Prioritizing Your Customers with Retail AI: The Outcomes-First Approach
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Artificial Intelligence in retail is not going anywhere. Those who adopt it will stay ahead of the pack, but here's the caveat: Is your organization implementation-ready?
It's easy to be enchanted by the numbers. According to BCG, "above-store organization productivity is estimated to rise by more than 30% while total employee costs reduce by 10%." This is only possible, however, by having senior teams with deep AI fluency.
Optimizing and priming your operations for AI is imperative to not only choose the right automation software but also its implementation. Without this preliminary stage, organizations are experimenting themselves into debt as they jump around from platform to platform, burning not only money but time.
Ruth Harrison, global retail and consumer goods lead at tech firm Avanade, says that retail's biggest challenge is building a strong foundation for their AI systems;
"One of the biggest challenges retailers faced was building those foundations: ensuring data is accurate and trustworthy, modernizing cloud architecture, and deploying ERP systems that are stable, integrated, and ready to scale. Without these essentials, even the most advanced AI strategies risk falling short."
Keeping retail "human" is what we do here at Competitor IQ. As we transition into this technology-first world, we want to make sure the industry doesn't lose sight of this. The customers make retail special, not the other way around. That's why implementing an “Outcomes-First” approach to your tech investments is crucial.
This approach involves outlining the outcomes you're looking to achieve first and then finding the platform that fulfills it. It's not about adopting the latest, shiniest tech but rather the support that helps you run the business better.
Whether you're ready to adopt an AI model or simply shopping around, here are five questions every retail professional should ask before they invest.
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Retail Innovation: 5 Questions to Ask Before Implementing AI
Question 1: Does This Benefit Your Customer?
The customer must be at the center of all corporate decisions, so ask yourself if the outcomes will actually improve the customer experience. Retail Focus highlights that most customers find the AI shopping experience lackluster despite most of them using it in their decision-making process.
Age, shopping behavior, and current friction points are some of the things to consider. A prime example of this is the elderly population, who tend to prefer in-store shopping. This group is less inclined to use chatbots or automated suggestions, but they do care about dedicated senior shopping times, wide enough aisles, well-stocked inventory, and knowledgeable staff. AI can help you determine these metrics while pinpointing the issues your customers consider a priority.
Also, despite the savings that AI promises on labor costs, will this ultimately impact customer satisfaction? As posed in the book, Retail Futures: The good, the bad and the ugly of the digital transformation, when AI helps to get customers in-store, will there be any humans to complete the transaction? when AI helps to get customers in-store, will there be any humans to complete the transaction?
61% of consumers are using or have used AI when shopping, with 53% doing so often. However, 68% could not name a single AI shopping experience that impressed them. On top of this, 64% wanted retailers to use AI to improve their shopping experiences, but many were sceptical about how retailers are implementing the technology, as trust remains the defining barrier to adoption.
Source: Retail Focus, Analysing the evolving role of AI in retail
Question 2: What Makes Sense for Your Brand?
This is a critical question that should involve internal discussions with your stakeholders. The key here is to ask if AI helps your organization be more human.
As Candice Mayer-Gillet, managing director at Westfield Rise, a retail media agency, affirms, "The brands that progress most will not be the ones that automate everything, but the ones who use AI responsibly to unlock ideas and improve clarity while keeping imagination at the heart."
If you have a specific image to uphold, does the adoption of AI prop it up or hinder it? For example, for sustainable brands, there is a stigma against the use of AI by climate-focused communities. Is this a risk you're willing to take?
You should also consider that you're requiring many of your employees to up-skill. Is this possible? Will you be pushing certain employees out of a job? How will this resonate with your consumer?
With fewer employees available to assist customers due to displacement effects, despite increased empowerment of in-store employees to value-add activities, there will be increasing pressures on remaining workers to not only perform but to learn the ever more complicated technologies, while at the same time remain customer friendly and approachable.
Source: Mahmoud, Tehseen, & Fuxman, The dark side of artificial intelligence in retail services innovation
Question 3: Will This Actually Increase Your Speed and Efficiency?
What are the outcomes that you want to achieve by implementing AI? Just because everyone else in the retail space is using one AI interface doesn’t mean it’s right for you.While certain platforms are best suited for specific goals, such as inventory management or loss prevention, others may have better integrations with your current systems.
One way to narrow down your AI options is to find platforms with Guardrails that keep your results focused and ensure that your automated flows don't... well, go flying off the guardrails.
Despite AI’s potential, it’s important that retailers continue to focus on customer wants and needs first. With AI being touted as the “new personal salesperson”, use technology to create a custom experience that helps your shoppers get what they want, how they want it. And be mindful to not overstep your boundaries, as consumers are tired of having their digital footprint scraped.
Question 4: Can We Realistically Adopt This?
Who is going to manage your AI systems once implemented? Will it be done internally or through a consultant? AI is not a tool that can be left on autopilot. It needs to be monitored and tweaked to ensure that workflows and outcomes are consistent.
Then there's the implementation and adoption period. Staff need to be trained on how to navigate and manage these systems from all levels of the organization. Whether it's from a technical standpoint or learning how to read the outputs, additional training is paramount to a successful rollout. According to BCG, "Teams must be trained and encouraged to use [AI] tools...responsibly, avoiding the 20%+ productivity drag seen in early AI rollouts where adoption was unmanaged."
Many Customer Relationship Management (CRM) software have integrated AI, such as Salesforce which lauds itself as the #1 AI CRM. If your company is already using a platform, consider seeing if there are integrated AI tools. This is significantly easier to adopt since you won't need to transfer data to another interface.
Question 5: Do You Have the Necessary Data?
Like they say, "garbage in, garbage out." The quality of your results and outcomes is based on the data your AI systems are setup to analyze.
For quick outcomes, make sure you already have information available to get your AI model started. If not, you'll have to setup and use AI to gather data as well as produce outcomes. This delays your actionable steps and returns on investment.
Harrison mentions that having a clear strategy is key:
"Success will also hinge on a clear automation strategy, knowing when to leverage off-the-shelf AI agents and when to invest in custom solutions tailored to unique business needs."
"Although AI may sound wonderful and promise a lot, the reality is that it is not a finished product. Professionals across all industries, not just retail, are still learning about what AI is capable of, with ongoing improvements required if you are to not fall short of expectations."
Source: Retail Focus, Analysing the evolving role of AI in retail
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AI is Key to Retail Innovation, But Stay Agile
There are still a lot of unknowns regarding the future of AI in retail, but one thing we're sure of, is that artificial intelligence has been let out of the box. There's no going back to a world without it. So, adapting your retail environment to the appropriate AI model is going to be key over the next couple of years.
This isn't a one-size-fits-all situation. Your business is vastly different from your competitors, so you must approach AI with this same mindset.
The key to your success is to always focus on the human side of retail and how you're using AI to help connect with people on a deeper level. This is how you create lifelong customers.
Interested in keeping things human?