

With AI, you could eliminate the need for the manager to stand around keeping things moving. Instead, store cameras or sensors could do the job instead. That way, the managers can take care of other business during business hours and beyond. At the same time, the data collected by the cameras could go through more if-then statements.

If the store is busy every day at 3:00 p.m. and customers are angrily waiting in line, then we need more cashiers at 3:00 p.m. each day.

Making Data-Driven Decisions

Let’s take the situation a step further. The AI sensor could store incoming data and measure the average wait time for customers. Those averages could then help the manager know when employees were most needed to care for overloaded checkout lines. When do the most clean-up situations occur?

There’s practically no limit to the doors that AI software can open.

In Australia, AI fashion booths are gauging customers’ body language and moods to make clothing suggestions. At Starbucks, AI is being used to track bestselling brews and personalize special offers. Which special offers do customers request and receive the most?

Other retail firms are improving their stockroom management, tasking machines with “heavy-lifting” in warehouses. Some stores do a deep-dive by seeing whether customers spend more when they turn right or left upon entering the store. If you know which isle your customers spend the most time on, you can plan better for the spend on displays on those isles as well as promotional coupons.

Gearing up for AI in Retail — Roadblocks Retailers Face

One thing’s for sure: AI can be a powerful retail tool. However, it’s not without roadblocks. Fortunately, most obstacles to adopting AI technologies can be overcome by asking (and answering) a few questions.

1. Why do we want to use AI?

This might sound like a trick question. It’s not. It’s an ethical one. Retailers need to be clear on why they want from AI, and their responses need to make sense. Case in point: If they’re using AI to improve the customer retail experience, — great. On the other hand, if they’re driving sales through AI-powered fearmongering, that’s inappropriate.

Everyone needs to have a bedrock of morality regarding AI’s use. Its potential for good is so vast. But when it’s used for the wrong reasons, it can do great harm. Therefore, the correct reply to this question needs to be centered on service and safety.

2. Which of our processes could benefit from AI?

You can’t explore all the possibilities of AI if you don’t understand where your bottlenecks are. Consider when I was 15 and worked at a fast-food place. I changed the marquee sign regularly. How did I know what to write? Someone at corporate would fax a companywide memo to my franchise owner. Then, my manager would review the fax and give it to me. Not precisely a streamlined system, right?

With AI, one person can schedule a digital sign to go live or even program the sign to change based on anything from the time of day to weather conditions — to on-the-spot sales.

When you’re considering implementing AI in your retail store, start by thinking about what your algorithms would look like in analog fashion — get help if you need to — don’t miss this opportunity. For example, where do you collect and disseminate information routinely? Those are probably areas that could be sped up if you handed them over to AI.

3. Who should help us implement our AI solutions?

When considering this question, did you automatically think, “an AI expert or IT person?” That’s what most retailers assume, but it’s not true. The best person to bring in to help you with your AI applications is an operational efficiency expert. This type of professional will strive to understand your business processes and store, in order to design a satisfactory AI solution for your if-then statements.

You’ll know you’ve found the right partner when you’re getting hit with all sorts of additional questions.

These questions will likely include inquiries about what kind of information you currently collect, which digital processes you might be able to automate, and how you intend to use AI-gathered data to make improvements to your retail systems that are already in place.

Looking Forward

It’s hard to tell how far AI in retail will go. Nevertheless, it’s clear that it’s bound to change the way consumers shop and how stores go about their everyday business. So even if you’ve delayed embracing AI retail solutions, now is the time to let go of your hesitancy and jump on the bandwagon.

Image Creditt: markus spiske; unsplash; thank you!

Scott T. Reese

Chief Technology Officer at Harbor Retail

Scott T. Reese is chief technology officer at Harbor Retail, a design + build firm where he helps bring Harmonic Retail™ to life with intuitive Self-Healing Technology™ and other future-forward digital integrations.