Tag Archives: digital disruption

3D Printing Technology for Retailers – An Opportunity or a Waste of Money?

3D printing technology for retailers is now emerging as an outcome for small localized retailers that are facing closure. However, as it is with most disruptive technologies, the advantages that 3D printing offer for retailers should be weighed against its potential pitfalls.

Although the 3D printing technology has been used for a number of years, it has been mostly on an industrial scale. Meanwhile, the price of desktop 3D printers has started to come down resulting in an average annually growth rate of 170% since 2008 1. The door is now starting to open for innovative retailers to include 3D printing technology into their business models. As a result, brave small retail store owners have already started using in store 3D printing.

3D printing is a game changer in retailing, according to Richard Kestenbaum, contributing for Forbes. Richard writes: “Last week Ministry of Supply installed a machine in its Boston store that can make a garment on demand in 90 minutes (with finishing done offline after the garment is created). The machine can be set to make garments all day and night or it can be instructed to make a garment to a specific customer’s design, allowing customers to customize the colors they want in the garment.”

Let’s have a look how 3D printing works…

How does 3D printing works?

3D printing, also known as additive manufacturing (AM), refers to processes used to create a three-dimensional object in which layers of material are formed under computer control  (Wikipedia). According to Berman (2012), 3D printers work in a manner similar to traditional laser or inkjet printers. Rather than using multi-colored inks, the 3D printer uses powder that is slowly built into an image on a layer-by-layer basis. All 3D printers also use 3D CAD software that measures thousands of cross-sections of each product to determine exactly how each layer is to be constructed 2.

3D printing uses such raw materials as plastics; resins; super alloys, such as nickel-based chromium and cobalt chromium; stainless steel; titanium; polymers; and ceramics. Examples of products that are manufactured by 3D printing includes artwork, automotive parts, ductwork for a mobile hospital, sand cores for automotive engine block castings, architectural models, dental bridges, jewellery, ball bearing assemblies, and gear assemblies 4. But how can retailers use 3D printers to their advantage?

3D Printing technology for retailers – a 3D-printed product out of a desktop printer

What are the opportunities of 3D printing technology for retailers?

Cremona, et al. (2016) identified the following points on how 3D printing may influence a firm’s strategy:

  • Process innovation:
    • Delivery time of the product: the time to market is extremely reduced, to the extreme that it might become real time.
    • Product development process: is optimized because adjustments are made in a faster and less costly way.
    • Quality and flexibility: is under the control of the retailer with 3D printing.
    • Satisfaction of the single customer demand: personalized products are added to the platform.
  • Customer’s value:
    • Brand awareness: a close collaborative relationship is established between the retailer and the customers thanks to usability testing.
    • Customer’s loyalty: offering customized, personalized products may help clients to feel special.
  • Product platform enhancement:
    • Pushing the limits of traditional manufacturing machines: now new products can be developed also in a different approach and materials are added instead of subtracted.
    • Personalized modules: products can be designed and delivered exactly how the customers want them.
  • Sustainable competitive advantage:
    • Differentiation strategy: carrying out projects on demand makes the retailer to perform a differentiation strategy. It aims at delivering the most technologically advanced product, which is a unique solution with a unique design for each customer.
    • High specialized production know-how: allow companies to actually integrate 3D printing in the product life cycle. In doing so, an additional service is provided.

The most important strategic advantages that 3D printing offer small local retailers are customization, personalization and control over the supply chain. But what are the pitfalls of 3D printing?

What are the pitfalls of 3D printing technology for retailers?

3D printing is in the introduction phase of its life-cycle in the retail industry. Subsequently there will be a lot of surprises (good and bad) as the technology gets adopted more widely.

