Impact of AI in Retail – Is Amazon Go the Start of Fully-AI Retail?

By Sudeep Srivastav
December 20, 2018 5 min read
Last update on: September 17, 2019

In the heart of Seattle lies a one-of-a-kind disruptive retail store – Amazon Go, a retail concept that gained popularity after making an appearance in headlines after opening its first Beta store earlier this year.

For those who are new to the world of Amazon Go, it is a grab and go retail model, where all you have to do is take up an item from the shelf and leave the shop and the items will automatically get added in your cart and the amount will be debited from your Amazon account.

The concept with which Amazon Go has been launched is something that the retail world has never seen. With Artificial Intelligence at its center tracking what items users are buying and the amount that has to be charged from them, Amazon go is venturing into the traditional retail setup and has introduced the technology yet again in its retail setup.

The popularity that Amazon Go Retail has been able to achieve in just a few months of its official launch has led to a number of other retail stores investing in deep learning and artificial intelligence technologies to follow the lead that Amazon has set. Walmart and Microsoft are also apparently planning to level the cashier-less retail outlet space which is presently only dominated by Amazon.

While AI-powered Amazon Go venturing into traditional retail plan has proved itself to be a hit with the brand hoping to expand its business to over 300 stores, AI’s capability as the medium bring Retail industry transformation is not restricted to just one disruptive use case that Amazon Go retail is. There are a number of other ways AI in Retail is changing the industry’s outlook.

Let us look into what those other ways are.

Ways AI can be Incorporated in Brick and Mortar Retail

With 7,000 retail stores around the world announcing that they are ceasing to exist in 2018 and thousand other announcing their plan to close down their operation after being succumbed to not being able to deliver the same output as online retail stores, the brick and mortar retail world as we know it is facing what is called a ‘Retail Apocalypse’.

Seeing the horror that now stands to face the future of Retail, a number of retail giants have started applying the power of Artificial Intelligence to keep them afloat.

Let us look into a few areas where the combination of Retail and AI is marking a strong appearance.

1.Streamlining Supply Chain

AI in supply chain management is the most popular adaption of the technology in the Retail industry.
One of the major elements the mere concept of a factory of future is made of smart, connected, and very efficient supply chain. The fact that there are a vast number of stakeholders participating in the supply chain cycle — manufacturers, suppliers, retailers, distributors, and the customers — the supply chain itself presents a number of opportunities for introducing automation in the business process, something that AI in supply chain is known to handle effortlessly.

Insights taken from the big data analytics can help companies predict and then react to the changes in demand, the amount of available inventory, the environmental condition, the supplier capabilities, the environment condition, and even the customer needs, which all ultimately ensures better productivity and a timely product and service delivery.

The prominent role of AI in supply chain planning is what IDC estimates will bring half of the mature supply chains to incorporate AI by the time we reach 2020. Even in the present day, there are a number of ways AI is revolutionizing Supply Chain Management.

Ways AI in Supply Chain and Logistics is Revolutionizing Retail

    • Improving the accuracy of demand forecasting
    • Lowers the operations and inventory costs along with providing faster response times to the customers.
    • Forecasting the demand for new products
    • Improving the factory scheduling and production planning accuracy by accounting for various constraints and then optimizing the supply chain for each
    • Reducing freight costs, improvement in the supplier delivery performance, and finally, a minimization of the supplier risk

2.Customized Customer Experience

Answering the shoppers’ unique requirement is one of the most full-proof ways to grow and maintain the customer loyalty count. Something conveniently possible through the blend of Artificial Intelligence and Customer Experience.
In a survey, 70% of respondents revealed how they would be a lot more loyal to the brands which added the features of personalization in their outlets. With the transactional data and machine learning, brands can easily track and then analyze past purchase, customer behavior, and loyalty cards etc to deliver more customized offerings.

