If you are looking for an answer to the question What is Artificial Intelligence? and you only have a minute, then here's the definition the Association for the Advancement of Artificial Intelligence offers on its home page: "the scientific understanding of the mechanisms underlying thought and intelligent behavior and their embodiment in machines."
However, if you are fortunate enough to have more than a minute, then please get ready to embark upon an exciting journey exploring AI (but beware, it could last a lifetime) …
CPG executives are painfully aware that they're investing billions of dollars in trade promotions each year, but as many as 72% fail to break even¹. It's clear that promotions have become more complex and harder to manage as CPGs must respond to changing consumer behavior, increasing demands from retailers and blurring of physical and online channels. Traditional forecasting and promotion-planning systems are unable to provide real-time, accurate insights to help managers understand the big picture. Below, we'll explore seven ways in which AI can help CPG companies more effectively plan promotional events, measure outcomes and make adjustments. You can read more in the companion paper on how AI transforms promotional trade funds management.
According to a recent study conducted by Forrester Research, waiting in the checkout line is the top complaint among U.S. grocery, mass-merchandise, and convenience store shoppers. Mega-retailer Amazon and a quartet of well-funded retail technology startups -- Zippin, Standard Cognition, Grabango and Trigo -- believe they have the solution to the problem: Checkout-free stores powered by various technologies that enable shoppers to walk into the store, grab what they want off the shelves and just walk out. Autonomous checkout, another term for checkout-free, is becoming one of the hottest areas of retail investment today. It comes as the convenience expectations of today's Amazon-shopping, Grubhub-ordering, Uber-hailing consumers are ever-increasing, and informing their in-real-life (IRL) shopping demands. Brands are responding in kind, delivering digital services aimed at automating mundane tasks -- in this case, the checkout process -- so much so that the result is meant to feel "automagical," according to trend forecasting firm TrendWatching.
You have bought a small product online from your favorite retailer. Your cart value is at £4.99, now you are at the checkout and the delivery fee is an additional £7.99 on top. The scenario above represents a snapshot of one of the largest problems in online retail. With trillions of dollars spent online annually, when you buy something online, a large chunk of the cost of most shopping carts goes towards delivery. It is widely agreed by industry leaders that the global solution is to automate the last-mile delivery process, thus completely removing the human cost of delivery.
Retailers are increasingly using artificial intelligence to manage their stores and monitor shopping behavior and offer better experiences, as we discover in the second installment of Mergers & Acquistions' 7-part series, Retail Tech M&A. There are 7 technologies retailers are investing in through M&A: The Internet of Things enables enhanced personalization, such as custom drive-thru menus. Artificial intelligence applications predict customers' needs. Modern data centers and warehouses fill orders quickly. Robots assist with sorting and packing consumer goods.
In Southeast Asia, e-commerce is big business, with Singapore, Malaysia, the Philippines, Indonesia and Thailand generating US$14.8 billion in online sales throughout 2016. According to a 2019 study from Facebook and Bain & Company, ASEAN's digital consumers' spending will triple by 2025. Within the e-commerce sector, online retailers are already embracing artificial intelligence (AI) applications such as chatbots, to deliver a more personal experience for shoppers online. According to a 2018 article by Rene Millman titled'Adoption of AI booming in Southeast Asia,' the adoption rate of AI in the region grew to 14 percent in 2018. The article, citing an IDC report'Asia Pacific Enterprise Cognitive/AI Survey,' revealed that 37 percent of companies would put AI adoption plans in place in the next five years.
Between delivery bots, interactive screens and voice shopping, the retail landscape has no boundaries for innovation. While some of the trends we're seeing now will prove to be just trends, others will change the way consumers shop and push brands to radically rethink their customer experience. As 2019 comes to a close, it's critical to reflect on changing customer expectations as well as industry leaders who are raising the bar for everyone in the retail space. As the chief marketing officer of a software as a service (SaaS) platform for e-commerce product data, I've come across some leading trends that are likely to stick. For any marketer in the retail space, it's important to consider what these trends may mean.
Consumer expectations are higher than ever as a new generation of shoppers look to shop for experiences rather than commodities. They expect instant and highly-tailored (pun intended?) To be forward-looking, brands and retailers are turning to startups in image recognition and machine learning to know, at a very deep level, what each consumer's current context and personal preferences are and how they evolve. But while brands and retailers are sitting on enormous amounts of data, only a handful are actually leveraging it to its full potential. To provide hyper-personalization in real time, a brand needs a deep understanding of its products and customer data.
Black Friday fever is almost upon us, and this year online retailer Amazon is rolling out the deals a whole week early in what will be its'biggest ever' event. That means you can get your hands on fantastic offers on toys, beauty, home and more over an extended eight-day period in the UK. During Black Friday last year, customers purchased over two million items on Amazon. Popular buys included the much-loved Amazon Beauty Advent Calendar, the Amazon Echo Dot smart speaker and the highly-rated Instant Pot Pressure Cooker - showing the huge range of fantastic deals available on the day. This year, the sales extravaganza is expected to feature Lightning Deals, limited-time offers, new exclusive-to-Amazon product launches and other big savings.
In 2002, Target hired statistician Andrew Pole. His job was to use predictive analytics -- a form of statistics that makes predictions by observing data trends -- to help the retail giant market certain products to certain groups of people. Along those lines, Pole's first task was to identify pregnant women -- specifically women in their second trimester. As Target's marketing team explained to him, new parents are extremely valuable customers whose brand loyalty tends to change when they have kids because they purchase things they probably weren't purchasing before -- like diapers, formula, baby clothes, etc. New parents also tend to be physically exhausted and therefore more prone to do all of their shopping at one place.
Artificial intelligence is touching almost every industry in the ongoing era of digital transformation. But what does it mean? Put simply, AI and machine learning -- a closely related idea -- are computer programs that emulate and learn human behavior to then make autonomous decisions. AI can be especially transformative in retail, helping almost every aspect of a retailer's business -- from utilizing data to drive sales, to automating the supply chain, or to hyper-personalize the customer experience. While AI can sound like some far-off idea, it's closer than you may think.