Shaleen recently blogged in inkjetwholesale.com.au the following of disadvantages of 3D printing:

  1. Scale and size limitations – you can’t print multiple objects of the same type at the same time.
  2. The absence of economies of scale – because every object or product is printed individually.
  3. Cost of buying and setting up a 3D printer – the initial cost still remains something of a roadblock for most businesses and individuals.
  4. 3D printed objects may require heavy duty post processing – it isn’t only the lack of polish that is the problem but also the possible dimensional inaccuracy.
  5. Large scale adoption of 3D printing will result in significant job losses – every new invention ends up taking away jobs amongst the masses.

According to Beck and Jacobson (2017), legal implications may include what is exactly a product, who is the manufacturer, what is the marketplace, and who should be potentially liable for a defective 3D-printed product (once “product” is defined).

At the end of the day, the most important aspect of 3D Printing technology for retailers is whether the customers will accept or reject it.

What do customers think of 3D printing technology in retail stores?

Retail Customer Experience recently reported results of a survey by self-service solutions company Interactions on what shoppers want from retail technology. The study, “What Shoppers Want from Retail Technology,” surveyed more than 1,000 adult shoppers. Of those polled, 84 percent expect retailers to successfully use tech features and functionality to boost the shopping experience and 62 percent are motivated to shop after an initial human greeting when entering a store. Importantly is what the respondents said about 3D printing in shops…

“According to the survey, 95% of shoppers said they were eager to buy products that were 3D printed, and 79% said that they would even spend more money at a store that offered product customization through 3D printing.”

Wow, really? I think we should end (or start) here…

Concluding

Lastly, 3D printing technology for retailers is a genuine disruptive digital technology that may (or will) turn the retail industry upside down. There are many recent examples of disruptive technologies that changed the rules of the retail game. As the costs of buying and setting up 3D printing technology are getting less, more retailers will adopt the technology. Indeed, if you invest now in the technology, you’ll be an early adopter and enjoy (localized) market leadership. Consequently, you’ll have to battle through the growing pains of the technology. On the other hand, by waiting a bit longer, laggard retailers my get 3D printers for a bargain, but at that time, probably, the customers will already be with the pioneers.

Video: The 3D printing process

Notes

1 Li, Y., Linke, B.S., Voet, H., Falk, B., Schmitt, R. and Lam, M. 2017. Cost, sustainability and surface roughness quality – A comprehensive analysis of products made with personal 3D printers, CIRP Journal of Manufacturing Science and Technology, 16:1-11.

2 Berman, B. 2012. 3-D printing: The new industrial revolution, Business horizons, 55(2):155-162.

3 Cremona, L., Mezzenzana, M., Ravarini, A. and Buonanno, G. 2016. How additive manufacturing adoption would influence a company strategy and business model, MIBES Transactions, 10(2):23-34.

4 Conner, B.P., Manogharan, G.P., Martof, A.N., Rodomsky, L.M., Rodomsky, C.M., Jordan, D.C. and Limperos, J.W. 2014. Making sense of 3-D printing: Creating a map of additive manufacturing products and services, Additive Manufacturing, 1:64-76.

5 Beck, J.M. and Jacobson, M.D. 2017. 3D Printing: What Could Happen to Products Liability When Users (and Everyone Else in Between) Become Manufacturers, Minn. JL Sci. & Tech., 18:143.

Images and video

  1. Commons.wikimedia.com; https://commons.wikimedia.org/wiki/File:3D_print_in_process_(9437659715).jpg
  2. Proto3000

Success in the Digital Age Requires Extraordinary Retail Leaders

The carnage intensified last year. “There were 15 shop closures a day across the UK in the first half of 2016 and the number of new openings has fallen to the lowest level for five years” writes Graham Ruddick, senior business reporter at The Guardian. And the carnage is continuing this year. “Brick and mortar stores are suffering due to competition from online sales and the closures just keep coming” according to Daniel Kline in MotleyFool. What is happening? Where are the retail leaders?

The advent of eCommerce, mobile shopping, interactive social media and marketing automation caused a ‘digital disruption’ in the retail industry. However, many established retail brands failed to adapt to the fast changing behaviors and high demands of their consumers. The digital age has come for them and moved on. As a result, retail leaders that couldn’t cope with the disruption have capitulated. But what type of retail leaders does the sector need during these turbulent times?

