Go Beyond Window Dressing in 2023 With Data-Driven Experiences

By Irene Sibaja

Retail Industry Principal, Treasure Data

Over the past decade, the dominating story in retail has been around bifurcation, where consumers are given a choice to buy in-store or online, with in-store clearly dominating. During the pandemic the pendulum swung sharply to ecommerce, where we saw massive changes in shopping experiences over a very short period of time. As the pandemic continued, hybrid models like BOPIS (Buy Online, Pick Up In Store) became common and are here to stay. As we emerge from COVID it is clear that while physical stores will need to evolve to stay relevant to future generations, they are not going anywhere soon. Forget bifurcation…what we have now is a complete blurring of the lines between online and physical retail, and effective CX is the key to conquering both.

Customer experience without personalization is just window dressing. In 2023, winning retailers will be focused on capturing valuable data across the customer journey and leverage it in future interactions.

Irene Sibaja is the Retail Industry Principal at Treasure Data, a leading enterprise Consumer Data Platform (CDP) provider. Irene came to Treasure Data most recently from NielsenIQ where she was VP, Customer Success supporting Sam’s Club. At her core, Irene is customer-obsessed - she uses this focus, and 25 years of success across strategy, retail and data analytics, to drive innovative ROI solutions across diverse organizations. She has an MBA from Harvard Business School and a BA in English Literature from Rice University.

However, one lesson retailers learned in 2022 is that customer experience without personalization is just window dressing. These three data-related trends will help brands get more out of their omnichannel stores in 2023:

Scan-And-Go Shopping

In 2023, many retailers will continue to evolve their eCommerce strategy by building even more sophisticated shopping apps that not only allow customers to complete a purchase in the middle of their shopping experience, but also provide tailored product recommendations. Stores are adding QR codes to physical displays that shoppers can scan with their mobile devices to learn more about the product in question, as well as see suggestions for products that would complement their purchase. Some of these QR codes enable a shopper to scan in-store and have products delivered to them at home. Yet another option for retailers is to adopt the “Just Walk Out” technology offered by Amazon Web Services. Users still have to download an app, but the in-store shopping experience becomes even more streamlined. These evolving technologies not only produce more satisfactory customer experiences, they also provide valuable data on the customer journey that retailers can leverage in future interactions.

Modern Loyalty Programs

Loyalty programs are constantly evolving. With ongoing inflation combined with third party cookie deprecation, loyalty programs are a critical piece of the marketing strategy. These programs successfully capture first party information that retailers can leverage for ongoing personalization initiatives. In 2023 we will see continued growth in loyalty, with a specific focus on engaging the elusive younger consumers who are less tethered to email addresses as the primary identifier.

In lieu of email, younger customers leave digital footprints on servers everywhere…with particular focus on Discord, Instagram, and TikTok. In order to reach this demographic, many retailers will update their first-party data collection methods and start to accept modern identifiers for their loyalty programs so that they can meet these shoppers where they most often are.

Connected Customer Experiences

Regardless of which channel shoppers ultimately use, there are some purchases that require a higher level of touch (think jewelry, cars, furniture). While chatbots can answer some simple inquiries, other purchases may require a more nuanced conversation. Many retailers have trained contact center agents who can support customers depending on their needs, but for the most part service remains disjointed and a point of friction. Customers are often forced to repeat themselves and provide a full history of their journey because support teams lack the data to connect all of their touchpoints. To eliminate the frustration that comes from having to explain a situation to YET ANOTHER person, companies can leverage technology such as a CDP to pull the cookie crumbs of customer data together to tell a meaningful story about a customer making for a smooth experience that will bring that buyer back again and again.

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33

The AI Stride: It’s Getting More Powerful

By Francois Chaubard, Founder & CEO, Focal Systems

Francois Chaubard is the CEO of Focal Systems, a deep-learning computer vision company focused on automating brick-and-mortar retail. Prior to founding Focal Systems, Chaubard worked at Apple as a deep learning researcher on secret projects. Before that, he attended Stanford University as a dual masters in CS and EE where he researched deep learning and computer vision under Fei Fei Li, the Director of the Stanford Artificial Intelligence Lab (SAIL) at Stanford University. There he created and taught 2 courses: CS231m: Mobile Computer Vision and CS224d: Deep Learning for NLP. He was also the TA for Stanford's famous Machine Learning course CS229: Machine Learning. Before that, he was a missile guidance algorithm researcher at Lockheed Martin building the next generation of the U.S. AEGIS Ballistic Missile Defense System. Before that, he received a bachelor's from University of Delaware in Mathematics and Mechanical Engineering.

Welcome to 2023. We have ChatGPT that can write poems, press releases, and legal docs far better than 99% of the population. We have DALL-E and Stable Diffusion that can draw and paint far better than 99% of the population. And in retail, where we have AI that can order better, planogram better, perform loss prevention better, manage shrink better, and schedule labor better than 99% of the population.

This is quite an exciting time to be alive honestly. Never before has AI proven so much promise.

Retail has been fraught with huge challenges over the last decade, the last three years in particular. Chief among these is labor. The issue hits on two fronts.

On one hand, there is a massive labor shortage. This leads to problems across the board with supply chain disruptions to long lines at the register. A lack of stockers means more workable out-of-stocks that could be filled, but instead the inventory just sits in the back. As the available pool of workers diminishes, opportunities for profit go with it.

On the other hand, the cost of labor is only increasing. With new locally-enforced minimum wage laws and the market growing more competitive, labor costs will continue to rise and consume whatever profits a store has.

In short, retailers will need to achieve more with a smaller workforce to maintain or grow their profit margins.

Serendipitously, as mentioned in the beginning of the article, AI has just hit its stride, and is only getting even more powerful. So AI can and should be leveraged to cull the gap!

