Artificial intelligence (AI) is going to radically transform the retail sector and could result in the creation of new shopping channels, according to Doug Herrington, CEO of Worldwide Amazon Stores.
“We really haven’t had a technology revolution as large as this since the start of the internet,” Herrington told delegates at the National Retail Federation’s (NRF) Big Show.
He acknowledged that the shift to mobile and the rise of social media platforms were transformative, but both pale in comparison to the impact AI is going to have on the sector.
“It’s going to touch all of us. It’s going to lower costs, improve quality, help us develop new customer experiences, and it may even spawn new retail formats.”
This is an excerpt. Read my full article on Forbes.
📺 This episode is also available as video, so head over to the new Retail Disrupted channel on YouTube to watch the conversation unfold.
David, Mark, and Natalie discuss how customer expectations are evolving in this digital era, why businesses often get stuck and don’t go far enough when it comes to personalization, and how generative AI will unlock new real-time personalization opportunities for retailers and brands.
More on the authors:
David C. Edelman has a history of personalization work spanning three decades. Today, he is a Senior Lecturer at Harvard Business School, an executive advisor and board member to brands and technology providers, and an advisor to BCG. Forbes has repeatedly named him one of the Top 20 Most Influential Voices in Marketing, and Ad Age has named him a Top 20 Chief Marketing and Technology Officer. Together with Mark, David wrote the 2022 Harvard Business Review article (Customer Experience in the Age of AI) that inspired this book.
Mark Abraham is a Senior Partner at BCG and the founder of the firm’s Personalization business, which he has built into a global team of more than 1,000 agile marketers, data scientists, engineers, and martech experts. Mark’s teams have accelerated the personalization efforts of over 100 iconic brands (e.g., Starbucks, Home Depot, and Google) and built some of BCG’s largest ventures and AI platforms, including Fabriq for personalization. Mark now leads BCG’s North American Marketing, Sales & Pricing practice.
About PERSONALIZED
“In a world where consumers expect more—instantly, seamlessly, and the way they want it—personalization is a strategic imperative.”
Research shows consumers want personalized experiences. A select few companies are rising to the challenge by building trusted relationships through digital channels. They engage with customers throughout their journey and tailor interactions using AI and technology. Most companies do not personalize well, wasting money and effort. Personalization must be a strategic priority. Personalized outlines the Five Promises companies must fulfill: Empower Me, Know Me, Reach Me, Show Me, and Delight Me. With examples across industries, PERSONALIZED helps executives put personalization at their strategy’s center to accelerate growth and capture their share of the $2 trillion personalization prize.
Thank you to the Retail Disrupted community for an amazing year! Enjoy the festive break and see you in 2025.
Find out more about the Retail Disrupted Podcast by visiting retaildisrupted.com
📺 This episode is also available as video, so head over to the new Retail Disrupted channel on YouTube to watch the conversation unfold.
David, Mark, and Natalie discuss how customer expectations are evolving in this digital era, why businesses often get stuck and don’t go far enough when it comes to personalization, and how generative AI will unlock new real-time personalization opportunities for retailers and brands.
More on the authors:
David C. Edelman has a history of personalization work spanning three decades. Today, he is a Senior Lecturer at Harvard Business School, an executive advisor and board member to brands and technology providers, and an advisor to BCG. Forbes has repeatedly named him one of the Top 20 Most Influential Voices in Marketing, and Ad Age has named him a Top 20 Chief Marketing and Technology Officer. Together with Mark, David wrote the 2022 Harvard Business Review article (Customer Experience in the Age of AI) that inspired this book.
Mark Abraham is a Senior Partner at BCG and the founder of the firm’s Personalization business, which he has built into a global team of more than 1,000 agile marketers, data scientists, engineers, and martech experts. Mark’s teams have accelerated the personalization efforts of over 100 iconic brands (e.g., Starbucks, Home Depot, and Google) and built some of BCG’s largest ventures and AI platforms, including Fabriq for personalization. Mark now leads BCG’s North American Marketing, Sales & Pricing practice.
