Artificial Intelligence & Retail Experience

Through automation, Amazon is shaking up the retail industry. Whereas until recently it didn’t rely on physical stores, it has warehouses and engages an army of delivery services to move their products to consumers. Physical stores are closing while Amazon’s sophisticated product sales and management software, utilizing AI technology, gives them an advantage. They are able to use data mining of your personal data to give you a personal shopping experience by pointing out what you might be interested in buying based on your profile and prior activity. The pervasive internet has allowed Amazon to exploit its strengths to attain its current dominant position.

Other retailers like Peapod are fighting for a niche in this market by offering internet orders and delivery. Walmart and grocery stores such as Jewel/Osco are offering internet order and pickup services and other customer services to keep their base. But the utilization of AI technology is and will lead to offer more choices, which will favor internet shippers like Amazon over physical stores whose space limits their selections.

For physical retailers to survive, they need to offer customers services they can’t get online. One of these might be the opportunity to view samples in a physical store’s virtual dressing room and have product shipped by that retailer. However, this may only be a short term solution. When mobile devices can allow online retailers to offer the same service in the comforts of your own home, it will eliminate that advantage of visiting a physical store.

Many people would rather deal with a pleasant human over a mechanical tool that lacks empathy for a customer’s complaints. However, advanced AI with its speech recognition software will allow automated customer service to exceed the experience of dealing with disgruntled or overworked employees. Ultimately, consumers want a good experience and if an automated AI agent can provide that, customers will be satisfied.

One advantage of physical retailers is that consumers can have the immediate gratification of walking out with their purchases. However, that requires that they go to the store and wander through items they don’t want to get to what they want. This is great for browsing shoppers, but for someone who is busy, this is an unwelcome waste of time.

Search engines and targeted advertising are biased toward those items you’ve shown an interest in. It’s more focused and can be done wherever you are, not requiring a visit to a physical store. Furthermore, Amazon and other online retailers are experimenting with autonomous drones to deliver packages quicker, getting closer to the instant gratification of an in-store purchase.

Thus, physical stores have challenges. Of course, there will always be shoppers who want to browse or to physically touch and try on their purchases before they buy, but that won’t be enough to support the number of physical stores around today. Perhaps competing retailer/manufacturers will rent space together under one roof to provide a real or virtual display of their product to consumers which then can be ordered and directly shipped in their color, style, and size.

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