Retail leaders in the digital age

Leadership is a process whereby an individual influences a group of individuals to achieve a common goal 1. But how can retailers lead and influence their staff during this digital disruption? Maybe it’s time to challenge retail leadership says Ken Silay, Partner, Innovator’s Equation. Ken suggests writing for Innovative Retail Technologies that “The truth is retail is run by old thinking and old metrics” and “difference between the old and new thinking in business creates a gap in retail leadership that will continue to get wider”.

Dr Ganesh Shermon, Managing Partner for “R for C Talent Management Solutions” (North America) recently highlighted the challenges retailers face. He said that retailers are confronted with dramatic managerial changes, given the convergence of the human mind, (Intellect), behavioral psychology (Cognitive), smart machines, and deep learning science and knowledge (Neural networks) as the basis for management actions. That’s really a mouth full!

The truth is that the old way of leading a retail business does not work anymore. But what should retailers do to get their businesses on par with the digital age?

Strategies that leaders should consider in the Digital Age

Prof Kamal Kishor Jain, Head of HR and Business Psychology Department at IIM Indore, recently said digital age leaders need to acknowledge the limits of their expertise. Additionally, the leaders should build a reliable network of knowledgeable experts to help them navigate through their choices. Prof Jain suggests the following:

  • Speed – is the most distinguishing characteristic of the digital age. No matter how fast you are moving to transform your business; the depressing reality is that you still probably aren’t moving fast enough.
  • Knowledge creation – we need to become more right brained to compete and survive. Leadership is not a noun, it’s a verb. The real charismatic leader is one who disseminates knowledge into his subordinates.
  • Primarily leadership qualities – leaders should be daring, caring and sharing. ‘Failing fast’ and ‘falling forward’ are critical precursors to success in the digital era. Such disruptive change requires leaders to be caring about people are affected by such changes. It is only by caring that a leader can elicit support from followers.

The Global Center for Digital Business Transformation, an initiative of IMD business school and Cisco, and HR consultancy metaBeratung, have identified four competencies (HAVE) that business leaders need in order to excel in the era of digital disruption:

  • Humble – in an age of rapid change, knowing what you don’t know can be as valuable in a business context as knowing what you do. Therefore, digital leaders need a measure of humility, and a willingness to seek diverse inputs both from within and outside their organisations.
  • Adaptable – in a complex and changing environment, an ability to adapt is critical. The global reach of digital technologies has opened up new frontiers for organizations, shrinking once insurmountable continental divides and erasing traditional boundaries between territories. Dealing with the cultural and business impacts of this requires adaptability.
  • Visionary – in times of profound disruption, clear-eyed and rational direction finding is needed. Therefore a clear vision, even in the absence of detailed plans, is a core competency for digital leaders.
  • Engaged – painting visions for the future, successfully communicating these visions and being adaptable enough to change them, requires constant engagement with stakeholders. This broad-based desire to explore, discover, learn and discuss with others is as much a mind-set, as it is a definable set of business-focused activities or behaviors.

How can leaders change their retail business to digital?

It is impossible for retailers to change overnight from doing their things the old way to embracing the digital economy. Indeed, the process must get started and in quick time. Therefore, the ability to digitally re-imagine the business is determined in large part by a clear digital strategy supported by leaders who foster a culture able to change and invent the new 3.  Kane et al proposed the following strategies for retailers to use getting their business to the digital age:

  1. Create a strategy that transforms – when developing a more advanced digital strategy; the best approach may be to turn the traditional strategy development process on its head.
  2. Get the right people for job – just as important as developing talent is reducing the risk of losing it.
  3. Take risks – to boost risk taking in their companies, executives need to change their mind-sets.
  4. Sparking new ideas – many new ideas arise through collaborative efforts among people of different backgrounds.
  5. Telling the story – storytelling is becoming a popular means of gaining employee buy-in and organizational traction for digital transformation.