About PERSONALIZED
“In a world where consumers expect more—instantly, seamlessly, and the way they want it—personalization is a strategic imperative.”
Research shows consumers want personalized experiences. A select few companies are rising to the challenge by building trusted relationships through digital channels. They engage with customers throughout their journey and tailor interactions using AI and technology. Most companies do not personalize well, wasting money and effort. Personalization must be a strategic priority. Personalized outlines the Five Promises companies must fulfill: Empower Me, Know Me, Reach Me, Show Me, and Delight Me. With examples across industries, PERSONALIZED helps executives put personalization at their strategy’s center to accelerate growth and capture their share of the $2 trillion personalization prize.
Thank you to the Retail Disrupted community for an amazing year! Enjoy the festive break and see you in 2025.
Last week, I travelled to the beautiful city of Barcelona to attend Manhattan Exchange. This is Manhattan Associates’ annual European conference and always a great opportunity to hear directly from some of the region’s biggest retailers and brands. So what stood out for me this year?
There were a few distinct themes that permeated throughout the event – unification of physical and digital commerce, store employee empowerment, and the need for both retailers and technology companies to continue to “shatter the status quo”, in CEO Eddie Capel’s words.
But what really sparked my interest was learning more about generative AI’s impact on customer service. Real-time responsiveness is very much a trend to watch for 2025. Here are my top takeaways:
Retailers are increasingly comfortable experimenting with gen AI but most of the use cases that we talk about today are centred on e-commerce operations – writing marketing copy, coding, creating images, etc. So, it was interesting to hear how European retailers are now encouraging staff to use gen AI in-store. Using voice, rather than text, this enables store associates to quickly identify solutions and better serve the customer. Expect a whole lot more of this in the coming months.
There was a clear consensus that AI chatbots in their current form (ie. not the gen AI kind) are an abominable experience for the customer. They often spit out generic or irrelevant information, or redirect the user elsewhere, all of which lead to customer frustration and potentially lasting brand damage.
Gen AI chatbots, meanwhile, are going to be a gamechanger. This next iteration of the chatbot, like Manhattan Active Maven, can resolve more complex issues. For example, instead of just asking “Where’s my order?”, customers can ask things like: “What size was that polo shirt I ordered last year?” or “Remind me how much tax I paid on that purchase.”
One of the top reasons customers get in touch with a contact centre is because they forgot to add a discount code at the checkout. This can be quickly resolved by a gen AI chatbot. Similarly, if a customer changes their mind after making a purchase – for example, they want to modify or cancel the order or alter their fulfilment method – this is another easy task for gen AI that benefits the retailer, customer, and planet.
Traditional chatbots can handle between 20-30% of inbound customer queries without any human intervention. With gen AI chatbots, this rises to more than 50%, freeing up staff time to focus on more valuable tasks like upselling or dealing with more complex customer issues.
Gen AI chatbots will drive efficiencies and improve the customer experience, but they won’t replace humans. For example, gen AI will draft an email for a contact centre employee to send to the customer following an interaction, but the employee can tweak this and must sign it off before sending. Similarly, the tool will generate post-interaction notes, saving employees another 45-50 seconds each time.
However, sometimes no AI is needed at all, and customers just want a human – albeit one that is still very much tech-enabled. We heard how a major European retailer allocates a QR code to each store employee, allowing shoppers to scan the code and continue the conversation with that member of staff after leaving the store. Now, as Green Retail World editor Ben Sillitoe pointed out on my podcast recently, we might not be rushing to scan the QR code of staff at our supermarket checkout, but for those more considered, bigger-ticket discretionary purchases (think fashion, beauty, luxury, home, electronics) this is exactly the kind of innovation retailers should be pursuing.
For more on Manhattan Associates, visit www.manh.com
Live from Barcelona, Green Retail World’s Editor Ben Sillitoe joins Natalie on the podcast to share what they learned at Manhattan Exchange this week. They explore how generative AI chatbots are going to revolutionize customer service, why the days of frontline staff being told to “sell, not think” are over and what sustainability looks like for retailers in 2025.