An example of this customer oriented AI in retail market would be what Sephora is doing with Color IQ. It is the brand’s artificial intelligence driven, an in-store offering which scans the skin surface and recommends makeup products on the basis of the skin color.

3.Lowered Out of Stock instances and Markdowns

Using AI in retail stores, the seller can get direct insights into the sales pattern in the stores and lower the safety stock usage. The technology will also come in very handy while allocating or replenishing the inventory as retailers will no more have to be dependent on seasonal markdowns.

An example of AI in retail industry can be seen in the case of H&M that declared the plan to adopt Big Data and AI for analyzing the store returns and receipts for the evaluation of purchase per location and then stock the inventories on the basis of these insights.

Employing AI for the purpose of analyzing the inventory will help lower the occurrence of product excess and instances where stores order bulk items of products that are not in demand, which ultimately gets wasted and have to be returned – bring an unnecessary hike in the purchase and shipping cost.

4.Revolutionizing the in-store customer experience

By integrating smart mirror technology – an AI in retail stores use case that is growing in popularity – in the store, clothing brands will be able to help visitors check how the piece of clothing is looking on them, while all they have to do is hold the piece of garment in front their body.
The mirror technology can be made more advanced, more conversion friendly by giving the visitors option to wear with their chosen piece along with the cost of each and an embedded checkout option which would be in sync with the system placed in the checkout zone.

5.Detecting Non-Scans

Retailers, on a yearly basis, lose out around $45 Billion in name of non-scans and shrinkage. The catastrophic checkout problem can easily be solved with AI. By using computer visions and AI algorithms retailers can analyze the video feed and detect the instance where the product is left unscanned and inform the checkout staff in real time.

A company offering technology to solve this very problem is StopLift. It makes use of video analytics and computer vision to identify scams and mistakes at the time of checkout. It compares the items detected on the video to the real POS data for tracking items which have not been scanned, thus saving a great number of scam instances.

Now that we have looked at the different ways AI can be incorporated in your brick and mortar retail space, even when your plan is not as ambitious as Amazon Go, let us look at the use cases of AI in Retail Industry by looking at businesses that have employed the technology for streamlining their services and bettering their customer experience program.

AI in Retail Use Cases

Pepper Robot

Pepper is a humanoid robot which can interact with the walk-in customers while perceiving the human emotions, is the best example of the use of AI in retail. The robot is already a hit in Japan where it is being used as customer greeter and rep in over 140 SoftBank mobile stores. A pilot of Pepper in California stores – Palo Alto and Santa Monica – received a 70% rise in the foot traffic in Palo Alto, along with 50% of Neo-pen sales in the Santa Monica region.

Domino’s Robotic Unit

Integrated with artificial intelligence technology used for military combat training, the DRU sensors help it in the navigation of the best path for delivery of pizza. Seeing the amount of investment that Domino’s is making behind the technology, the future when delivery persons will be replaced by robots is not very far.

Amazon’s Drone

Coined as Amazon Prime Air, drones are a major futuristic part of Amazon delivery system. While the launch date is not announced yet, the future where the items we buy are delivered to our home through drones is not very far. A future that will set a benchmark of use of AI in Retail.

Want yours to be the next name in the list as a disruptive use case of AI in retail market? Contact our team of developers specializing in the adoption of Artificial Intelligence in Retail.

AI in one form or the other has placed themselves as an important part of the brick and mortar retail industry.

While its integration is comparatively a lot easier in case of mobile retail or mCommerce apps, integration of the disruptive technology in store would call for a major overhaul of your business model and would only deem to be useful when the integration that you have made is technically advanced – something that can only be achieved when you have partnered with an equally sound AI specialist development company who understand the technology to its core.

Wrapping up the article with the answer to the question we started with – Is Amazon Go the Start of Fully-AI Retail? Yes. The adoption of AI in Retail Stores that had already started will now move in full swing with the trend that Amazon Go has now set in the Retail industry.

Sudeep Srivastav
Sudeep Srivastav
CEO, Appinventiv
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