3 Retailers That Have Used Artificial Intelligence to Create a Better Customer Experience

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By Ben Rudolph

In the 1800s, Ned Ludd believed that emerging technology, such as power looms, were going to disrupt the textile industry and unemploy artisans. Similar to Ludd’s claims about artisans, the news media often discusses the pending “death” of retail because of powerful technologies like artificial intelligence. Now coined the Luddite Fallacy, mechanized power looms actually allowed artisans to achieve employment and productivity gains through the industrialization of weaving. Retailers are experiencing a similar phenomenon. 

While some retailers have faltered, others find tremendous success through transforming themselves and using artificial intelligence to incorporate journey mapping, develop a customized customer experience, and optimize in-stock positions. As such, 80% of retailers and brands are expected to adopt some form of artificial intelligence into their business plan within the next three years; up from current rates of 40%.  Three companies that demonstrate the potential use cases of AI in the retail sector are Apple, Walmart and The North Face.

1. Apple. In 2014, Apple introduced iBeacons in its retail stores, world-wide. These beacons utilize low-power Bluetooth transmitters to intelligently map a consumer’s position in retail stores. iBeacons are able to pin-point customer movement more precisely than traditional GPS systems. 

The iBeacons work in tandem with a user’s phone and the Apple Store mobile app. When you walk into an Apple Store with the app installed on your phone, it generates specific recommendations and actionable notifications. For example, if you have an older model iPhone and walk by a phone display table, the app will check your upgrade eligibility and advise you of the trade-in value of your current device. If you have ordered a device for pick-up, the app will automatically generate your order number for an Apple Store employee to bring your item to you. 

Created as an open source mechanism, iBeacons, and similar beacon technology has not yet seen large adoption in retail environments; only 16% of retailers in the US have adopted or have plans to adopt beacon technology. Dependence of beacon technology on consumers needing to download an app remains a barrier to growth. As such, only large brands like McDonalds, Starbucks, Macy’s, and sports franchises like the Golden State Warriors, have utilizing beacon tech to a greater extent. These brands have seen success, with the Warriors seeing average arena transactions increase 87% because of beacon engagement and messages, demonstrating the potential of AI location-based notifications from beacons.

2. Walmart. After Amazon revealed its “store of the future” as Amazon Go, Walmart recently did the same, with its Intelligent Retail Lab (IRL). This new experimental retail location in Levittown, New York, is a 50,000 sq. ft store that uses AI to ensure perishable products remain in stock and fresh. It may not have a flashy check-out, or lack thereof like Amazon Go, but IRL is able to track inventory in real time with unprecedented efficiency.

Walmart hopes to use this location as a test site for use of AI and, eventually, apply this technology in all of its stores. Similar to Amazon Go, IRL uses cameras throughout the store; they collect a staggering 1.6 TB of data per second. When a customer picks up an item, such as the last package of a certain type of meat a text is sent to a sales associate to restock it. Previously, inventory proved difficult to track without the literal scanning of every barcode. While not as “sexy” as Amazon Go, IRL’s stock tracking could have a huge impact on Walmart’s customer experience and bottom line. Not only will customers leave stores happy, IRL will allow Walmart to properly update its website and app for quick shipping and in-store pickups.  

While only open for a few weeks, to combat privacy issues Walmart has included interactive information stations and screens in IRL that answer questions about the store’s technology and about the nature of data being collected. This cautious effort echoes increased concerns by consumers over data collection by big tech. Mike Hanrahan, CEO of IRL, notes that “you can’t be overly enamoured with the shiny object element of AI.  There are a lot of shiny objects out there that are doing things we think are unrealistic to scale and probably, long-term, [are] not beneficial for the consumer.”

3. The North Face. The North Face partnered with IBM’s Watson, an artificial intelligence platform, to help customers find the perfect coat. Using Watson and its cognitive computing abilities, The North Face developed an in-store app to ask customers questions about where they plan on wearing their desired coat and what activities they will be doing while wearing it. Watson Analytics uses this customer information and makes a personalized recommendation. As The North Face’s app continues to build on previous customer information, it pairs it with in-store and eCommerce purchases and activity, to offer The North Face customers even more personalized product recommendations.

While implementing technology-forward tools can carry risk, after using’s IBM’s Watson’s AI driven tools to help service customers better, The North Face found that 75% of customers who used its new tools said they would do so again, and North Face found that customers spent 40% more time on North Face’s site when they interacted with IBM’s solution.

 

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