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The Set List: The AI Retail Revolution 

‘In five years, cognitive AI will impact every decision we make’ - Ginny Rometty (IBM CEO). Image © IBM

Editor’s note: this blog is the sixth in a series discussing trends and insights into the world around us.

IBM CEO Ginny Rometty’s prediction at the annual Code Conference earlier this year isn’t too hard to believe. With the AI market estimated to grow from $420 million in 2014 to $5.05 billion by 2020, thanks to the rising adoption of machine learning, AI is no longer the stuff of science fiction. IBM’s cloud-based cognitive computing engine Watson, in particular, is involved in everything from healthcare research to teaching robots how to speak Japanese, and playing a key role in transforming the retail customer experience (CX).

In recent years, brands have overwhelmed consumers with their offerings. Although customers like having the power and choice to search for their purchases, for many, the consumer experience has now become something that never ends. The increased effort needed to choose between too many options within a limited time has meant that many leave without making a purchase at all.

Helping retailers to curate

AI is helping consumers and retailers with this problem by bringing personalised experiences to the physical and digital store, and it’s expected that by 2020, 85% of customer interactions in retail will be managed by AI. With data obtained from consumers increasingly being used to form insights in retail, there is a move towards fixing the backlash emerging from offering too much choice to providing a more superior offering.

Its ability to learn, understand, reason and interact with natural language is beginning to be seen in retail through the careful curation of a smaller range of options that perfectly meet your needs, and the removal of options that don’t suit your taste or preference. It also has the ability to cleverly combine this data with the latest consumer buying trends and behaviours. What formerly would have only emerged from human intuition can now be accurately generated in seconds creating information rich data can use to understand a brand's business and consumer base. Making the CX easier and in fact, better.

If you follow the breadcrumbs, there are already a number of retailers experiencing and utilising the benefits of AI. The North Face was the first major retailer to incorporate IBM Watson’s cognitive computing intelligence Fluid Expert Personal Shopper into their e-commerce experience, helping improve customers’ online product selections. The site utilises the tools natural language processing ability through a series of questions to help consumers refine and discover a tailored jacket based on their responses. It’s like having a digital personal assistant that makes your life just that little bit easier when it comes to choosing your next winter coat!

Macy’s are another brand also experimenting with AI, but this time for its in-store experience. "Macy’s On Call” is a new intelligent engagement app currently being tested out in ten of the retail company’s stores around the US. The mobile tool uses IBM’s cognitive technology 'Satisfi' to create an in-store shopping assistant that allows customers to post their questions about the location of specific products, departments or brands, and services the customers’ need for each query – regardless of the language being used.

Image © Macy's

So, what’s next?

New technologies and retail practices are having a profound effect on CX, and with more and more retailers putting innovation at the core of their strategies its impact will only continue to grow in 2017. People’s common view of AI is that it can be more annoying than helpful, as well as feeling impersonal.

But what if it could feel empathy or have an opinion? The speed of innovation is so fast today that this could soon be a reality. We are seeing advancements in technology predicted to take five years now taking place in two. Digital retail assistants are expected to be able to recognise customers by face and voice across channels by 2018.

Tech giants Apple and Amazon have both bought two different start-ups specialising in AI software that recognises objects and/or facial expressions. How they will integrate this into to their own products is yet to be known, but with a bit of imagination, it’s pretty easy to guess what could be next.

In the future, maybe Siri will be able to guess what you need without you needing to say a word, or while shopping in Amazon’s physical store you'll receive suggestions via your phone of what you could buy to cheer you up because you look a little sad that day. With the younger generation finding technology in retail useful for their shopping experience and many saying they were quite comfortable with retailers using in-store AI technology, one things for sure, we’re not as scared of the unknown as we once were…

Nadia is a London-based interior designer with experience working on a variety of consumer-based projects, including restaurants, bars, and fast fashion retail at a variety of scales. Nadia’s passion for shopping and love of food makes her an excellent curator of consumer experiences. Contact her at nadia_belvedere@gensler.com.