AI, machine learning, robots, and marketing tech coming to a store near you
Retailers are harnessing the power of new technology to dig deeper into customer decisions and bring people back into stores.
TechRepublic’s Bill Detwiler interviews Salesforce’s Rob Garf, VP of Industry Strategy and Insights, at Dreamforce 2019, about how retailers are trying to reach buyers during the 2019 holiday season.
Dozens of robots, digital signage tools, and more were available for retail representatives to test out, with hundreds of the biggest tech companies in attendance offering a bounty of eye-popping gadgets designed to increase efficiency and bring the wow factor back to brick-and-mortar stores.
Here are some of the biggest takeaways from the annual retail event.
The resurgence of brick-and-mortar interest
With the explosion in popularity of Amazon, Alibaba, and other e-commerce sites ready to deliver goods right to your door within days, many analysts and retailers figured the brick-and-mortar stores of the past were on their last legs.
But it turns out billions of customers still want the personal, tailored touch of in-store experiences and are not ready to completely abandon physical retail outlets.
“It’s not a retail apocalypse. It’s a retail renaissance,” said Lori Mitchell-Keller, executive vice president and global general manager of consumer industries at SAP.
As leader of SAP’s retail, wholesale distribution, consumer products, and life sciences industries division, Mitchell-Keller said she was surprised to see that retailers had shifted their stance and were looking to find ways to beef up their online experience while infusing stores with useful but flashy technology.
“Brick-and-mortar stores have this unique capability to have a specific advantage against online retailers. So despite the trend where everything was going online, it did not mean online at the expense of brick-and-mortar. There is a balance between the two. Those companies that have a great online experience and capability combined with a brick-and-mortar store are in the best place in terms of their ability to be profitable,” Mitchell-Keller said during an interview at NRF 2020.
“There is an experience that you cannot get online. This whole idea of customer experience and experience management is definitely the best battleground for the guys that can’t compete in delivery. Even for the ones that can compete on delivery, like the Walmarts and Targets, they are using their brick-and-mortar stores to offer an experience that you can’t get online. We thought five years ago that brick-and-mortar was dead and it’s absolutely not dead. It’s actually an asset.”
In her experience working with the world’s biggest retailers, companies that have a physical presence actually have a huge advantage because customers are now yearning for a personalized experience they can’t get online. While e-commerce sites are fast, nothing can beat the ability to have real people answer questions and help customers work through their options, regardless of what they’re shopping for.
Retailers are also transforming parts of their stores into fulfillment centers for their online sales, which have the doubling effect of bringing customers into the store where they may spend even more on things they see.
“The brick-and-mortar stores that are using their stores as fulfillment centers have a much lower cost of delivery because they’re typically within a few miles of customers. If they have a great online capability and good store fulfillment, they’re able to get to customers faster than the aggregators,” Mitchell-Keller said. “It’s better to have both.”
Difficult digital transformations for retailers
But one of the main trends, and problems, highlighted at NRF 2020 was the sometimeshave had to make to a digitized world.
NRF 2020 was full of decadent tech retail tools like digital price tags, shelf-stocking robots and next-gen advertising signage, but none of this could be incorporated into a retail environment without a basic amount tech talent and systems to back it all.
“It can be very overwhelmingly complicated, not to mention costly, just to have a team to manage technology and an environment that is highly digitally integrated. The solution we try to bring to bear is to add all these capabilities or applications into a turn key environment because fundamentally, none of it works without the network,” said Michael Colaneri, AT&T’s vice president of retail, restaurants and hospitality.
While it would be easy for a retailer to leave NRF 2020 with a fancy robot or cool gadget, companies typically have to think bigger about the changes they want to see, and generally these kinds of digital transformations have to be embedded deep throughout the supply chain before they can be incorporated into stores themselves.
Colaneri said much of AT&T’s work involved figuring out how retailers could connect the store system, the enterprise, the supply chain and then the consumer, to both online and offline systems. The e-commerce part of retailer’s business now had to work hand in hand with the functionality of the brick-and-mortar experience because each part rides on top of the network.
