The internet has changed virtually everything about where, when and how we shop. As little as 20 years ago, big-ticket purchases had to involve trips to our nearest shopping centres or out-of-town retail parks. But today, this idea seems alien to many of us.

In more recent years, our regular online shopping exploits have extended to everyday items like clothing and food. And as consumers, the level of convenience that this has brought to our lives has been so vast that physical shops have been forgotten… or have they?

Savvy retailers have found that technology doesn’t have to spell the end of on-site shopping. Quite the opposite: it can actually add to the experience and encourage customers to buy their goods in person. As we highlighted in a blog on this site late last year, American retailers including Sephora and Nordstrom Local have innovated with apps that allow customers to try on ‘virtual’ makeup and clothes before visiting stores to buy exactly what they want.

Through the data generated by customers’ use of these apps, these brands can refine and personalise in-store shopping experiences like never before. When customers visit the store, staff are equipped with information about products they’re interested in and their buying habits, and are therefore better able to help the customer with their latest purchases.

This omnichannel retail experience is fast becoming the norm with major brands across the world. But one step beyond that, a new trend is emerging: one that removes the human element of this personalisation and replaces it with the rapidly increasing power of artificial intelligence.

While AI is already being used to find traits in customer behaviour online, it hasn’t yet been deployed in a physical sense. But now, cameras, sensors and other devices connected to the Internet of Things can derive insights from how customers behave within a store.

This can include items customers look at and for how long, the areas of the store they visit and for how long, even down to what they take off the rack or try on. Through facial recognition of the customer, that information can be integrated with online shopping and payment habits. All this can then be analysed through machine learning to produce deeply personalised shopping suggestions.

This means that when a customer enters a store, they can easily be greeted with the perfect product: in a style they like, in their size and at a price they’re normally happy to spend. The customer might not have known that they wanted the product before they walked in, but this helps ensure that it’s the product they walk out with – and that they’re happy with it.

This may sound like the kind of tech that’s still very much in its development stage and is unlikely to go mainstream any time soon. But as all the technology needed to power it is already in existence, this level of analysis into a customer really isn’t far away. As retail and consumer expert Richard Kestenbaum puts it: “You will start to see this kind of technology developing in stores in 2018 and you will see more of it in 2019. By 2020, if a store doesn’t have it or doesn’t have an implementation plan, they’ll be on a path to failure.”[2]

There is, of course, one underlying concern that this development brings: it does all sound a bit ‘Big Brother’. Theoretically, there is a possibility that consumers will feel that such deep monitoring and analysis of their behaviour goes beyond what they feel comfortable with.

However, the evidence so far suggests otherwise. Research has indicated that 70 per cent of shoppers in the United Kingdom are familiar with these technologies, while at the same time, 67 per cent of them believe that retailers should make the tech a priority.

Of all the innovations that could make a real difference in retail in the year to come, this full implementation of AI is likely to take centre stage. So from the perspective of a service provider like you, being among the first to integrate these capabilities into the solutions you offer to your retail clients could prove to be one of the best business decisions you make in 2018.

You can leverage information and expertise to add value to your consumer and retail offerings, and take advantage of the leading-edge cognitive capabilities of Watson, when you partner with IBM. Find out more in our special eBook.

 

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