This research service is part of Frost & Sullivan's Integrated Commerce Research Programme. It provides an original perspective on how artificial intelligence (AI) is making its way into the retail sector. Retail has entered a new era where eCommerce and technology bellwethers like Alibaba, Amazon, Apple, Baidu, Facebook, Google, Microsoft, and Tencent have raised consumers' expectations. AI is enabling automated decision-making with accuracy and speed, based on data analytics, coupled with self-learning abilities. It has passed a critical usefulness threshold but is also overhyped. AI depends on other technologies such as the Internet of Things (IoT) to provide it with quality data to be able to address specific use cases of which there is a constantly growing number across industries and value chains, from customer-facing through core operational processes to the back-office.
The need for this linkage highlights the importance of a carefully planned digital transformation strategy wherein deployment takes into account dependencies between technologies. At the same time, growing fondness of retailers to experiment with, and take into production, emerging technologies for personalisation, human-machine interaction, automation and friction reduction, support greater efficiency and the delivery of better user experiences. As online and offline converge to become simply parts of the shopping experience, analytics identify and propose products to the needs and tastes of individual shoppers or shopper-captured images. Personalisation of offers and prices aspire to become real time in physical environments as well. Chatbots and social robots are becoming increasingly common to provide advice and support, while AI will increasingly pervade every business process and function across the retail value chain.
The frequent last-touch experience of the shopper with AI will be frictionless checkout (unless there is subsequent need to turn back to customer service chatbots). Data remains ‘the new oil’ that is the indispensable foundation for AI to work while the tension with privacy increases. Merchants and other ecosystem players’ fight for the customer interface is not just a fight for sales and margins. It is just as much as fight for the ability to collect data. Data will determine the medium-term ability of a merchant to deliver a positive customer experience based on the merchant’s AI being able to make accurate predictions about offering the right product or service, at the right price, the right time and in the right way to the right customers. This research service takes retailers and other readers on an exploratory journey through AI-related changes in the retail environment to provide orientation in this fast-evolving environment.