After all, it will probably require an extraordinary retail leaders to facilitate the move of their businesses from analogue to digital.

Watch this video: “A successful leader must be a global leader, says Marshall Goldsmith.”

Concluding

“If something isn’t working within your organization, challenge it. And if your leadership steps on your challenge, find someone to work for who isn’t afraid of a challenge. An organization that doesn’t try to define their future isn’t moving forward anyway” advises Ken Silay. Therefore, if you are one of the retail leaders raising your hand to lead your company into the digital age, make sure that you have the right qualities.

Read also:

Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes

Notes

1 Saint, S., Kowalski, C.P., Banaszak-Holl, J., Forman, J., Damschroder, L. and Krein, S.L. 2010. The importance of leadership in preventing healthcare-associated infection: results of a multisite qualitative study, Infection Control & Hospital Epidemiology, 31(09):901-907.

2 Shermon, G, 2017. Bringing disruptions into the workplace, Human Capital, p44. March, 2017.

3 Kane, G.C., Palmer, D., Phillips, A.N., Kiron, D. and Buckley, N., 2015. Strategy, not technology, drives digital transformation. MIT Sloan Management Review and Deloitte University Press, 14.

Image and video

wikimedia.org; Big Think

 

How successful are Retailers in the Omnichannel?

Bricks and Clicks (B&C) retailing is with us for more than two decades. The adding of the online channel to their physical business has allowed retailers to survive and grow even during tough trading conditions.  However, a recent report by Andria Cheng in eMarketer suggests that B&C retailers are struggling to the get their omnichannel strategies to work.

Andria refers to a 2016 survey of about 350 retail and consumer goods CEOs in countries such as the US and China. The survey was conducted by PricewaterhouseCoopers (PwC) for JDA, a supply chain software provider for retailers from Ann Taylor parent company Ann Inc. to grocer Albertsons. Several worrying aspects about the use of the omnichannel in the retail industry came to the fore with this survey.

How effective are Bricks and Clicks retailers using the omnichannel?

The reasons for retailers to become Bricks and Clicks were discussed previously by this author: “Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes”.  However, the implementation of an omnichannel retail strategy seems not that straightforward.

Results from the survey commissioned by PwC (reported by eMarketer) indicated the following:

  • More than half of retailers haven’t started implementing, are struggling to define or don’t even have plans to develop a “digital transformation strategy”.
  • Only 10% of CEOs say they are able to make a profit while fulfilling omnichannel demand because of delivery and other supply chain complexities.
  • 75% of retail executives said their online operating costs as a percentage of sales have seen either “significant” or “some” increase in the past 12 months. One key driver of that increase: 74% of retailers said customer returns are hurting profit to “a great extent” or “to some extent.”
  • CEOs, especially those in the soft-lines (like apparel) and hard goods (like appliances) sectors, said that their greatest concern is inventory exhaustion, or “out of stock.” Out of stock is a big problem hurting retailers’ ability to convert sales when consumers visit stores.
  • More than half (51%) of respondents said they offer or plan to offer pick up in store in the next 12 months.
  • With the high costs of free shipping and other delivery offers, 33% of survey respondents said they would offer same-day delivery in 2017, down from 44% last year. Meanwhile, a third of respondents said they plan to increase the minimum order value. The percentage of retailers offering specific delivery time slots also has declined.
  • Almost three-fifths of retailers surveyed said they have no plans to reduce their store investment and said their online sales are “additional” sales that aren’t hurting their physical store sales.
  • Automation and internet of things rank lower on their investment list for now, even though these are the areas that are gaining ground as retailers consider them “true game changers,” according to the survey.

Digital technology such as artificial intelligence (AI) and self-service technology (SST) are for long now available for retailers to use.

