Retail Executive

JAN-FEB 2018

Retail Executive is the trusted advisor to top retail executives from the industry’s most profitable retailers. We help retail executives succeed in their job role and grow their business via exclusive, actionable, peer-driven content.

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5 Recommendations For Incorporating AI Into The Business Artificial intelligence (AI) is not a silver bullet but is an important part of the future of retail. R O B E R T H E T U Retail Research Director, Gartner ▶ Inspiring creativity: Retailers will focus on cus- tomer insights and an adaptive journey. Through natural-language processing and machine learn- ing, AI systems can learn from the huge data created by customers, generating behavioral/us- age insights and providing direction for product owners/retailers, which helps them gain a better understanding of their consumers and custom- izing their products, designs, and shopping expe- riences around unique user needs. ☐ Chatbots and virtual personal assistants (VPAs): Retailers are striving to achieve a fully integrated, unified commerce presence, focusing on personalization and seamless customer experience with AI-powered solutions. Find a use case: Break paradigms and seek innovations across all areas, remembering that now all innovations require technology. While AI is not a silver bullet, retailers must start explor- ing it, developing use cases, and preparing for a future in which AI will be an integral part of the business process. Here are a few recommendations on how to get started: ▶ Create a framework for use-case identification by identifying and targeting labor-intensive and re- petitive activities ▶ Pilot a project immediately and use the lessons to develop a production AI function in 2018 ▶ Incorporate safeguards to identify and prevent possible bias ▶ Create an environment conducive to continuous education ▶ Set explicit expectations that this is a learning process and mistakes will be made. R etailers find themselves caught in a com- petitive battle royal as the existential crisis heats up to a fever pitch. Differen- tiation through a combination of services and products must be delivered to the individual customer across hundreds or thousands of locations and channels. Enter artificial intelligence, a gleaming machine that can solve all that ails retail. The hype around AI is palpable and so is the mystery associat- ed with it. AI is not a silver bullet, but the technologies that typically comprise it should be part of the retail road map toward digitalization. There are many evolving definitions of AI; for our pur- poses we will describe it as a set of technologies that can interpret complex data patterns, evaluate possible actions, and select and execute an autonomous solu- tion. Technologies that are typically a part of AI include natural language processing (NLP), machine learning (ML), deep learning (DL), and deep neural networks (DNN). In retail we see opportunities for automating repetitive tasks and for fueling human creativity and innovation. Gartner predicts that by 2020, retailers will use AI to hone the accuracy of, and accelerate, human decision making well beyond current levels. ▶ Automation: Retailers will focus on many outdat- ed and overly complex organizations at the head- quarters level that are prime for intelligent process automation (IPA) and robotic process automation (RPA). In fact, Gartner recently predicted that by 2020, merchant leaders will become algorithms, prompting the top 10 retailers to cut up to one- third of headquarters merchandising staff. ☐ We have already seen this coming to life with recent announcements from JC Penney and Macy's leveraging algorithms to drive merchandising decisions. Find a use case by identifying, optimizing, and automating labor-intensive and repetitive activities. R AI deep dive By R. Hetu 5 RECOMMENDATIONS FOR INCORPORATING AI INTO THE BUSINESS RETAILEXECUTIVE.COM JANUARY/FEBRUARY 2018 40

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