By Sandeep Dadlani, President and Global Head of Manufacturing, Retail, CPG and Logistics.
Macy's began 2017 by publishing a list of 68 stores it would close this year. Amazon, on the other hand, entered the New Year still high from its massively successful Cyber Monday sales of 2016.
This has been the story of retailing in recent times - a contrasting tale of the fortunes of the high street incumbent and its disruptive online rivals. But, brick and mortar stores are trying to close the gap to ecommerce by embracing automation, digital, and lately, Artificial Intelligence (AI) technologies. And it hasn't come a moment too soon.
Recently, Infosys commissioned a survey of 1,600 IT and business decision makers from 10 vertical groups to understand their perceptions about AI and their organisations' status of adoption. The retail industry was second from the bottom in terms of AI maturity. Late to the party, retailers, both physical and digital, are now exploring using AI technologies to enhance every step of the operational life cycle, from planning to sourcing to storing to moving and selling. One retailer we are working with is transforming their contact center to include a 'chatbot agent' with an AI program determining which calls to route to the chatbot and which ones to the live agent. Another is figuring out how to leverage machine learning to crash the concept-to-production cycle times for seasonal merchandise well before the season. Yet another is looking to use a machine learning algorithm to determine how promotional campaigns will work and predict the success of the next customer touchpoint. Natural language processing is also being used extensively to painlessly manage complex contracts and policies with employees, franchisees and suppliers.
The scope of AI is not restricted to automating inventory management, intelligently routing deliveries, autonomously manning the helpdesk, or recommending personalised product options, although these are important. It can also add immense value by automating the flow of data in reverse order – as it originates at the retailing end, and moves through the distribution, warehousing and manufacturing points – and making it available to the ecosystem. Today, this important insight is either not available at all or takes a very long time to show, at which point it is not actionable.
A few CPG and retailing firms have understood the importance of data in automation. Here is a use case some CPGs are working to bring to life: To sensor-enable the entire supply chain – from raw materials and finished goods to logistics – making their operational processes transparent and amenable to automation. Lowe's, the home improvement solutions retailer, is testing a robot to monitor inventory, list stock-outs and gather inventory analytics.
Besides improving their supply chain, retailers are deploying various AI technologies to automate a number of operations to enhance both efficiency and experience. Apparel brand Under Armour has an intelligent app to monitor customers' health, fitness and nutrition, and offers guidance based on individual data. During the 2016 holiday season, Estee Lauder employed a chatbot on Facebook Messenger which allowed customers to check out various products, choose a delivery option, and pay through PayPal without opening another website. Online retailer Ocado has a contact center where machine learning has been used to "teach" software about various issues and resolutions, so that it can classify and respond to customer emails pretty much like a human agent. Brick and mortar retailers can also leverage AI to advise them on how to micro-merchandise their shelves or offer micro-services in-store to super-personalize the shopping experience. A simple but significant application could be as obvious as using AI to man the long queues at the exchange counters – so sales staff can actually focus on the cross-sell and up-sell opportunities tied to the exchanges.
But as I said before, the industry has barely scratched the surface of its enormous AI opportunity, which according to Gartner will cover 85 percent of customer interactions in retail by 2020. Our own research says that 66 per cent of respondents from the retail vertical agree that AI is fundamental to the success of their organisations' strategy. Cost reduction, revenue increase, IT process automation and improvement in decision making are seen as the biggest drivers of AI in their business.
Retailers have another unique opportunity in the AI domain – perhaps not available to their counterparts in domains like manufacturing or telecom. Given their direct and very frequent proximity with large sections of people, then can take a lead role in familiarizing – both employees and consumers - with the advantages of new technology in a friendly, non-intrusive manner. Whether it is the co-bot in the warehouse or voice-activated shopping assistants, beyond the zing-factor these can help open the minds of the larger population to develop a deeper concept of the possibilities that technology can unfold and the causes it can serve.
Of course, there are barriers too. The lack of involvement from the business organization - which mistakenly believes that AI is an IT responsibility – often holds back adoption. Shortage of the right technology skills in retailing firms is another challenge. But the biggest barrier by far stems from employees, who fear change, or worse redundancy, on account of AI.
These fears, while understandable are unfounded. Sure, AI will take away a number of routine, low-end jobs from the human workforce in short order. Retailers will automate mediocre-skill roles that make up the big fat middle of their workforce. But as AI continues its inevitable climb up the job hierarchy "commoditising" roles that were once considered skilled, it will free up substantial talent resources which progressive retailers will be compelled to look to deploy into innately more human endeavors with larger components of creative thinking and problem finding. These people will then engage in pursuits such as writing out innovative new data co-relation models, making business sense out of it, rethinking their operating models, and finding super-creative new ways to keep their fingers on the consumer pulse. AI will help them succeed in these roles by performing supporting and otherwise onerous, time-consuming tasks. In doing so, it will actually amplify human achievement. And for this, retailers will have the robots to thank.