How to add digital technology seamlessly to your retail business

Digital communication technology is part of the retail setup and is here to stay.  However, retailers are reluctant to adopt the technology for a number of reasons. Retailers should consider the following when deciding to add digital:

  1. Visualize what your business will achieve by adding digital and how your customers will respond to it;
  2. Develop a business plan to integrate the digital with the physical operations of your business;
  3. The integration will cost you money – find out how much and where the funds will come from;
  4. Before your spend a cent on it – discuss and argue the process with all the stakeholders – allow everyone to have their say;
  5. If possible, do a quick survey with your customers to get their opinion on the matter;
  6. Once everyone has agreed with the integration, develop and implement an integration strategy;
  7. Measure the results and make corrections as the process moves forward;
  8. If you lose money continuously, start again or discard the process.

Most of the reactions of the CEOs coming from the PwC survey can probably be because they didn’t plan properly. To be honest, failing to plan is planning to fail.

A strategic planning session

Concluding

The digitization of retail is as revolutionary as it gets. Not only that, it is disruptive. Integrating the digital with the physical is no more ‘a nice to have’. Retailers ignoring the revolution facilitated by digital communication technology, and driven by their customers 1, will fail. Strategic planning may help retailers to do the integration orderly and seamlessly. Only then retailers can enjoy success in the omni retail channel.

Note:

1 Picot-Coupey, K., Huré, E. and Piveteau, L. 2016. Channel design to enrich customers’ shopping experiences: Synchronizing clicks with bricks in an omni-channel perspective–the Direct Optic case. International Journal of Retail & Distribution Management, 44(3):336-368.

Further reading

  1. How do Customers Respond to Self-Service Technology in Retail Shops?
  2. Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?
  3. Retail and the Internet of Things

Images:

  1. Flickr.com
  2. Wikimedia

Pop-Up Shops as a Marketing Tool for Retailers

Pop-Up Shops are short-term, temporary retail events that are “here today, gone tomorrow”. It is the temporary use of physical space to create a long term, lasting impression with potential customers. “The pop-up retail phenomenon, once known as flash retailing, has grown in recent years” say experts at Gordon James Realty, a local property management firm. Retail space for pop-up shops is rented for a fraction of the cost of a long-term space and is a cost-efficient way for a retailer to increase its brand awareness and make a profit.

Pop-ups are changing how commercial property owners are leasing their spaces; how big brands are launching new products and how online retailers are marketing the merchandise they sell online 1. Inquisitive customers enjoy pop-ups because there they can learn more about product they are buying – e.g. where, how and by whom the products were made. Online customers can enjoy the shopping experience by visiting Pop-Up shops of online retailers. It offers a physical space to touch, smell and try-out products that they’d searched online.

What are Pop-Up shops?

My first memory of a Pop-up shop was as a little boy at a school bazaar. The local fish-and-chips fast-food retailer has setup a stall, with the necessary fryers and other equipment from his store at the school. The sounds and smells that were coming from his pop-up stall will always stay with me. However, more formally:  A distinguishing feature of pop-up retail is its temporary nature, intentionally springing up, and disappearing quickly 2. Consequently Pop-up shops can further be described as follow:

  • The shops usually involve one retailer rather than a group of retailers, and are usually found in trade shows. The latest trend however, is that they are setup in unused open spaces, storefronts, or within existing stores.
  • They are a way for promoting selected products or brands in a temporary location and on a smaller scale than trade shows;
  • Pop-up shops may be open in only one location, and are designed to be open a few days to a year;
  • Customers are allowed to have unique, personalized interactions and experiences with brands at the shops; and
  • Pop-up shops employ brand representatives who have a lot of knowledge about the brand.

The benefits of Pop-up shops are according to Sriram Subramanian writing in ShoppinPal:

  • Low overhead costs – retailers can take advantage of prime retail space at the fraction of what it normally cost;
  • Lower risk – short term monthly leases, low initial expenses and flexibility in operations reduce the risk for retailers;
  • Higher brand awareness – people are interested in the sudden appearance of a store, especially if it offers something different;
  • Increase sales – by taking your store where your customers are and making it more convenient from them buying from you;
  • Extended reach for established retailers – reach into different locations and new market niches without having to establish new stores in those locations.

