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The future of retail: AI spending is set to boom

AI

We’ve been looking pretty closely at Retail Priorities 2018  here at WGSN, and now, a new study from Juniper Research takes a look at the future of  retail in relation to AI spending.

Whilst the figure is expected to be around $2bn this year, it’s set to rise by $7.3bn annually by 2022, a new study from Juniper Research shows, as retailers target new avenues to boost customer experience personalisation.

The research says that retailers will heavily invest in AI tools that allow them to differentiate and improve the services they offer customers from automated marketing platforms that generate tailored, timely offers, to chatbots that provide instant customer service.

The spend is set to be strongest in customer service and sentiment analytics, where AI can be applied to understand customer reaction to the products purchased and the service received.

In fact, Juniper thinks 54% of spending will be on customer service/sentiment analytics, with 30% going to AI-based automated marketing and 16% to demand forecasting.

But AI can do much more than that too. NY-based start-up Entrupy, is using the tech as a way to authenticate luxury goods in an age when counterfeits are an ongoing problem for brand owners. And it has just expanded its operations to Japan, putting it in close proximity to some of the world’s most avid luxury consumers, as well as bringing it closer to the Asia Pacific region where many counterfeits originate.

Its AI uses a hand-held scanner and specially designed software and claims 98% fake-spotting accuracy. And it can do that not only for luxury bags but items such as smartphones and car parts.

With the OECD and the main EU body responsible for IP estimating that the annual global value of counterfeits is around $500bn, and resale marketplaces expanding fast, there’s an urgent need for something that can reduce the need for human experts in the identification process.

Resale sites usually have some kind of authentication system but with huge volumes of luxury (or so-called luxury) goods being processed every month, it’s hard to keep up with the supply.

It’s just one example of how AI can impact industry and back with the Juniper report, the research is predicting that retailers will also use AI insights to design and target new product ranges, as well as to create promotional offers.

Research author Nick Maynard said that retailers are looking to replicate the success of Amazon in making AI a core part of their operations, so they know when the price is right (and what price to charge), as well as working out in advance how strong or weak demand will be.

Demand forecasting is increasingly becoming a key tool for retailers with the growing importance of key shopping days, such as Black Friday and Singles’ Day, and the expansion of events like Valentine’s Day.

But in order to maximise opportunities in AI, retailers must invest in this area in order to stay competitive, particularly in low-margin retail segments.

Juniper said that while the cost of AI tools is currently uneconomical for many players, it will drop by 8% over the next four years, which will boost that 300% increase in software spend.

“AI has a huge transformative potential for retailers, in a way that is difficult to underestimate, a potential based on changes under way in the retail industry, which are making AI more applicable all the time,” Juniper said in its white paper.

 

For more on AI, check out our report on The Future of AI: Friend Tech or Data & AI: Transforming Buying & Merchandising

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