If you missed the episode with Manhattan Associates’ Pieter Van den Broecke, you can catch up here.
Find out more about the Retail Disrupted Podcast by visiting retaildisrupted.com
Retail Disrupted
Gen AI Chatbots, Empowering Staff and Sustainability
byNatalie Berg
Live from Barcelona, Green Retail World’s Editor Ben Sillitoe joins Natalie on the podcast to share what they learned at Manhattan Exchange this week. They explore how generative AI chatbots are going to revolutionize customer service, why the days of frontline staff being told to “sell, not think” are over and what sustainability looks like for retailers in 2025.
If you missed the episode with Manhattan Associates’ Pieter Van den Broecke, you can catch up here.
The interview from this episode originally aired on The Globalist from Monocle Radio. Natalie discusses the latest global retail stories with Georgina Godwin:
Ikea’s Roblox venture: the launch of a virtual store and how Ikea has become the first brand to offer paid work on the gaming platform.
Walmart’s tech update: innovation in delivery – drones and at-home delivery – and the beta launch of a generative AI-powered shopping assistant.
Pretty Little Thing becomes the latest UK retailer to start charging for returns.
You can listen to the original episode of The Globalist Episode 3352.
After years of volatility and disruption, might 2024 bring some much-needed stability?
I’m optimistic that we are safely out of ‘permacrisis’ mode, but that doesn’t mean that 2024 will be uneventful. Technology will continue to disrupt the status quo, improving operational efficiencies and taking the customer experience to new heights. Here are 3 areas to watch:
AI: From Intrigue to Implementation
The buzz and excitement of generative AI bursting into the mainstream dominated the headlines in 2023, with ChatGPT alone reaching 100 million users within just a couple of months. But things will really begin to heat up in 2024: this will be the year of deployment. AI is no longer hype; it’s reality. We are on the cusp of another ‘smartphone moment’ where AI will disrupt every aspect of the value chain – from product development right through to consumption.
From a customer experience perspective, the holy grail of hyper-personalisation is finally within reach. AI-powered shopping assistants are not the future, they are here now. Rich, real-time, relevant experiences are rapidly becoming the norm. I’m personally excited to see how AI develops in our kitchens, helping consumers not only with meal inspiration but also reducing food waste, and also how AI-enabled virtual try-ons might help tackle the perennial problem of returns.
Tech-Enabled Human Touch
As retailers recognised the value in repurposed, tech-infused stores, the collective view on bricks and mortar shifted from ‘liability in a digital era’ to ‘top asset’. The industry’s primary goal of the past decade has been digitising our physical spaces. As we look ahead to the next decade, the focus will shift to making our digital spaces more physical, more immersive, more lifelike. We’re already seeing this with the rise of virtual try-ons, liveshopping, social commerce and virtual shopping consultations, to name a few. Mixed reality is coming. In the future, we really won’t know where the physical world ends and the digital one begins.
As e-commerce transitions from its current static, transactional state to one of multiple dimensions, physical retailers will need to ensure they are leveraging their staff to provide a unique, elevated experience. Retailers must look to technology here to help democratise concierge-level service, allowing staff to serve the customer in both an efficient and highly personalised way – that’s everything from clienteling to allowing customers to pay on the spot or swiftly collecting or returning an online order. Tech-enabled human touch will differentiate the winners from the losers in 2024.
ESG: Firmly Back on the Agenda
In recent years, progress on the ESG agenda may have been quietly stunted as both retailers and consumers prioritised cost efficiencies. However, it’s safe to say that this is one trend that is never going away, and I believe sustainability will be a top priority for retailers in 2024 and beyond.
Transparency will be a key theme this year. Consumers look to retailers to guide them in their decision-making and, with heightened awareness around both greenwashing and bluewashing, there is simply no hiding behind false claims or labels. Retailers will be judged on their authenticity. They should be striving for honesty over perfection. Retailers must have full visibility over their supply chain and be able to effectively communicate their practices and standards to consumers. I believe we’ll see greater demand for product durability and traceability around retailers’ broader circularity efforts. Increasingly, shoppers will want to align with brands whose values reflect their own.