Let’s take a look how retailers may use pop-up shops strategically to their advantage.

 Bricks and Mortar retailers use Pop-Up Shops to stay competitive

The battle for Brick and Mortar retailers to survive against the virtual onslaught of their online counterparts has been discussed many times by this author (e.g. “Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes“). Hence some Bricks and Mortar retailers had to resort to Artificial Intelligence and using the Internet of Things to integrate digital technology to the physical stores.  However, resolute Bricks and Mortar retailers have found another innovative way to enhance the shopping experience of dwindling customers.

Pop-up shops that are strategically placed on shopping floors are appreciated by customers because of the positive hedonistic aspects thereof 2. Here they enjoy the excitement of the experience and the exposure to new, unique products. The Pop-up shop offers an interactive environment where the customers may communicate with knowledgeable brand representatives to gather information and share their perspectives.

A pop-up shop placed inside the retailer’s store can be used as a hub where customers can get more technical information about products and services. It gives them the opportunity to buy the retailer’s products online while they are in her shop.

Online Retailers use Pop-Up shops to let their customers feel, smell and taste their products

One of the big drawbacks that online retailers have is that their customers can’t feel, smell or taste their products online.  However, pop-up shops may help online retailers to bring their customers in touch with their products. Pop-up shops are ‘mobile’ and can relative easily be assembled in places where customer traffic is high.  They can be erected in shopping malls, at trade fairs etc.  Further, online retailers that sell niche products may choose to setup the pop-up shop close to their target customers.

The big online retailer Amazon.com has started to launch pop-up shops in multiple locations across the USA, according to Eugene Kim of the Business Insider. The pop-up shops reflect the company’s growing drive to reach consumers directly . Amazon.com does it through a variety of access points including retail storefronts, home delivery, and innovative devices.

Amazon’s Pop-up Shop

Concluding

Although pop-up shops are not new to retail, they are nowadays used more strategically as a marketing tool. Therefore retailers should ask themselves what they want to achieve with pop-up shops. Are the additional costs and benefits worth the effort? Also, the roll-out of pop-up shops need to be preceded with a focused marketing strategy. Therefore, tell the people in the vicinity of your planned pop-up shop about it . They need to know what they can find there, and what the benefits are for them.

Finally, the rise of pop-up shops can partly be ascribed to the ongoing digital disruption taking place in the retail marketplace.

Notes

1 Baras, J. 2015. Popup Republic: How to Start Your Own Successful Pop-up Space, Shop, or Restaurant. John Wiley & Sons.

2 Kim, H., Fiore, A.M., Niehm, L.S. and Jeong, M. 2010. Psychographic characteristics affecting behavioral intentions towards pop-up retail. International Journal of Retail & Distribution Management, 38(2):133-154.

Images

flickr.com

Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

Artificial intelligence (AI) is intelligence exhibited by machines. AI, still science fiction for most of us, is now becoming a daunting reality in the retail sector. Although we have learned machines (e.g. robots) for some time now, connecting them with the internet may accelerate digital disruption. Digital disruption occurs because unmet needs in the market and in our societies can be addressed through digital means1.

What does Artificial Intelligence means for retailers?

“Artificial intelligence is the key to the future of online retail, providing a crucial way to help shoppers find what they want” suggests Isabell Fraser business and property reporter at The Telegraph.  It is about consumers using voice commands using their smartphones to order products from retailers.

The opportunity that the Internet of Things (IOT) may offer Bricks and Mortar retailers was previously discussed in this blog (Retail and the Internet of Things). The IOT allows any machine with an on/off switch to be connected to the internet. “The IOT is very closely related to Artificial Intelligence (AI). In fact, IOT would not be very powerful without AI” commented Douglas Green in Quora. According to Mark Jaffe, CEO of Prelert, the realization of IOT depends on being able to gain the insights hidden in the vast and growing seas of data available. Since current approaches don’t scale to IOT volumes, the future realization of IOT’s promise is dependent on machine learning to find the patterns, correlations and anomalies that have the potential of enabling improvements in almost every facet of our daily lives.

