Retail technology’s annual jamboree returned to New York City for Retail’s Big Show, organised by the National Retail Federation (NRF), attracting senior retailers and technology providers from around the world looking to gain insights into the latest offerings impacting the sector.
This year’s event saw a return to pre-pandemic levels of attendance, with 40,000 people from 104 countries representing 6,200 brands converging at the Javits Centre. In recent years, the likes of sustainability, the metaverse, non-fungible tokens (NFTs) and robotics had been all the rage, whereas this year, the overwhelming theme was artificial intelligence (AI).
Every stand at the Expo and each presentation made on the various stages invariably included an element of AI. Headline speaker Marc Benioff, CEO at Salesforce, recognises the serious benefits AI can bring to the sector, but he suggests companies must look beyond the hype and clearly focus on what it can actually deliver. “If it does not improve us, or the world, then we lose the plot with AI,” he says.
David Wilkinson, CEO of NCR Voyix, very much agrees. “AI is a very interesting technology,” he said. “We don’t have time for science experiments, we have problems to solve today. It’s about using technology to solve problems versus looking for a problem for the technology to solve.”
Where Benioff sees great upsides is when the technology can be used to enhance existing activities – often involving people – within retailers. He cites its use by luxury goods companies such as Gucci to empower people in call centres: “It has taken the group up to another level,” he says. “By applying AI to agents who were dealing with issues, the system has augmented their activities and is making them better [at their jobs].”
This connecting of the technology with the human aspect was very much a key theme at NRF. David Kimball, CEO of Ulta Beauty, says: “Innovation starts with the human connection. Despite all the technology, there’s a strong desire to connect on human terms. AI can complement the human. We’ve virtual chat tools, and AI can do guest services to bring more data, more personalisation and a more human experience to this.”
The company has also used new technology to deliver virtual try-on offerings, a robotic eyelash extension service that automates the process, making it faster and more consistent, and it is also trialing an automated manicure service. In addition, it has been working on delivering more personal communications through its loyalty programme and app, which represents 50% of its e-commerce revenues.
It’s a similar story at Victoria’s Secret, with the company using AI to improve the experience to the customer – both in-store and online. Chris Rupp, chief customer officer at Victoria’s Secret, said: “We’re looking at how AI makes the in-store better. We’ve 50,000 SKUs [stock keeping units], so how do we match them to customers and bring all the data we have to bear?”
The company is also using AI to improve the digital experience by integrating video online. “The digital experience can be quite flat,” she says. “To bring in more physical and emotional things is very important. We’re using short-form video on the website that acts as a two-way tool. We’re looking to match this to the [individual] customer. The conversion in-store is seven-times that of online because in-store there is more of a conversation. What if we could convert a few more people by using technology to bring conversation to the online experience?”
A new search function has also been implemented that enables customers to send in a photo of an existing product and the visual search capability then finds all relevant products with the same characteristics in the Victoria’s Secret product file.
The ability of AI to trawl though troves of data is bringing in an era of empowerment to retail employees. Like many companies, Sainsbury’s has been experimenting with Microsoft’s Copilot – an AI companion – with the initial use case around improving the efficiency of meetings as it enables the interrogation of data from within the business, and then helps determine the relevant follow-up steps.
Clodagh Moriarty, chief retail and technology officer at Sainsbury’s, says she can see the value in ultimately having this powerful capability in the pockets of colleagues across the business giving them access to a wealth of enterprise knowledge. “Data has the key role, whether that is at the depot or backroom or in-store,” she says. “We can bleed a little AI into all stages.”
Among the various companies at NRF developing these types of digital assistant services was Kore.ai, with its Retail Assist and Food Assist products that pull in data from myriad sources – including through tools such as Salesforce and Zendesk – and then allow employees to mine this data with information requests. This can enhance the service they provide to customers, as well as boost the efficiency of employees internally. By placing QR codes in-store, the service can be made available to shoppers.
