With this post, Outside In boldly goes where it (mostly) hasn’t gone before… Artificial Intelligence (AI). Admittedly, I have no ‘expertise’ in the said domain, but have the curiosity to learn more about the subject… and what better way to start the efforts by tracking what is ‘popular’ in the Industry today. Thanks to an illuminating report by AIQRATE that I read recently, I am in a position to summarize the ‘popular’ AI Use Cases in the Retail & CPG Industry. Grab your Coffee…
Market Potential
The ecommerce revolution has initiated a fundamental change in consumer shopping behaviour, which has continued to gain momentum in the mobile and social media era. In the process, customer demands have reshaped the retail and consumer products industries. To meet these changes, retailers and brands have leveraged technologies over the past decade that enable them to stay close to local market trends, understand consumer preferences and shopping behaviours, design products, provide value-added services and engage consumers in contextual ways
A research by IBM shows that two in five retailers and brands are already using intelligent automation, and that number is on track to double within the next three years
The AI in the CPG & Retail Market is expected to reach USD 30.90 billion by 2025, at a CAGR of 35% over the forecast period 2020 – 2025
The Popular AI Use Cases Today
1) Product Categorization: Lalafo helps sorting merchandise and services via AI-powered image recognition. When sellers want to market goods on Lalafo, they can just upload an image of these goods with no need to add a description. AI has helped Lalafo increase content relevance and improve sales
2. Customer Support: Chatbots help retailers to provide great customer service, help customers find items on the site, notify them about new collections, and offer them apparel similar to things they’ve already chosen. Burberry and Tommy Hilfiger have already launched AI-driven bots on Facebook Messenger that guide customers through their latest collections and answer their inquiries
3. Product Search – Audio as well as Video: Many prominent brands such as Costco, Kohl’s, Target, Tesco, and Walmart use either Google or Amazon AI technology and smart devices to serve customers with easy and fast search. Customers do not need to type in queries on small devices anymore; they can just ask Alexa to add carrots or new glitter shadows by MAC to their shopping bag. AI-powered technology scrutinizes an image and analyzes colors, shapes, and patterns to identify an item – allowing customers to upload images and find identical or similar products. American Eagle Outfitters offers visual search in its mobile app. Its image recognition technology – built on Slyce – lets customers not only find the exact or similar clothing but also get recommendations on what goes well with it
4) In-Store Assistance: Investments in AI-driven technologies that can both assist customers while shopping in their physical stores and help their staff handle customer inquiries. Kroger Edge technology will replace paper price tags with instantly changing digital tags. In addition to prices, smart shelf tags will display nutritional information, current promotions, and video ads
5) Virtual Fitting Rooms & Mirrors: The virtual fitting room is a great helper for busy shoppers as they can try out manifold apparel, find the right outfit and an accessory that perfectly matches it, and do all this in a matter of minutes. Gap, Levi’s, J.Crew, Old Navy, American Eagle, Bloomingdales and Brooks Brothers have set up Me-Ality virtual fitting scanners – that can scan a shopper’s whole body – in their stores and seen a dramatic increase in sales. A whole body scan takes about 20 seconds and measures 200,000 different points on the body
6) Tracking Customer Satisfaction: Apart from scrolling through social media and gathering feedback left by customers, artificial intelligence can detect the actual mood of the customers in the store. Walmart is rolling out facial recognition cameras that can define a customer’s level of satisfaction at the checkout. If a customer is frustrated, a company representative will talk to them to soften the annoyance and revive their relationship with the store
7) Predicting and Influencing Customer Behaviour: Retailers & brands can leverage behavioural economics and reach customers with an individual approach. Personali’s (Nagomoo) Intelligent Incentive platform analyzes customer psychology and emotions to encourage purchases. Pet Food Brand WAG increased Revenue by 30% with INTENT-BASED PROMOTIONS. Check the complete case study here at: https://www.namogoo.com/resources/case-study/wag-dramatically-increases-revenue-and-conversion-rates-with-intent-based-promotions/
8) Cashier-free Stores: The automation of stores helps diminish lines, reduce the number of employees needed, and dramatically save operational costs for a company. Amazon AI has enabled checkout-free stores. The Amazon Go app along with Just Walk Out Shopping technology automatically react to a customer’s taking from and returning products to the shelf. We all know this Use Case, but sharing the link just to refresh our memory:
9) Trade Promotion Optimization: CPG companies can get help to stop overpaying retailers for carrying out promotions such as sales or in-store displays. The AI software uses natural language processing to match Trade Promotion Contracts to Invoices. Checkout Genpact’s Case Study on AI-driven Trade Promotion Contract for a CPG Company: https://www.genpact.com/insight/case-study/an-intelligent-new-trade-promotions-system-for-a-cpg-giant
10) Adjusting Prices: Intelligence can show retailers likely outcomes of different pricing strategies so they can come up with the best promotional offers, acquire more customers, and increase sales. For example, Bed, Bath & Beyond can use AI-powered pricing and inventory algorithms to define the most appropriate prices for goods and notify Customers
11) Managing Overstock and Out-of-Stocks: AI helps retailers and brands replenish supplies by identifying demand for a particular product based on sales history, location, weather, promotions, trends and so on. This way companies can prevent underperforming products from building up, stock what customers are likely to buy, achieve faster deliveries, reduce returns, and save lots of money. H&M uses AI to analyze store returns, receipts, and loyalty cards to predict future demand for apparel and accessories and manage inventory
In Conclusion
The changing customer preference and growing competition among retailers to hold significant market share have increased the deployment of AI in the retail industry. The growing digitalization coupled with rising internet penetration and proliferation of smart devices across the globe is rapidly increasing the use of AI by Retailers & CPG players. Future AI-driven Applications look to be far more extensive than many companies currently realize. The competitive landscape is shifting and it’s no longer about just pursuing AI—it’s about being among the first to adopt AI at scale to reach unprecedented levels of personalization, precision and profitability
References and Sources
1) Global AI Adoption Report by AIQRATE
2) Lalafo Product Images: https://lalafo.com/index-en.html
3) Burberry AI-FB Messenger Chatbot: https://www.chatbotguide.org/burberry-bot
4) American Outfitters Visual Search: https://slyce.it/blog/american-eagle-joins-growing-list-of-retailers-using-slyce/
5) Kroger Smart Shelves: https://news.microsoft.com/transform/kroger-smart-shelves-ditch-paper-drop-lights-delight-shoppers/
6) Bloomingdales Me-Ality Body Scanner: https://www.nydailynews.com/life-style/fashion/bloomingdale-me-ality-body-scanner-article-1.1314847
7) Walmart Facial Recognition: https://eachscape.com/walmart-facial-recognition/
8) WAG Intent-driven Promotions: https://www.namogoo.com/resources/case-study/wag-dramatically-increases-revenue-and-conversion-rates-with-intent-based-promotions/
9) Genpact’s Case Study on Trade Promotion Contract: https://www.genpact.com/insight/case-study/an-intelligent-new-trade-promotions-system-for-a-cpg-giant
10) AI-driven Pricing Optimization: https://www.intelligencenode.com/blog/the-retailers-guide-to-price-optimization/
11) Amazon Go Stores:
12) H&M AI-led Inventory Management: https://bermanevansretail.com/2018/05/23/hm-is-now-using-data-analytics/