Looking to Tech to Stem Physical Retail's Struggles 

AI, location, analytics are areas of focus

Author: Rimma Kats

January 16, 2018

Emerging from a difficult year marked by widespread store closings and declining comparables, retailers gathered at the National Retail Federation's Big Show in New York focused on technology as a key to changing the trendline.

“This blend of physical and digital is happening,” said James Connell, vice president of ecommerce and marketing at Canadian apparel retailer Roots, during a panel. “Everyone keeps talking about the physical store being dead, but it’s not. Technology like AI is important because it’s automating a lot of redundant tasks.”

According to Gordon Lanpher, senior director of digital innovation at adidas, consumers are overwhelmed by the many choices they see, and ultimately are seeking curation and guidance on what they need to complete a full look.

“Our ecommerce teams have built visual merchandising tools to do outfitting and complete looks, but they’ve found that it’s time consuming, costly and a lot of effort,” said Lanpher. “AI tools can analyze and categorize imagery, and find a way to automate outfitting. Basically, AI is stepping in and doing a human’s job—and doing it faster and better.”

To help them with this function, adidas is working with FindMine, a company that’s known for its automated “Complete the Look” technology, which creates complete outfits around a product.

“As a shopper, I was being sold products one at a time,” said Michelle Bacharach, cofounder and CEO of FindMine. “I would get sold a leather skirt, but I wouldn’t necessarily know what would work best with that skirt. That information was consistently missing from the sales experience. If Bloomingdale’s showed me what else I can wear with it, I would spend more.”

“AI helps serve that need,” she added. “As a retailer you want to get more revenue out of your customers, and as a merchant, you want to save time. Our customers are seeing 200% higher revenue from consumers who get the complete outfit.”

Data may be another important piece to the future of retailing. “What’s missing today, and what’s hampering physical retail, is they’re not using that data right now,” said Joe Jensen, vice president and general manager of the retail solutions division at Intel Corp. “The old model of how you spend money on technology, your staff—that all needs to be rebalanced.”

“Retailers have been on under a lot of pressure to make sure they hit their numbers every quarter,” he added. “That has certainly impacted their investment in technology. They need to step back and look at their spending. They’re going to have to allocate more resources to tech.”

A survey of retailers in North America found that many plan to increase their spending on different types of technologies, including AI. The study from IHL Group and RIS News revealed that on average, retailers expect to increase their spending on AI and machine learning by 7.0% over the amount they spent the year prior.

Meanwhile, separate data from Linc, in partnership with Brand Garage, found that over a third of US retail execs said they’re currently experimenting with AI, whether by using it to assist human agents in resolving problems, or through customer-facing chatbots. Most recently, Mall of America introduced a chatbot that uses AI and natural language to answer customer questions in real time.