Artificial intelligence: a mix of delays and opportunities

intelligenza artificiale retail
20 Feb 2019

Artificial intelligence has been the basis for 75% of digital communication since as far back as 2002. So says the IULM University in Milan, one of Italy’s top universities. So the question is: what is the situation with AI technologies, especially in retail?

AI is behind, and this affects not just the sector nor only the country. The delay is due to the backwardness of research and development of artificial intelligence technologies in Europe. According to McKinsey, Europe’s digital ICT sector accounts for around 1.7% of GDP, compared with 2.1% in China, and 3.3% in the United States. Only two European companies are in the worldwide digital technology top 30, and only four European companies are in the top 100 global artificial intelligence start-ups. And yet many stories from the retail world clearly show the benefits of artificial intelligence beyond all doubt.

Virtuous stories

Lowe's introduced a robot in its stores. “LoweBot” finds products in multiple languages and helps customers effectively navigate the store. The robot also assists with inventory management by monitoring the movements of goods in real-time. H&M uses artificial intelligence to analyse store returns, manage the loyalty programme and predict future demand, whereas Kroger and eBay use it to define the most appropriate prices for goods and price optimisation. Costco, Kohl's, Target, Tesco and Walmart are capitalising on voice search for products. Chatbots for customer support are now used by a high percentage of the most popular fashions brands. Burberry and Tommy Hilfiger use them on Facebook Messenger to answers customers’ queries.

 

Supply chains

The clearest proof of artificial intelligence in retail primarily concerns the relationship with the shopper. But this does not mean that interaction between man and robot or smart changing rooms is more important than the typical distribution processes.

In the taxing quest for unified commerce models, supply chains are actually becoming increasingly more complex and faster, making them extremely difficult to control and manage. AI helps to integrate masses of data which is normally spread across various divisions. If the management of orders, inventory and transport were unified, as it should be, the predictive analytics based on this data would enable more sophisticated sales and service models to be developed.

Italy

On the whole, Italian consumers seem to open to innovation, which makes the takeaways from a recent survey even more interesting. The “Conversations about Transformation” survey was carried out by the Digital Transformation Institute with Assintel and SWG towards the end of 2018. According to the survey, 68% of the respondents believe that it is important for machines to be able to detect the reactions of the people with which they interact. Furthermore, 55% of these said that they were very or fairly willing to talk to a virtual assistant.

However, many across the board have serious concerns about what is still an unpredictable future.