IS ARTIFICIAL INTELLIGENCE REALLY THE DOOMSDAY FOR RETAIL?

A.I. In Retail.

While we are all being distracted by off color comments and crazy tweets, hurricanes, earthquakes and nuclear war technology; companies are quietly building algorithms and robots - both digital and humanoid - that can instantaneously analyze billions of data points, do routinized tasks, and create their own language (Do you speak BOT? Doubtful.) These bots have the potential to eliminate millions of jobs around the world. Retail is poised to be the hardest hit by these technological advances according to Klaus Schwab, Founder of the World Economic Forum. But before we can assess the threat level of this new technology, let’s define what A.I. means within the context of retail.

So what is A.I.? It’s the theory and development of computer systems that enable machines to perform tasks that would normally require human intelligence, or more simply said to my fellow retail professionals: A.I. gives machines the power to copy intelligent behavior.

A quick Google search will display hundreds of initiatives that are currently in development that will eventually replace current human tasks. So in the retail context , A.I. is much more than self checkout in stores and faster algorithms to make online shopping faster. Nearly every function in retail will be affected by A.I. from buying, planning, space and merchandise allocation to, yes, even product design and creative content.

Shoppers and retailers already interact with advancements in A.I. every day from the Google searches mentioned above to the lovely ladies or Amazon and Apple, Alexa and SIRI. Each use feeds information to the algorithms that are used in the drastically improved chatbots, voice assistants and product recommendations on sites that follow you across the web. As Japjit Tulsi, VP of Engineering at Ebay, wrote on Venture Beat, “...powerful new GPU’s (graphics processing units), dedicated hardware, new algorithms, and platforms are being created for deep learning. People’s interests and fears are peaked by advances that are happening so quickly.” Even though these technologies are not entirely new or foreign to retailers or the consumer, people are naturally concerned about the perceived rate of progress, along with headlines about growing discomfort about a lack of regulation in the space.

It’s notable that even Tech Titans like Elon Musk and Mark Zuckerberg strongly disagree (see widely publicized and ideological Musk v. Zuckerberg feud) on the potential impact of A.I. on society. Quoted in Vanity Fair, Elon Musk said, “I think [A.I. development company, Deep Mind, is] really improving at an accelerating rate, far faster than people realize. Mostly because in everyday life you don’t see robots walking around. Maybe your Roomba or something. But Roombas aren’t going to take over the world.” (Vanity Fair) While Silicon Valley is creating and the government is (hopefully) thinking about how to regulate, the retail industry needs to be charting the course of the innovations best suited for our sector that make customers happiest and differentiate brands and experiences.

“THOSE WHO DO NOT LEARN FROM HISTORY ARE DOOMED TO REPEAT IT.”—George Santayana.

Robots and automation have already eliminated blue and white collar jobs alike in the automotive industry. Self service gas stations made the gas station attendant virtually disappear, and toll collectors have gone the way of the horse and buggy. New technologies not only have the mechanism down but also the computing power to adapt to and learn new tasks. In this month’s Wired magazine, James Surowieki weighs the evidence on whether automation is destined to take our jobs and recounts the story of a Japanese cell phone store that replaced all its associates with humanoid robots named Pepper, which (or should it be who?) can “express his own emotions” and use a 3-D camera and two HD cameras “to identify movements and recognize the emotions on the faces of his interlocutors.” A 2016 report by the World Bank has a model where ⅔ of current jobs are lost to automation; however, most of those old jobs done by new machines will still need to be manned or overseen by humans like in automotive factories. As we move steadily towards the fantasy of self driving cars, connected homes and the Internet of Things; we have much to look forward that will reinvigorate the retail sector for the better of its employees and customers; however, the greater looming concern is the next step when automation is automated, and humans are no longer essential to the development of new technologies and operations of commerce.

Now that we have rehashed what is out there about the A.I. revolution more generally, we can delve deeper into retail’s role in the technological revolution.

First, the U.S. government has the responsibility to create and enforce regulations. If we want to avoid the mass hysteria of losing coal jobs, of which there were far fewer, the industry must create safeguards for its employees and training programs to seamlessly integrate those disenfranchised into new roles or industries. Public companies and corporations are always under pressure to increase profits and value for their shareholders; therefore, even the most socially minded companies cannot be expected to regulate the economic impact of their decisions - that’s the government’s responsibility. Without thoughtful technology regulations, A.I. can create an unemployment tsunami like we have never seen before.

There is good news! The store of the future - both online and physical - will be a showroom for the endless assortment the retailer offers. We already see this being tested by innovative direct-to-consumer brands like Away and Everlane, as well as with traditional department stores like Nordstom’s new Local store format. Retailers will already know what you want based on past behavior plus an algorithm to predict future behavior. After browsing the customer can choose to have the item delivered that same day or carry out any item in stock by simply walking out of the store, a la Amazon Go, as the customer’s credit card and profile data are saved to the cloud and read by sensors like EZ Pass reads cars as they speed down the highway. Relying on a primarily delivery-based fulfillment (thanks to driverless cars, which are related but a topic into itself), stores will be less cluttered, having only to display samples, and more easily managed by a smaller, better educated staff that relies on technology and tools informed by A.I.

While a lot of the news can feel dire and change happening so rapidly, it can feel overwhelming to a change and risk adverse industry like retail; however, we are more prepared for this technological revolution than we were for e-commerce. Let’s brace ourselves but experiment. Let’s be wary but optimistic about the back of house efficiencies and improved customer experience. Let’s be on the vanguard of change, rather than debating whether or not it is actually going to happen, because if there’s one thing I can promise you, it is here.