Should under pressure retailers prioritize AI?
Microsoft grabbed itself plenty of media coverage this past week with the claim that UK retailers are tapping into artificial intelligence (AI) solutions at a much slower pace than other industries.
Its new report shows that 56 percent are still not using AI in their operations when compared to 44 percent of financial services companies and 40 percent of manufacturers. Of the leaders in the retail sector, around 61 percent are currently deploying the technology.
Change cannot be ignored and AI will impact retailers of all shapes and sizes, Microsoft declared. Whilst there is some truth to this, it should be remembered that many High Street retailers are struggling to keep their heads above water at present. They would, therefore, be forgiven for placing all bets on AI.
The pressures of running physical stores is causing an investment divide between online and High Street retailers, according to recent research by Hitachi Capital UK. Its study, involving 502 senior retail decision makers of director level or above, found that pure-plays are prioritizing positive, revenue-generating investment opportunities such as new products (41 percent of respondents).
On the other hand, as Sander Roose, CEO of Omnia Retail, observes, the dynamics of the sector are changing so quickly that many brick-and-mortar brands are struggling to keep up with day-to-day operations, let alone make the significant investment of time, energy and money that it takes to embrace the likes of AI.
However, the longer businesses wait to innovate, the harder it will be to catch up, Roose argues. Automation of laborious tasks, such as competitor price-watching and pricing, frees up employees to focus on strategy and making their business more profitable.
Simon Farthing, Director, Global Strategy and Insights, Monetate, believes that the Microsoft research highlights a crucial missed opportunity for retailers to enhance the shopping experience. The ability to remain agile and stay one step ahead of technological innovation can mean the difference between a customer completing an order or choosing a competitor.
Retailers not using AI technologies are likely paralyzed by their data, overwhelmed by the amount and what to do with it. In contrast, when AI is involved, the initial rules will need setting up by someone (the human touch) but then the technology is free to gather insights into shopping patterns and customer behavior, and then crucially act upon them. This will ensure customers are seeing products and web pages that are relevant to them in that moment, on particular devices and in certain locations.
The pro-AI camp say that retailers who don’t adopt innovative technologies may well end up behind the curve, failing to understand what customers really want and how to offer it to them.
But it isn’t the only game-changing solution in town (did somebody say blockchain?). And, at a time when the retail sector is navigating some intensely challenging market conditions, we should expect it to remain a niche thing for the foreseeable future.