Customers of retailers may therefore, in the near future, command any household appliance to function at their convenience.

Not long from now…

Imagine this, not long from now – Mary asks her washing machine (she named it Alice) with the following voice command: “Alice, add 2 kilogram washing powder to the shopping list”. Alice, an AI device, is also part of the IOT. Alice has recognized Mary’s voice command and added washing powder to Mary’s online shopping list which is instantly send to her local grocery retailer. Later the same day, a drone delivered the groceries, also the washing powder that was ordered by Alice.

Allright, we’re not there yet. Two of the most common uses of AI in retail are around visual search, offering shoppers items that are similar to a picture they like and have uploaded, and for personalized recommendations report Leslie Hook and Lindsay Whipp in The Financial Times.

AI inside the physical shop

AI also creates opportunities inside a store. Bricks and mortar retailers hope that AI could draw customers back to their physical stores. Leslie Hook and Lindsay Whipp quoted Michael Klein, head of industry strategy for Adobe Marketing Cloud saying that “merchandising needs to become entertainment”, pointing to digitally enabled experiences such as virtual makeovers or home furnishing demos.

Experts writing in The Future Of Shopping report talk about the impact the “fourth industrial revolution” – a merging of physical, digital and biological technologies – on shopping.

The report, co-authored London marketing agency Holition forecasts the following:

  • Virtual reality (VR) headsets that gauge your mood in the lighting and atmosphere of a simulated store.
  • Immersive virtual experiences involving products, such as visiting a cocoa farm to watch beans being picked and processed to make chocolate.
  • AI assistants that know your interests and tastes better than you do and can pre-empt purchases. For instance, shortly before a seaside holiday they might show you a range of swimwear.
  • Holographic fashion shows held in unusual locations.
A customer using a virtual mirror in store

A customer using a virtual mirror in store – image Wikimedia

Wow! There are seemingly unlimited opportunities for retailers, household appliance manufacturers and cloud computing companies applying AI. Or will the digital disruption that AI cause too big to handle?

The other side of Artificial Intelligence

The AI story unfortunately has an eerie side.

Jerry Kaplan2 introduced AI in his book with the following warning: “Recent advances in robotics, perception, and machine learning, propelled by accelerated improvement in computer technology, are enabling a new generation of systems that rivals or exceed human capabilities. These developments are likely to usher in a new age of unprecedented prosperity and leisure, but the transition may be protracted and brutal”. Kaplan foresees that without adjustments to economic systems and regulatory policies, there may be an extended period of social upheaval…

Kaplan’s concerns are shared by Bill Gates reports The Washington Post.   Gates said: “First the machines will do a lot of jobs for us and not be super intelligent. That should be positive if we manage it well. A few decades after that though the intelligence is strong enough to be a concern”. Stephan Hawkin, although totally dependent on AI, bluntly suggests that AI could bring an end to mankind.  Retailers, however, do need mankind to stay in business…

Retailers that choose to ignore AI may not escape from the digital disruptions it causes. Digital disruptors innovate rapidly, and then use their innovations to gain market share and scale. This happens far faster than challengers still clinging to predominantly physical business models can cope with1.

Concluding

Retailers will have to decide where and when Artificial Intelligence has the potential to replace human intelligence. Cost and scale will drive these decisions. Future decisions about AI by retailers will probably be about the ethics of using the technology and the effect it may have on society.

Notes

1Bradley, J., Loucks, J., Macaulay, J., Noronha, A. and Wade, M. 2015. Digital Vortex: How Digital Disruption Is Redefining Industries, ©Global Center for Digital Business Transformation.

2Kaplan, J. 2015. Humans need not apply: A guide to wealth and work in the age of artificial intelligence, Yale University Press.

Images: flickr.com; wikimedia.org