Artificial Intelligence (AI) in retail: it’s a cake mix blending customer experience, competitive advantage, ethics, and retail reform. With a turbulent economic landscape and policymaking pressure to keep AI under control, an interesting question emerges: Where does AI sit in the future of the high street?
Retail operations and technology
The daily operating costs of a physical retail store have become increasingly under pressure as a result of both COVID-19 and the cost of living crisis. From an AI standpoint, this already complex infrastructure being intertwined into physical retail spaces in challenging macroeconomic conditions adds an extra dimension of pressure to maintain a technological competitive advantage.
Furthermore, economic headwinds have affected and will continue to affect consumer spending. As a result, these conditions create an important mix of considerations companies must evaluate to determine what technologies can be effectively strategized, deployed, and scaled.
From PWC’s 2023 Consumer Insights Pulse Survey, 96% of surveyed consumers intend to adopt cost-saving behaviors over the next six months. With inflation currently at 8.7% (as of June, 2023), the cost of living is very much on people's minds, with 57% of consumers expecting to spend less on everyday items.
How is AI being used in retail?
We now turn to a key consideration: the utilization of Emerging Technologies in retail spaces, in particular, Artificial Intelligence. AI in retail is no small feat: expected to be worth just shy of $57.8 billion by 2030, there are many ways it can be utilized, ranging from product demand forecasting to personalized shopping. Ultimately, it’s a dog-eat-dog for technologies that bring the customer closer to the brand than ever before.
AI and the changing retail landscape
Market landscape aside, an area of increasing importance is how AI will slot into the convergence of the physical and digital retail experience. Whilst 50% of consumers prefer the ability to speak to a friendly associate, 42% of consumers want the ability to use self-service checkouts.
Among these statistics, 82% of respondents are happy to share personal data in return for an improved customer experience. With these statistics in mind, a key question arises: to what extent will the physical and digital retail experience converge? This is a discussion point that’s easier said than done.
For this, let’s take an existing retail concept that’s still niche, but operational: Amazon Go. This a classic example of what’s defined as frictionless retail. Walk in and you’ve sensors monitoring you from every angle: looking at what you pick up, put back on the shelf, and what you walk out of the shop with.
With that, this information is fed through some wizardry to link to a customer's online account. Whilst these Computer Vision examples combine convenience for the customer, shifting completely to digital and integrating AI-based solutions won’t always be the answer.
It’s, in my view, all about experimentation of how much technology is brought into the retail experience: making sure the technology-savvy shopper can be serviced efficiently versus those who wish for a subtle digital offering complemented with a sprinkle of human interaction.
What’s the next step?
Ultimately, the convergence of both the physical and digital retail space presents a thought-provoking digital transformation challenge. I’m personally of the view that the future of high street retail will be a combination of a subtle AI offering whilst maintaining a level of human interaction.
Do I think the future of the high street will be like Amazon Go? No. Sure, there may be brands that start leveraging advanced Computer Vision Technologies, but certain retailers will need to keep a core human element. Take climbing retailers, for example.
Yes, digital billboards and signage along with an in-store point of sale (POS) can cater to customers who wish for a slicker transaction, but there isn’t a substitute for real-world advice and experience. You need humans for that, and in my view, human interaction, irrespective of how advanced AI gets, will be a staple of the high street for years to come.
Bibliography
AI Retail Market Worth: Ltd, M.M.R.P. (2023). AI in Retail Market to Be Worth $57.8 Billion by 2030 - Exclusive Report by Meticulous Research®. [online] GlobeNewswire News Room. Available at: https://www.globenewswire.com/en/news-release/2023/04/24/2652693/0/en/AI-in-Retail-Market-to-Be Worth-57-8-Billion-by-2030-Exclusive-Report-by-Meticulous-Research.html [Accessed 29 May 2023].
PWC Retail Predictions: PriceWaterhouseCoopers (2019). Retail outlook: 2019 Retail Predictions - PwC UK. [online] PwC. Available at: https://www.pwc.co.uk/industries/retail-consumer/insights/retail outlook.html.
PWC Survey 2023: PWC (2023). Global Consumer Insights Survey: PwC. [online] PWC. Available at: https://www.pwc.com/gx/en/industries/consumer-markets/consumer-insights-survey.html.
Inflation Figure: Bank of England (2023). Inflation and the 2% Target. [online] Bank of England. Available at: https://www.bankofengland.co.uk/monetary-policy/inflation.
