Intelligent
shops

Retail reality 

Can intelligence also be implemented in a physical shop?

In online terms, AI in Europe is lagging behind China and the United States. We will not become dominant anymore, although of course we can work to close the gap. Now that there is so much information, the challenge for everyone is to identify what is really relevant and bring it together in a worthwhile way that will stimulate conversion and sales.

For the time being, artificial intelligence - in which human intelligence and a multitude of tasks are imitated by machines - is science fiction. The reality is that narrow artificial intelligence in a very specific area is already very promising, if we believe Reiner Kraft, recently responsible for Zalando's technological strategy. On this fashion platform, online sales are largely driven by suggestions. It is possible to see exactly how many of the products were purchased on the basis of personalisation, and how many have been returned. In the coming years, it will be time for a further step by using artificial intelligence to build in a leverage effect. Zalando wants to increase its use for personalised offers. This is now based on style and other outfits that the customer already has. But to go deeper, more data and AI are needed. Kraft acknowledges that many companies mainly do what is in the interests of shareholders: increasing profits and turnover. Apart from the strict privacy regulations in Europe that companies have to comply with in any case, society is increasingly demanding a 'clear conscience' on the part of international business when it comes to using personal data. In the long term, the future will belong to companies with a clear conscience.

Guess' AI-focussed stores
AI experiments are also occurring in the physical domain. For example, Guess has recently partnered with Chinese e-commerce giant Alibaba to further develop their retail strategy with a focus on AI that includes the physical domain. Guess initially put a lot of work into AI as a front-end consumer-oriented tool. Mainstays of its AI-focussed shops are things like smart fitting rooms and 'magic mirrors' on which customers see additional product recommendations based on the items brought into the fitting room. The success of the front-end has encouraged Guess to integrate AI into the back-end so that it is now implemented throughout the business.

Even though Guess has not revealed exactly how much money was spent on AI, the investment seems to be bearing fruit. After standing still for almost 10 years, Guess's revenue increased by a modest four per cent in the third quarter of 2018. Asia, where Guess' AI efforts are the greatest, experienced the strongest growth with an increase in retail sales of more than 20 per cent.Personal taste
Companies will be able to get an increasingly accurate picture of their customers. Artificial intelligence can help in offering suggestions to both buyers and sellers. If the former is successfully carried out, the consumer is less likely to choose something that does not fit or look good, and the entrepreneur will rely on AI to choose the most popular items of the season. However, there is a risk of damage. There comes a time when customers feel deadened and start to turn their backs on data profiles that leave nothing to chance. This is certainly so as we get smarter and smarter and know what's good for customers before they do themselves. There must always be room for creativity and personal taste.

Do you want to know more about this trend? Then you should contact Erica Twigt, erica.twigt@kega.nl  or +31 (0)252 750275.

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