Improving customer experience
Sainsbury’s is also focusing on AI at the front-end of its business, and the checkout has been recognised as an opportunity for AI. Through a partnership with NCR, the company has been rolling out smart scales that can identify products, which Moriarty says has transformed the front end. “We’re deploying AI to increase the speed, but also improve the overall customer experience,” she says
AI is also impacting the customer experience through innovative tools such as Nibble, available in the suite of Shopify plugins. The intelligent AI negotiating tool is being used by beauty brand Iconic London to address the fall in its average order value (AOV). The offering’s conversational negotiating capabilities can move customers into purchasing three items by negotiating discounts with customers on the additional products added to their online basket.
Kathleen Loftus, global digital director at Iconic, says the negotiating tool helped the company drive a 50% increase in its AOV, and that the average discount was 9% compared with the company’s usual discounts it offers in the 15-20% bracket. Nibble’s effectiveness is enhanced by it adopting the tone of voice of the brands it works with to “humanise the brand”. This builds on the two Nibble core personas – casual and business – that can be adopted by retailers.
This leveraging of pricing is arguably underused by retailers – particularly when it comes to dynamic pricing where there is great sensitivity. Norway-based supermarket REMA 1000 is working with Aptos-owned Revionics to enable it to change prices to maintain its position as the cheapest supermarket in the country.
Partap Sandhu, head of pricing at REMA 1000, says the company undertakes continuous price comparison scanning at its competitors, and from this it identifies where it is not the cheapest and adjusts its prices accordingly on the electronic shelf-edge labels (ESLs) that it has installed in all its 675 stores. On average, 100 price changes are made per day in each store, and the whole exercise takes only 15 minutes.
Sandhu recognises there are a lot more initiatives it can undertake with dynamic pricing and its ESLs, such as reducing waste and maximising margins. Initiating markdowns on perishable goods as their sell-by-date approaches “is the next thing for us”, he says.
Radio-frequency identification
ESLs are not the only technology to have been around for many years present at NRF. Radio-frequency identification (RFID) is a long-established technology that has interestingly been enjoying an accelerated level of adoption and roll-out by retailers recently. According to Dean Frew, group chief technology officer at SML, the rise in use of buy online, pick-up in-store (Bopis) by consumers post-pandemic is driving demand for RFID as retailers recognise they need to dramatically improve the accuracy of their tracking of inventory.
Typically, retailers have between 55-75% inventory accuracy, which has led to issues. “Retailers can’t live with the cancel rates of Bopis orders because of stock not being available,” he says. “They either beef up their inventory [with more stock held as a buffer], or they cancel the orders. For some retailers, it can be 50% cancel rates. More retailers realise the ramifications of compensating for poor accuracy.”
For a growing number of retailers, the alternative option is to invest in RFID.
Improved accuracy also helps retailers ahead of supply chain-impacting activity such as changes in the weather. Its impact on the supply chain can certainly be dramatic, and the use of technology from the likes of Planalytics can enable retailers to predict demand and adjust their supply chains accordingly. According to Scott Bernhardt, president at Planalytics, such services can improve planning accuracy by 20%, and for supermarkets specifically, they can reduce perishable waste costs by 10-35%.
Aaron Cano, senior vice-president of analytics and marketing operations at Fresh Direct, works with Planalytics to deal with weather-driven demand (WDD). “It has a huge impact on demand,” he says. “If it snows two inches or rains for five days, then what’s the impact? Demand can increase 20% on Thursday and Friday before rain is forecast. If we know the forecast a few days out then we can amend the supply chain.”
He also highlights how staffing levels are impacted by the weather from people not turning up for work, so it’s sensible to gear up the staffing levels beforehand. “There’s a ripple effect on the business from the weather,” says Cano. “With a forecast, we can automate, through machine learning, changes to the supply chain.”
And for Joshua Niebler, senior director of e-commerce experience at US-based Dick’s Sporting Goods, its work on WDD is enabling it to highly tailor the home page for customers. “Weather relevance is a priority,” he says. “We’re personalising the online experience.”