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AI delivers benefits on all retail fronts, but journey takes courage and commitment

AI promises a world of benefits to retail, but learning how to use the technology requires a lot of background work to ensure the data is of high quality and a competent team.

Discussing AI use cases are Erik Andrejjko, Evolve; Pradeep Elankumaran, Farmstead; Jennifer Ogden-Reese, SeatGeek; Jack Hanlon, Jet.com; and Janie Yu, Fung Capital.

May 23, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

Artificial intelligence, a technology that allows access to massive amounts of data, promises a new era for retail, as brands are using more data than ever as digital initiatives expand to multiple channels.

Harnessing AI, however, presents a host of challenges. Which is why a panel discussion examining AI use cases in retail drew an overflow audience during the recent ShopTalk conference in Las Vegas.

Janie Yu, a partner at Fung Capital, a venture capital firm for retail, introduced the panel by offering a personal anecdote to demonstrate one of the challenges facing retail in today's changing retail landscape. Yu said her favorite store is Burberry, a luxury fashion store based in London. The reason she likes it is the personalization; every time she visits the store, the associates remember her.

"There's only one problem; it's not scalable," she said. "You have to rely on AI to do the job."

AI enables personalization

The panelists agreed customer personalization holds an important key to success in today's retail environment.

The ability of AI to deliver a personal experience is particularly important for Jet.com, an e-commerce site owned by Walmart that offers same-day and next-day service across numerous product categories, said panelist Jack Hanlon, Jet.com's vice president of analytics. AI has helped Jet.com create a more personal connection to its products.

"Personalization is a way we can help credibility, be a good partner," he said.

Farmstead, which delivers local fresh food in an hour or less to Bay area customers, builds profiles for every customer to understand buying habits, said panelist Pradeep Elankumaran, co-founder and CEO. He said AI, which predicts customer demand in real time, allows the company to scale personalization.

The inability of grocery retailers to do this is the reason they are not able to serve the "mid-market" well online, Elankumaran added.

Besides personalization, however, the discussion demonstrated that AI improves all other aspects of retail, including operations and marketing.

Yu said Amazon has demonstrated the best use of AI in improving its supply chain, which many observers cite as the key to its success. Amazon accesses a lot of its supply chain data from its partners, she added.

AI challenges on many fronts

The panelists agreed that gathering data presents a big challenge to companies attempting to use AI.

"AI is not easy to do," Yu said.

Having the right team in place to harness the data is a challenge in itself.

The better data scientist understand a company's operations, the better the data quality will be, said panelist Erik Andrejko, chief technology officer for Evolve, a Kraft Heinz company.

Kraft Heinz started Evolve after acquiring Wellio, a food technology startup that uses AI to suggest recipes to meet consumers' taste preferences, dietary restrictions and cooking skills.

Andrejko, describing AI as "augmented intelligence," compared the task of gathering the data needed akin to building a house.

Elankumaran, of Farmstead, agreed gathering data is the challenge that AI presents. To make use of data, Farmstead had to build its own inventory control system and order system.

Farmstead also uses AI to reduce food waste by determining how much of every stock keeping item to keep in inventory and for how long, Elankumaran said. Where food waste averages 35% for most food retailers, Farmstead has between 8 and 10%.

"This is an extremely tricky threading of the needle," he said.

SeatGeek, an online ticket platform that allows fans to buy and sell tickets for sports and entertainment events, uses AI to improve its customer support, said Jennifer Ogden-Reese, the company's chief marketing officer. The company uses AI to determine which customer inquiries need to be forwarded to live support specialists.

"The human touch really still matters," she said.

SeatGeek first considered using live chat to respond to customer requests, Ogden-Reese said, but found live chat did not deliver a premium customer experience.

AI also allows SeatGeek to know the life time value of every customer, Ogden-Reese said.

"We're already being able to be smarter with our marketing spend," she said.

AI enhances employee performance

The panelists agreed AI also allows companies to make better use of the workforce. Hanlon, of Jet.com, said AI helps automate certain functions, enabling humans to attend to tasks that cannot or should not be automated.

AI also helps Farmstead determine how many pickers and drivers are needed as the business grows, Elankumaran said. It has automated the company's procurement function, which has allowed the produce manager to spend more time inspecting product quality. The growing company has also added another produce quality person.