Collins Dictionary has announced that ‘AI’ is the Word of Year for 2023. Miya Knights, Retail Consultant and Publisher of Retail Technology Magazine, joins Natalie to discuss the wide-ranging implications of artificial intelligence. They break down the learnings from last week’s first ever AI Safety Summit, held at Bletchley Park, exploring both short-term and longer-term risks posed by the technology.
They then move into a conversation about AI’s impact on the retail sector and how it will transform the way we shop, exploring the many opportunities for retailers – from driving back-end efficiencies to utilising AI-powered shopping assistants to deliver more tailored customer experiences.
If you’re not innovating, you’re standing still and that is the most dangerous place to be in retail. Perpetual disruption requires perpetual innovation.
The most successful retailers today are those that reject the status quo. They foster a culture of innovation and fast failure. Everything they do begins and ends with the customer. They understand that they have to keep moving, constantly evolving their proposition, and experimenting with new technologies in order to stay relevant in this digital era.
That’s easier said than done in the current climate. Ongoing cost pressures and soft consumer demand mean that retailers must deal with more pressing, short-term challenges. In times like these, innovation can often get put to the back burner.
However, now more than ever, it’s essential that retailers embrace technology as a means of driving efficiencies as well as enhancing the customer experience. I keep coming back to the phrase ‘tech-enabled human touch’. In my view, this is what’s going to separate the retail winners from the losers going forward. Store associates are a retailer’s most valuable asset. Equipping them with the right digital tools means that they can quickly address any customer pain points and cut friction from the in-store experience (ie. help a shopper to find an item on the shelf, reorder an item that is out of stock, or check a customer out on the spot with a mobile POS device).
And, with greater transparency around a customer’s shopping habits across both physical and digital channels, it also enables staff to offer a more deeply customised experience. This is only going to improve as retailers look to AI to power those more personalised recommendations.
And things are moving quickly. At a client event in Cannes earlier this month, Manhattan Associates CEO Eddie Capel reminded us that it took Netflix ten years to get to 100 million users. It took TikTok 9 months. And for ChatGPT – just two months.
Generative AI will transform retail. This is an industry that is accustomed to a certain level of disruption, but today technology is progressing at a mind-boggling pace. Many believe we are on the cusp of another ‘smartphone moment’ where an immersive digital world is about to transform our lives.
But will we all be donning VR headsets and living in the metaverse? I don’t think so. When exploring these new disruptive technologies, it can be difficult to separate the hype from reality. When it comes to the metaverse, there is much scepticism and general befuddlement. What is it? How do you enter it? Is anyone even there?
It’s difficult to define right now because it’s still being built. And if you ask those who are building it what the metaverse is, you’ll get a ton of different answers. This means that to the layperson consumer it can be a difficult, almost impossible, concept to grasp.
However, just as retailers have digitised their physical stores, they must now turn their focus to making our digital experiences more immersive. Today, online shopping is still fairly one-dimensional. It’s transactional. But it’s moving in the right direction – it’s becoming more engaging and discovery-led. For example, retailers are increasingly using video and 3D images (often AI-generated) to create more contextual experiences for online shoppers. Augmented reality (AR) is bridging the gap between physical and digital retail, especially in beauty, luxury, footwear and home. Virtual shopping consultations are connecting online shoppers with in-store staff, again harnessing expertise to elevate the customer experience. Liveshopping, too, is picking up momentum and social commerce is taking the discoverable and making it transactional. People used to find products; today products find people.
If we look even further into the future, we won’t know where the physical world ends and the digital one begins. Our AI-powered shopping assistants will make our lives easier and more connected than ever before (Bill Gates even thinks they will kill off Amazon and Google search). Virtual showrooms will never replace the physical store but they will become the next best thing. And spatial commerce has the potential to completely redefine the online shopping experience.
The future is wildly exciting for retail. Don’t get left behind.
This commentary originally featured in the KPMG/Retail Next Retail Think Tank Q3 whitepaper. Read in full.