Eye on AI - February 7th, 2020
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
In this week’s “Eye on AI,” we return to the effect of AI on retail, with an important question at the heart of the discussion: do shoppers prefer human or machine assistance? Regardless of the answer, however, AI-powered assistance is here to stay. So with that, let’s get to this week’s AI news!
Which Is Preferred: Humans or Robots? In Most Cases, Both.
We begin with an article that addresses the question posed in the introduction, appropriately titled “What Do Retail Customers Prefer: Assistance From Humans or Machines?”, which looks at a survey of 1,000 adults commissioned by Arm Treasure Data addressing shopper preferences.
“Some analysts believe chatbots — and the evolving capabilities of AI — could revolutionize industries and propel companies to new levels of success,” writes Total Retail contributor Tom Treanor. “.... it’s pretty clear cut why organizations deploy automated solutions. But what about consumers? …. Given the nascent nature of the technology, it shouldn’t come as a surprise that the results are mixed.”
The survey showed that participants appreciated the expediency of some AI robot services, such as lower hold times and more efficient directive, but one in five admitted to preferring human interactions. The reason, according to the Treanor, is that survey participants found humans superior to robots in understanding their concerns and offering thorough explanations – in other words, shoppers desire empathy.
What comes as a surprise is that those same participants who found human assistants superior to robots also said they prefer online shopping to in-store shopping.
“Nearly two in three consumers admitted they prefer to shop online to avoid human interaction,” continues Treanor. “Fifty-eight percent shop online because they’re ‘feeling lazy,’ and 42 percent cite social anxiety as a reason for staying away from stores.”
I take some issue with the use of ‘prefer’ in the survey, as one could argue that people with laziness or social anxiety might prefer getting interacting with people if it weren’t for the emotional or physical strain of their conditions. That pet peeve aside, it is interesting that the clear preference for human assistants isn’t enough to push shoppers into physical store locations.
AI Revives Brick & Mortar & Gives Growing Businesses Distinct Advantage
We continue with a complimentary article titled, “AI, machine learning, robots, and marketing tech coming to a store near you,” which looks at how AI-Tech, particularly tech shown at the National Retail Federation's 2020 Big Show in New York, helps brick and mortar retailers compete with delivery-based retail models and led to a resurgence of in-store shopping.
“‘It's not a retail apocalypse,” says Lori Mitchell-Keller, executive vice president and global general manager of consumer industries at SAP. “It's a retail renaissance…. This whole idea of customer experience and experience management is definitely the best battleground for the guys that can't compete in delivery. Even for the ones that can compete on delivery, like the Walmarts and Targets, they are using their brick-and-mortar stores to offer an experience that you can't get online. We thought five years ago that brick-and-mortar was dead and it's absolutely not dead. It's actually an asset."
Contrary to what robot assistant financial projections suggest ($10 billion in global markets by 2026), as the world becomes more digitized, people more deeply yearn for personalized interactions not available online. That’s not to say online shopping is on the demise, My Total Retail reporter Jonathan Grieg notes, only that there are a market and a desire for both. Retailers that offer both, and utilize the digital data they collect to better market to their shoppers for in-store and digital sales and better inform companies how to advance their products (this ‘virtual sofa’ phone app, which displays furniture via AR inside rooms before users purchase, is an excellent example, as is this article about a cocktail company using AI to help develop new recipes), often see the highest returns.
But transitioning to digital is a complicated, expensive process, especially so for more traditional retailers. It requires new systems, new oversight teams, in-house data scientists or consultants who can effectively mine and utilize collected data – a big reason why, as of last December, only 10% of small to medium-sized retailers had made the digital transition to take advantage of AI. Traditional retailers aren’t technology experts. It’s easy to see how new technologies might seem intangible to them if not explained properly. Despite this, many retailers are beginning to see the competitive advantage AI might give them, and are trying to make the digital transition.
"Retailers are struggling to work through what tech they need,” says IBM global managing director for consumer industries Luq Niazi. “When there is so much tech choice, how do you decide what's important? Many companies are implementing tech that is good but implemented badly, so how do you help them do good tech implemented well?.... You have to think about how you bring the capability [of old and new tech] together in the right way to deploy flexibly whatever apps and experiences you need from your store associate, for your point of sale, for your order management system that is connected physically and digitally.”
As every data scientist knows, collecting data and mining data are two different skill sets. Companies that understand this are able to put people and technologies in place to effectively utilize AI and collect and harness big data to their advantage. I believe smaller retailers can bridge the competitive gap with the right technology, and the right team in place to manage it. But the longer they wait, the deeper the competitive hole in which they’ll find themselves.
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