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Retail industry is all set to unveil the next generation shopping experience through AI. Unlocking a plethora of growth opportunities, retailers across globe are investing heavily in AI capabilities to gain market share. Interestingly, according to TechInsight360’s Global AI Retail Survey, investments in AI have witnessed sharp increase in the mid-tier retail segment as well. Key focus area to deploy AI include retail operations including warehousing, delivery, in-store, payments, predict consumer behavior, offer personalization, and online store operations. In addition to online retail, the focus has also increased on enhancing in-store operations through deployment of AI. AI-enabled future stores will be capable of offering in-store recommendations to shoppers through geolocation or geo-fencing technology. Moreover, deployment of AI will also make the in-store operations such as real-time tracking of shoppers, management of virtual mirrors for cosmetics and clothing stores, and voice command app for shoppers, store managers and associates more efficient.
Owing to the early adoption and increased investments in AI technology, China and US dominate the global AI retail market. Further giving impetus to the growth in AI retail market in the US market is the presence some the top tech-giants offering AI-enabled retail solutions such as Google, AWS, IBM and Microsoft. Retailers such as Amazon has invested heavily in AI technology to introduce Amazon Go, an automated grocery store. After the successful beta testing of Amazon GO for its employees in the Seattle Campus, the online retail giant has recently opened the fourth Amazon Go cashier-less convenience store. Amazon reportedly spent US$1 million in AI technologies and camera alone for its first store. The company further plans to expand the convenience store chain to approximately 3,000 locations by 2021, which will require an investment of approximately US$ 3 billion.
Emergence of online retail giants such as Amazon Go in the store retailing has increased the pressure on drug store chains and grocery retailers in terms of cost, efficiency and sales growth. To match-up the competition, the grocery retailers are also investing to transform their business through robotics and automation. The first automated hyperlocal fulfillment center in the world was launched in the US recently. The center also denoted as the world’s first robotic supermarket launched by Takeoff Technologies in partnership with the leading Hispanic grocers in the country. The center is expected to serve 14 locations of Sedano supermarket across Miami. The AI-enabled robots in the automated fulfilment center are capable of assembling the orders placed by customers through online app for up to 60 items in a few minutes time. Similarly Kroger has also entered into an agreement with Ocado for automated grocery fulfilment centers and expects to open more than 20 such centers across the US in the next three years.
Artificial Intelligence (AI) spend in retail industry has increased at 86.6% during 2017 to reach US$ 1.7 billion. Over the forecast period (2018-2025), spend on AI is expected to record a CAGR of 28.9%.
Future of global AI retail to be driven by APAC region
Over the coming decade, the growth in the AI retail market is expected to be majorly driven by the growth in the Asia- Pacific region, especially China. China leads the region with largest investment in the AI technology including facial recognition, in which particularly the country has made significant achievements. Major e-commerce retailers in China such as Alibaba and JD.com are heavily investing in AI technology to establish their footprints on offline retailing market.
While China has the highest online sales penetration in the world, 80% of the total retail sales still comes from the brick-and –mortar stores. Comprehending the fact that the future of retail will be integrating both channels to offer the best retailing experience, leading Chinese retailers are developing technology for automation and enhancing the offline retail store experience.
Alibaba introduced the New Retail concept in 2016 and currently has collaborated with over 1 million stores to use the advanced retail technologies. From remodeling of stores, QR codes and payment methods to supply of sensors and mobile phone apps, Alibaba has abetted the convenience stores to raise their revenues by 30%. The company also provides these mom-and-pop shops with an analytical software that facilitates identification of the popular products, getting it ordered from cheapest distributors and speeding up of the check-out process. The department stores such as Guess are being equipped with interactive changing room that shows a reflection of the customer wearing a product, which the customer can get to the changing room by activating a robot with a tap on the mirror. Moreover, the changing rooms are also equipped with an AI tool that shows other products that pair well with the customer’s choice.
The leading Japanese retailer, Aeon, is planning to invest 500 billion yen logistics and IT for integrating the online and store sales and automation of distribution. India is also making huge investments in retail technological advancements relating to AI, blockchain, chatbots and is all set to become one of the top retail destinations witnessing augmented global participation.
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