“There are five things that retailers ask me to solve: Customer experience, inventory visibility, supply chain efficiency, analytics, and the integration of media experiences like a robot, electronic shelves or digital price tags. How do I pull all this together into a unified experience that is streamlined for customers?” Colaneri said.
“Sometimes they talk to me about technical components, but our number one priority is inventory visibility. I want to track products from raw material to where it is in the legacy retail environment. Retailers also want more data and analytics so they can get some business intelligence out of the disparate data lakes they now have.”
The transition to digitized environments is different for every retailer, Colaneri added. Some want slow transitions and gradual introductions of technology while others are desperate for a leg up on the competition and are interested in quick makeovers.
While some retailers have balked at the thought, and price, of wholesale changes, the opposite approach can end up being just as costly.
“Anybody that sells you a digital sign, robot, Magic Mirror or any one of those assets is usually partnering with network providers because it requires the network. And more importantly, what typically happens is if someone buys an asset, they are underestimating the requirements it’s going to need from their current network,” Colaneri said.
“Then when their team says ‘we’re already out of bandwidth,’ you’ll realize it wasn’t engineered and that the application wasn’t accommodated. It’s not going to work. It can turn into a big food fight.”
Influx of AI and machine learning
Retailers are increasingly realizing the value of artificial intelligence and machine learning as a way to churn through troves of data collected from customers through e-commerce sites. While these tools require the kind of digital base that both Mitchell-Keller and Colaneri mentioned, artificial intelligence (AI) and machine learning can be used to address a lot of the pain points retailers are now struggling with.
Mitchell-Keller spoke of SAP’s work with Costco as an example of the kind of real-world value AI and machine learning can add to a business. Costco needed help reducing waste in their bakeries and wanted better visibility into when customers were going to buy particular products on specific days or at specific times.
“Using machine learning, what SAP did was take four years of data out of five different stores for Costco as a pilot and used AI and machine learning to look through the data for patterns to be able to better improve their forecasting. They’re driving all of their bakery needs based on the forecast and that forcecast helped Costco so much they were able to reduce their waste by about 30%,” Mitchell-Keller said, adding that their program improved productivity by 10%.
SAP and dozens of other tech companies at NRF 2020 offered AI-based systems for a variety of supply chain management tools, employee payment systems and even resume matches. But AI and machine learning systems are nothing without more data.
Getting more data from your customers
Jeff Warren, vice president of Oracle Retail, said there has been a massive shift toward better understanding customers through increased data collection. Historically, retailers simply focused on getting products through the supply chain and into the hands of consumers. But now, retailers are pivoting toward focusing on how to better cater services and goods to the customer.
Warren said Oracle Retail works with about 6,000 retailers in 96 different countries and that much of their work now prioritizes collecting information from every customer interaction.
“What is new is that when you think of the journey of the consumer, it’s not just about selling anymore. It’s not just about ringing up a transaction or line busting. All of the interactions between you and me have value and hold something meaningful from a data perspective,” he said, adding that retailers are seeking to break down silos and pool their data into a single platform for greater ease of use.
“Context would help retailers deliver a better experience to you. Its petabytes of information about what the US consumer market is spending and where they’re spending. We can take the information that we get from those interactions that are happening at the point of sale about our best customers and learn more.”
With the Oracle platform, retailers can learn about their customers and others who may have similar interests or live in similar places. Companies can do a better job of targeting new customers when they know more about their current customers and what else they may want.
, all looking to learn more about their customers and tailor their e-commerce as well as in-store experience to suit their biggest fans.
IBM global managing director for consumer industries Luq Niazi told TechRepublic during a booth tour that learning about consumer interests was just one aspect of how retailers could appeal to customers in the digital age.
“Retailers are struggling to work through what tech they need. When there is so much tech choice, how do you decide what’s important? Many companies are implementing tech that is good but implemented badly, so how do you help them do good tech implemented well?” Niazi said.
“You have all this old tech in stores and you have all of this new tech. You have to think about how you bring the capability together in the right way to deploy flexibly whatever apps and experiences you need from your store associate, for your point of sale, for your order management system that is connected physically and digitally. You’ve got to bring those together in different ways. We have to help people think about how they design the store of the future.”