The COVID-19 pandemic and resulting economic downturn will have a long-lasting impact on the way consumers shop and retailers conduct their business.
And the increasing adoption of Artificial Intelligence and Machine Learning, in various ways, will be a major part of the industry’s future.
EXPERT FORECASTS AI TO BE PIVOTAL INVESTMENT FOR LARGE RETAILERS IN POST-COVID WORLD
“It is going to be, for certainly most of the large retailers, one of the biggest investments they are and will be making in the months and years to come,” she said.
“It’s because of how the pandemic has reshaped the retail sector and consumer shopping behaviour. There’s an incredible growth in e-commerce in Canada. We’ve seen e-commerce grow in four months as quickly as we had anticipated it would grow over a period of 18 to 24 months. That has accelerated the need for retailers to invest in technologies that allow them to better serve their customers in all their channels.
“And it allows them to adapt, specifically in the brick and mortar environment, to a social distancing reality. So those tools are going to be important moving forward and we believe they will be staples as the sector continues to adapt to a new reality.”
EXPERT SAYS GLOBALIZED NATURE OF SUPPLY CHAINS PUT ORGANIZATIONS AT RISK DURING COVID-19 PANDEMIC
Retail expert Doug Stephens, Founder and CEO of Retail Prophet based out of Toronto, said one of the big learnings from this pandemic on the part of retailers has been the degree to which our current iteration of supply chains and the globalized nature of supply chains put organizations at risk.
“The reason for that in large part is because over the last 30 or 40 years global supply chains have really been designed and orchestrated and managed to achieve one outcome and that has really been the lowest possible cost,” he said.
“As a consequence, companies have constructed their supply chains in such a way that in some cases there’s just an inordinate complexity to them. An iPhone for example is made of components from 43 different countries and each case Apple is going out trying to find the lowest cost bidder to provide each of those components.
“What I think the learning is from the pandemic, and from the probability that we’re going to experience future disruptions of this calibre, is that supply chains need to be redesigned not purely around cost but more around the ability to be dynamic, to be flexible and to actually take risk out of the equation.”
To reduce risk, the whole system has to be redesigned. The ordering cycle has to be brought down from months to maybe weeks. Suppliers are needed to be on tap that are able to be resilient and flexible and to make more dynamic decisions based on supply and demand.
“In order to move your supply chain behaviours over to a system that now takes risk out of the equation, puts less capital at stake and is more resilient and dynamic, you need something more than human intuition to do that,” said Stephens. “So that’s where I think the first instance of AI can completely revolutionize our take on how supply chains are managed and dealt with.
“The second piece is around understanding changes that are taking place in the market. In order for me to manage my supply chain properly I need to be informed to an extent that I’m not currently informed as a buyer. I need to have a crystal clear view at any given point in time as to what my consumers are looking for, what they are maybe likely to want in the future — all the stuff that every retailer aspires to know about their customers. Again, that’s where AI and Machine Learning can come into play to really be deciphering all of the structured and unstructured data that companies have at their disposal and even information outside the company that can be distilled into insight but all of that being brought together so that those ordering cycles can be brought down. That companies feel more able in the moment to determine what’s on trend, who are their customers, what do they want, and what should they be putting in front of (customers).”
CUSTOMER INTERFACE PLAYS MAJOR ROLE IN ADOPTION OF AI IN RETAIL
The third major stake around AI is in the customer interface itself. When the consumer comes online or when they walk into a store, retailers can in an instant know who they are, they can understand the customer’s history with the brand, they can get a sense of their tastes and preferences, and they can start to make really cogent recommendations that aren’t just simply based on lagging indicators like what they bought two months ago but are more complex algorithms based on all kinds of different inputs.
In an article written in the Toronto Life publication, Brisebois wrote: “We expect to see more stores install cameras that measure and guarantee compliance with safety distances — if there are too many people in close proximity, these cameras can issue real-time messages to remind them about distancing. The use of robots and other artificial intelligence is one of the most exciting opportunities for retail, offering a chance for store owners to create safe environments for shoppers while also enhancing the visitor experience. More stores will be outfitted with robots that can kill viruses and bacteria with ultraviolet light — they can be used on store merchandise, on packaging, on door handles. Retail owners can also use artificial intelligence to provide personalized product recommendations for customers, a tactic pioneered by Amazon. A touch-free experience will become the norm: new technologies will offer mobile pay-and-go options, where customers can scan a product’s barcode from the retailer’s app using Bluetooth and RFID, then pay with a card or digital cash.
“We’ll see transformed brick-and-mortar stores in the market, especially as click-and-collect becomes the norm. Many existing stores will transform into “dark stores” — traditional retail spaces converted into local fulfillment centres. The stores that remain will offer super-engaging, safely distanced retail experiences.
Stores will appeal to shoppers by offering guest speakers, live podcast recordings and literary readings to build a sense of community. Stores will display select marquee objects, livestream events hosted by staff, and encourage at-home browsing. To supplement the in-store experience, retailers will create virtual showrooms, virtual tours, even virtual fittings. AR, or augmented reality, allows customers to create virtual photographic avatars on a touchless screen to sample makeup shades or try on a pair of pants.”