How Retailers Like Starbucks Use AI to Improve the Customer Experience

Starbucks store

By Tricia McKinnon

Artificial intelligence (AI) is at the core of many consumer facing technologies including voice assistants, facial recognition and search engines. According to an eMarketer survey the most popular use of AI by retailers in North America and the UK is for search (37% of retailers) followed by recommendation engines for products/content (33%) and then data science (26%).  While use of AI within the retail sector is still developing here are a few retailers that are using AI to provide better customer service and an enhanced customer experience.

1. Starbucks  

Starbucks may not be the first company that comes to mind when one thinks about AI. But Starbucks is starting to look more like a technology company that sells coffee. Starbucks’ popular mobile app features My Starbucks Barista which allows customers to place and pay for their orders by having a conversation with a virtual barista. Then customers can pick up their order at a nearby Starbucks.  The feature is so popular that some Starbucks stores have lost business from walk-in customers that do not want to wait in long line ups caused by virtual orders.

The app also provides customers with personalized recommendations for additional products they may want to purchase based on their purchase history.  According to Starbucks' Chief Technology Officer they use “a data-driven AI algorithm based on your own preferences, your own behavior as well as behaviors that [Starbucks is] trying to drive”.  Starbucks has said that its personalization initiative “is the single biggest driver” of improved spend per customer it has seen.

2. Lowe’s

Lowe’s has introduced LoweBot, a customer service robot. The robot uses natural language processing to answer customer questions. If you ask the LoweBot where can I find lightbulbs, the LoweBot will travel across the store to show you where lightbulbs are located. It can also provide information on what is in stock in store.  This information can be accessed by customers directly or by store associates.  

One of the goals of the initiative is to provide store associates with readily available data so that they can better assist customers.  The goal is to augment the work of sales associates (not to replace them) so that they are available for higher value tasks.  When asked if the LoweBot could eventually eliminate jobs, Kyle Nel, Executive Director of Lowe's Innovation Labs said “most definitely not — my phone doesn't make me obsolete." 

3. Neiman Marcus

Neiman Marcus launched a feature within its mobile app called Snap. Find. Shop. Customers use the feature by taking a picture of an item using their smartphone camera while in the app.  The app then scans its inventory to see if Neiman Marcus carries a similar shoe or handbag. If it does it makes a product recommendation which the customer can purchase.  The innovative app has increased customer engagement and overall app usage. Scott Emmons, Head of the Innovation Lab at Neiman Marcus calls the functionality the “Shazam for shopping”.

All of these innovations show the impact that technology can have on providing a better customer experience.  If organizations can get the application of leading technologies such as AI right they will reap the benefits in terms of better customer engagement and higher revenues.


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