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Artificial Intelligence in Retail: Grocery’s New Frontier

In a December 2011 article entitled “The Future of Shopping,” Harvard Business Review writer and Bain & Company partner Darrell Rigby describes a customer experience not unlike the retail therapy played out by John Anderton (portrayed by Tom Cruise) in the movie Minority Report. To paraphrase: Amy, aged 28, needs clothing for an upcoming vacation and she is willing to merge the digital and the physical (or as Rigby calls in a later HBR article, “The Digical”) to find the right products at the right prices, as quickly and conveniently as possible.

Her digical shopping experience includes the following steps:

    • Conducting a video call with her personal shopping concierge at her favorite retail store;
    • Reviewing avatars of the recommended looks (based upon customer intel from previous online and in-store purchases);
    • Visiting the store to try on the top-rated looks;
    • Price-checking via barcode scanning on her smartphone, only to find a cheaper offer at a rival store, which the sales associate is happy to match if it means keeping Amy in her store and trying on more items that match her profile;
    • Sending a video of her wearing her new recommended looks to three friends for their thumbs-up or -down;
    • Checking out via her smartphone, after scanning the internet for coupons (saving an additional $73!), with billing going to the account that’s on-file in the store’s CRM system;
    • And finally, as she heads for the door, being greeted by a life-sized screen–salesperson, who shows her a special offer on an accessory that will match well with her purchases, which she likes, scans and has shipped directly to her home overnight.

Now, though every step along Amy’s buyer journey is possible from a technology perspective, as we make our way into the first month of 2018, it is safe to say that retail still has a way to go to match this bold vision for the future of shopping. 

So was Minority Report a prediction of the grocery retail experience to come?

Some interesting examples of retail disruptors from around the world suggest that we may, in fact, be following a path only dreamed of in sci-fi movies of the past. Case in point: Described as “a new kind of store featuring the world’s most advanced shopping technology,” Amazon Go was built to facilitate the ultimate grocery shopping experience. And while the “no lines, no checkout” phenomenon was beta launched with employees in Seattle, Washington, in December 2016 (and was later pushed back, due to technical glitches), this advanced supermarket concept is only one of at least three disruptive grocery formats that Amazon is said to be exploring, with curbside pickup and drive-through locations being developed in order to compete with other retail powerhouses like Wal-Mart Stores.

Meanwhile, on the other side of the planet, a start-up called Wheelys has developed The Moby Mart—a prototype for a new 24-hour convenience store format unlike any we’ve seen to date. Like Amazon Go, this “grocery store of the future” has no staff or cash registers and instead conducts transactions via an app on shoppers’ smartphones. At the same time, it’s also mobile and designed to drive itself back to a warehouse to restock or to a customer’s address to make a delivery.

What’s powering Amazon Go and Moby’s “just walk out” shopping experience?

Both organizations are tapping into two key business assets that, taken together, can make for more targeted and personalized shopping experiences:

1. Technological advances in statistics and computing

Especially Artificial Intelligence (AI) and Machine Learning, that make it possible to program computers to learn from, adapt to and predict consumer behavior, as well as more quickly and accurately process transactions while connecting back with sales, marketing, fulfillment and logistics systems to keep all the cogs in the wheel turning simultaneously.

2. Many millions of highly valuable data points

Huge quantities of data is collected on consumers, through transactions on eCommerce sites and at brick-and-mortar locations, in addition to their digital footprints from web pages, social media profiles, and other properties across the online landscape.

If Amazon Go can do it, so can you—but scaled to suit your business.

Record eCommerce sales year-over-year demonstrate that consumers want retailers to break down the silos between digital and physical retail channels in order to facilitate more seamless and engaging shopping experiences. Advancements in digital technology—including AI and Machine Learning, but also, in data collection, management and analytics capabilities—have the power to transform the shopper journey.

“All retailers have data within their businesses; the question is how can they best get actionable insights from it,” says Emily Bezzant, head analyst at Edited, a retail analytics company with offices in New York, London and Melbourne.  

Ultimately, all grocery retailers—not just the national retail brands—can capitalize on digital technology to give customers more of what they want and need from their buying journey. And as a growing number of retailers catch on to the advantages of AI to more accurately predict (and serve) customer needs, the question becomes: Where does your business sit in the retail mix?

And one last bit of food for thought 

New technological advancements are only as valuable as the ecosystems into which they’re being integrated. A critical question to ask, then, is whether the new technology you’re eyeing is dependent on other systems to deliver value right out of the box. Nine times out of ten (especially when it comes to AI or other data-reliant technology), the answer will be “yes.” And so: You’ll be throwing good money after bad if you’re enabling the right technology for your business, but before the rest of your business is ready for it.

If AI or other new technologies figure into your business plans for 2018, first assess how well your systems work together now and in the future to support each other—focusing on both customer-facing eCommerce and customer service platforms, but also support systems that function in the background, including IT, data capture and management, and inventory and supply chain management, among other platforms.

Looking to leverage your existing eCommerce data to enhance your customer experience in 2018? Download our free eBook, "5 Ways Data is Transforming the Future of Retail". 

Articles and resources by the Mercatus team to help guide you on your eCommerce journey.

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