However, for retailers to adopt AI, they will need a meaningful change in thinking. What needs to happen now is a dramatic change in the way retail is performed, thinking AI first, instead of labor and process first. Historically, Brick and Mortar retail has been one of the slowest adopters for new technology, holding out a select few. The retail sector at large needs to transition to adopt this new approach that is centered around the power of AI.

AI will be the focus of the next decade, just as e-commerce has been the focus of the last decade. The true retail revolution will occur in the coming years.

Let’s discuss the benefits first. To begin, AI is the perfect employee. It’ll never call out sick or come to work with a hangover. It’s always present and constantly optimizing itself to fulfill its objective function. This alone is a feat no human is capable of, our bodies need rest, but an AI is always awake. No human is 6 sigma. But AI can be and very often is.

In addition to filling the gap, AI can actually improve the quality of service while reducing costs by 10-20x. AI can detect patterns and key data points that the human mind misses. And finally, one “lesson” learned in one store, like seeing the impact of an additional labor hour scheduled in the afternoon, can instantly be applied to all stores within a day without any human in the loop.

Not only does AI fill in the void, it also actively enhances a store's profits.

We may have thought that the pandemic years caused the greatest shift in the retail industry. My prediction is that the true revolution will occur in the coming years. 2023 will be marked by increased labor costs even as labor shortages hold fast. This will necessitate AI adoption, which mandates a complete paradigm shift in thinking of retail leadership.

AI will be the focus of the next decade, just as e-commerce has been the focus of the last decade. Rest assured it will be a wild ride. I am just excited that I get a front row seat!

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33

Tackling Retail's Large-scale Business Problems with AI

By Alan O’Herlihy, Founder and CEO, Everseen

Alan O’Herlihy is an experience builder and inventor working in every facet of retail, in both physical and digital channels, through privately owned retail propositions and via leading SAP implementations. Drawing on his experience with large SAP installations as well as early roots in retail, Alan identified a way to help retailers minimize shrinkage— creating a new computer vision and AI solution to address the industry’s $100B in annual losses. He founded Everseen in 2007, combining his passion for invention with the ability to lead large-scale enterprise installations. He continues to set the company’s direction and vision, as the company expands its retail AI solutions and enters new markets.

Technology is dramatically reshaping the way retailers do business and the way consumers shop. There have been tremendous changes and innovations impacting the market, from contactless shopping to artificial intelligence (AI) that delivers actionable insights for retailers, and the blending of online and physical (phygital!) shopping experiences.

Of all the technology innovations, AI has the greatest power to transform the industry, enabling retailers to navigate the current economic turbulence, and come out the other side thriving.

From our behind-the-scenes view and as a leader in computer vision AI working with some of the world’s leading retailers, here are some of the key AI trends and developments we see impacting the market in the coming year:

The retail industry is poised for massive AI adoption

We expect to see grocery and drugstore retailers in particular implementing AI solutions, with loss prevention and tackling shrink being one of the primary drivers. The global shrinkage rate runs at 1.4-1.6% of annual retail sales, according to the National Retail Federation, and automation can be a huge enabler in reducing that figure. Right now, less than one-third of food retailers are currently using AI, according to The Food Industry Association, yet 71% report that they plan to increase spending on AI [Total Retail’s 2022 Retail Technology Report].

AI should be a strategic investment for every forward-thinking retailer. It has the potential to transform the entire retail business –– from supply chain to inventory and self-checkout.
Successful AI implementations will start with solving one problem and scale to solve others

A smart strategy for getting started with AI is for retailers to focus on one aspect of their operations. Tackling shrink and loss prevention is a great first step. We’ve seen computer vision AI generate significant ROI quickly for our customers, reducing loss and increasing profit margins within weeks.

One of our most successful customers began with a pilot implementation in just a few stores, then expanded to over a thousand. After successfully integrating AI into its operational and shopper experience at the checkout for a few months in 1,800 stores, it is now progressing to have AI-based loss prevention in place in all its locations – more than 2,600 stores. This customer started using computer vision AI for loss prevention at the checkout and is now exploring using the same technology in the heart of the store for shelf availability and in the backroom for deliveries.
Retailers increasingly taking an ‘ecosystem’ approach

Savvy retailers have a viewpoint on developing a full retail tech stack. There are many moving parts in a retailer’s technology implementation, from cameras to chatbots and servers, and this should ideally be an ecosystem of solutions that work together. Solutions that can integrate with existing hardware and software are simpler to adopt and install and deliver the best value for money, without disruption to business operations.
Developing areas to watch: Product Availability, Process Automation, Waste Reduction

The ability to use valuable data to generate insights for retailers means that AI has the potential to be transformative in several other areas of retail business operations.

AI should be a strategic investment for every forward-thinking retailer. It has the potential to transform the entire retail business –– from supply chain to inventory and self-checkout.

Product Availability: shelf availability issues could be resolved with AI insights supporting inventory management, alerting staff when shelves need replenishing, and deterring loss on the shop floor – after all, if a product isn’t available for a customer to buy, it is a lost sale for the retailer and a dissatisfied customer that could end up shopping elsewhere
Process Automation: as labor availability continues to be a challenge for retailers, automated processes (like autonomous receiving) can ensure efficiencies are maintained and improved, also freeing up staff from overly repetitive tasks
Waste Reduction: as perishable items like fruit and vegetables approach the end of their shelf life, computer vision AI and dynamic pricing could be used to offer customers a bargain at the shelf, and save waste at the same time

Retailers must think big when it comes to technology and particularly AI – about how they can tackle large-scale business problems and pioneer new territory. Computer vision AI gives retailers the ability to see across the entire retail footprint (front, middle and back of store); see issues; and solve problems. The payoff is significant, from huge cost savings to dramatically improved shopper satisfaction.

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33