Artificial Intelligence (AI) is on the rise as retailers race to create the most engaging, personalized experiences for customers. In fact, AI in the industry is expected to exceed 8 billion US dollars by 2024. This year’s Digital Innovations Report has shown that retailers across all sectors are adopting AI to their advantage, including e-commerce, grocery, restaurants and in particular, fashion brands.
Where AI is having the most demonstrable impact, is for those retailers who utilize their business data to create a targeted shopping experience. Customer service is improving through a more personalized customer experience tailored to their own tastes, and payment process friction is being reduced, with both applications ultimately boosting profits for retailers.
In a recent IBM survey, 91 percent of retail executives said that they believe cognitive computing will play a disruptive role in the industry, and 83 percent believe it will have a critical impact on the future of their businesses. Retailers who are embracing AI technology are seeing themselves retaining a competitive edge in a cut-throat industry, but which brands are racing ahead and how are others going to keep up?
Big giants leaping ahead
The likes of Adidas, Amazon and Zara have topped the list with AI initiatives, including voice technology and in-store robots. But some of these innovations are leaving small businesses in the dust, due to the lack of funds to invest in their own AI technologies.
The Digital Innovations report does celebrate some smaller retailers making inroads, such as online fashion retailer Zalando’s use of the Bllush AI-powered platform to deliver themed content to visitors on its website, however, on the whole, smaller retailers have been focused on other forms of innovation. Rent the Runway, for example, has launched iPad-powered kiosks in order to improve its returns and collection process and Japanese e-commerce site Zozosuit has developed a new body measurement device for personalized, bespoke clothing.
Fostering a culture of innovation through management structure
Aside from the larger R&D budgets that the big players have at their disposal, one reason for this success could be their management structure and investment in innovation leadership. Chief Innovation Officer is a job title that’s been creeping into the world of retail more and more, sending a message that innovation deserves its own place on the board.
Yet, the responsibility shouldn’t just sit with one person. Amazon’s ‘culture of experimentation’ is a case in point and Tesco’s dedicated innovation lab are examples of where innovation – specifically around AI – is part of the organizational structure. Smaller retail businesses may not have the scale to carve out entire R&D divisions, but the tech landscape is changing to democratize access to AI and all of those in the industry need to take advantage of this.
Harnessing the benefits of cloud-based AI
The rise of cloud-based AI is leveling the playing field for those businesses that don’t have in-house capabilities, and while some customization still needs occur, it could help to give smaller players a leg up in an increasingly competitive field. These AI systems provide a more affordable platform for retailers to host their AI innovations without having to develop a full in-house solution, making the technology more flexible and accessible across the industry.
While the large well-known fashion retailers appear to be leaping ahead with the AI trend, smaller brands are clearly utilizing up and coming tech trends to ensure they don’t get left behind. Adopting AI is an essential step for the retail industry, and when applied in the right way it will bring mass benefits to businesses for years to come.
As fashion retailers continue to adopt these new technologies, time will tell as to which new players will enter the Digital Innovation league table next year.
Written by Richard Piper, Director, Webloyalty