From left: Katherine Cullen Director, Retail and Consumer Insights National Retail Federation; Luq Niazi, global managing director consumer industries, IBM; Bindu Thota, VP, technology, zulily; Jeff Donaldson, founder, Intriosity.

Jan 14 2019

NRF 2019: How Retailers Can Take on the AI Revolution

When integrated carefully and holistically, the technology can help to improve operational efficiency and drive revenue.

The retail artificial intelligence revolution isn’t just coming, it’s already here. This is according to Luq Niazi, global managing director of consumer industries for IBM, who spoke at a panel on retail automation at NRF 2019: Retail’s Big Show in New York City on Monday, Jan. 14.

In fact, according to a joint survey of 1900 retail executives by NRF and IBM released at the show, 51 percent of retailers are already using AI for customer intelligence, 48 percent are using it for demand forecasting, and 38 percent are using the tech for pricing and promotion. These numbers are projected to jump to 79 percent, 85 percent and 73 percent, respectively, in the next three years as more companies deploy AI and automation in multiple facets of their operations.

“Intelligent automation is driving new ways to deliver superior customer service and personalization for a consumer of one. It’s driving new ways to drive agility and effective decision-making across the entirety of the enterprise,” said Niazi.

Moreover, the use of intelligent automation — defined by the survey as automation that’s “guided by AI tools that need minimal manual routine interventions” — shows great promise to augment and assist human capabilities, retail executives say. Executives anticipate that intelligent automation can help reduce operating costs by 7 percent, on average, and increase annual revenue growth by 10 percent.

“You’re going to start to see a whole new level of thinking about how processes can be reimagined with intelligent automation,” said Niazi.

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Zulily Taps AI to Drive Personalization

To achieve these benefits, however, companies need to begin thinking about how to holistically spread the use of AI and intelligent automation throughout the enterprise, Niazi notes.

Does that seem far off in the future? Not so much. One company, zulily, is already making use of AI effectively across its entire organizational structure. The 9-year-old online retailer launches 9,000 products through more than 100 sales events a day, and taps automation and machine learning daily to drive personalization, pricing and more.

“Literally, from day one, we were using some form of automation … It started as basic, and it kept getting more and more advanced to relate to our customer and to craft our customer story,” said zulily Vice President of Engineering Bindu Thota on the panel at NRF.

Moreover, Thota notes that personalization doesn’t start on the site, but that the brand seeks to engage the customer “where she lives,” whether that be on Pinterest, Facebook or another social media platform. This requires a mixture of art and science, Thota explains, as zulily employees work in partnership with the automation tools to craft particular customer stories.

“Every place where we touch them, we personalize it for them. We are literally talking to them, and we leverage automation and machine learning to do that,” she said. “What you see [when you come to the zulily site] is very different from what I see, and that is part of our business model and in our DNA from day one.”

The company has already seen success from this model. By crafting personalized push notifications via machine learning and automation tools, Thota notes that zulily has seen a “49 percent lift in demand.”

MORE FROM BIZTECH: See how zulily’s director of data science and machine learning taps tech to take on customer demands.

Overcoming Retail Automation Challenges

While valuable, the road to retail AI won’t be a straight one.

“You’re going to start to see a whole new level of thinking about how processes can be reimagined with intelligent automation,” said Niazi. “But it does drive the need for new levels of skills and change adoption … and, of course, it does pose new challenges.”

These challenges include sourcing talent, AI bias, integrating AI with existing processes and systems and several others.

Despite these obstacles, however, the AI retail revolution is “going to happen, it’s happening now — embrace it,” said Niazi.

And for those looking for advice on where to start, Thota says companies should know exactly what they want from AI and automation before they pursue it.

“You can go blindly into something, but if you don’t know what you’re looking for, you don’t know what you’ll get,” she said.

She also notes that the road isn’t a straight one, and that retailers will need to continually adjust their use of the tech to fit needs. “Continue to test and measure the outcomes, and then continue to test, continue to refresh, because things change, your customers change.”

Keep this page bookmarked for articles from the event. Follow us on Twitter at @BizTechMagazine, or the official conference Twitter account, @NRFBigShow, and join the conversation using the hashtag #NRF2019.

Juliet Van Wagenen

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