Unlocking the potential of AI in retail
There is huge potential for retail organisations and FMCG brands today to reap greater value from technologies like AI, machine learning and augmented decision-making, explains Ash Patel, Chief Information Officer, IRI.
According to figures from the IDC Worldwide Semiannual Artificial Intelligence Tracker, worldwide revenues for the AI market, including software, hardware, and services, are forecast to grow 16.4 per cent year on year in 2021 to US$327.5bn. Astonishingly in the next few years, the market is expected to break the $500bn mark with a five-year compound annual growth rate (CAGR) of 17.5per cent and total revenues reaching an impressive $554.3bn.
These are impressive growth figures by anyone’s reckoning, especially in a year dominated by the global healthcare crisis, but these are technologies that have been making waves for the last few years.
We’ve been seeing developments across a number of industries, including financial services, healthcare and automotive, and from driverless cars to drug discovery, changing the way we live and work.
When it comes to retail, it is helping to drive huge changes and major digital transformation projects. This is an industry that has faced huge challenges during the pandemic but has perhaps seen more changes than any other sector. The opportunity to leverage AI, big data and analytics has never been more relevant today for both retailers and FMCG brands.
Data-driven decision-making
At the heart of all of this is data. AI and complementary technologies like machine learning are helping to deliver new ways to unlock the potential of the huge amounts of data that both retailers and manufacturers collect.
Data analytics, a good example of where AI is helping to drive change, is rapidly moving from human to machine-driven analysis. Until recently, developing strategies for growth involved a query-based, ad-hoc approach to test a variety of hypotheses. But this has reached its limits. With the amount of data today, it is just not possible to use this methodology to identify the optimal strategy for a product or business.
Powered by AI, new analytics solutions allow computers do a lot of the heavy lifting. Algorithms can analyse trillions of data points and provide forward-looking insights that maximise the return on investment.
But how can AI, which can deliver benefits on many levels, reach its full potential?
Focus on organisational change management
Organisational change management is key to success when it comes to unlocking the potential of new technology. Any retail organisation that is not prepared to embrace change are set to fail when it comes to disruptive technologies.
Of course, this isn’t just about data-driven AI or machine learning but could be any new technology that is likely to disrupt a business. Some are attempting to fit AI-based solutions into a traditional organisational structure, or not thinking broadly enough about how to take advantage of its true capabilities.
Many are happy to rely on intuition and subjective decision-making based on experience or previously acquired knowledge. Some may distrust AI. Without any element of human intervention, others might be concerned that it will lead to inaccurate decisions.
For those that have based decisions on gut instinct and are entirely convinced about the technology, running contests or games internally to prove that AI and machine learning can consistently outperform human decisions in the traditional way, provides that real-life, real-time test environment.
To do this effectively, it involves measuring the ROI of the decisions that were made, as well as the ROI of the recommendations AI/ML produced that the human did not follow or execute. Then using the quantified opportunity cost of ‘the road not taken’ to further support any change management and adoption.
Mind the skills gap
According to a survey by RELX, more than four in 10 enterprises now use AI in a serious way, up to one-third in just two years. But AI talent is in short supply, and could be just one of the reasons why more companies are failing to use it. Even advanced AI adopters are seeing shortages of talent, according to a 2020 Deloitte survey. The type of talent most in demand is for AI developers and engineers, AI researchers, and data scientists.
Any organisation can take advantage of the power of new technologies. Particularly in the retail sector where AI and machine learning is helping to create a level playing field in many ways, especially when it comes to strategic decision making in a time of great change and disruption.
There is an opportunity to transform the existing role of information workers from collating and preparing data for others, to creating algorithms and automation that produces accurate and actionable recommendations, instead of just information for further interpretation.
The challenge is in combining domain expertise and real-world experience with AI and machine learning brute force algorithms and computing. The need for solutions like IRI Neuron that emphasise real sector knowledge and grey matter capture and automate the data science algorithm building without the need for an army of data scientists has never been more timely.
Retail organisations will need to overcome resistance to change in order to take advantage of AI and see themselves as a ‘data democracy’ where information is transparent and available to all.
READ MORE:
- Apple’s iOS15 changes: What it means for email marketing and customer experience
- Announcing TBT’s first live webinar, Cybersecurity: Fighting back with AI
- The power of AI in accelerating growth
- Can AI be relied upon to run mission-critical systems and make judgement calls?
This will ensure the sector moves towards a collaborative approach and away from siloed decision-making. Only then can artificial intelligence and other complementary advanced technologies become powerful tools to help give them the edge and deliver their potential.
For more news from Top Business Tech, don’t forget to subscribe to our daily bulletin!
Follow us on LinkedIn and Twitter
