Digital disruption is nothing new to the struggling realm of Australian retail. However, with Amazon confirmed to be sinking millions of dollars into its move down under within the next few months, the retail sector is in for another shakeup.
Bricks-and-mortar stores are trying to close the gap to ecommerce by embracing automation, digital, and lately, Artificial Intelligence (AI) technologies. And it hasn’t come a moment too soon.
How intelligent is your AI?
Recently, Infosys commissioned a survey of 1,600 IT and business decision makers from 10 vertical groups, including 200 Australian large enterprise leaders, to understand their perceptions about AI and their status of adoption.
The study found that Australian businesses are already reaping the rewards of AI, with around two in five experiencing cost savings, improved productivity and better decision making subsequent to AI adoption.
However, despite Australia’s almost $8 billion investment in AI over the past year (a sum second only to the US) the retail industry was second from the bottom in terms of AI maturity.
Late to the party, retailers, both physical and digital, are now exploring using AI technologies to enhance every step of the operational life cycle, from planning to sourcing, storing, moving and selling.
Two thirds of Australian adopters are focusing on process automation and cost reductions as leading benefits to come out of these developments. One retailer we are working with is transforming their contact centre to include a ‘chat-bot agent’, with AI determining which calls to route to the chat-bot and which go to a live agent.
Others are leveraging machine learning to improve concept-to-production cycle times for seasonal merchandise and determine the success of the next customer touchpoint. A Melbourne store is even using AI to predict stock implications of storms in Bangladesh, where their factories are housed.
Natural language processing is also being used extensively to painlessly manage complex contracts and policies with employees, franchisees and suppliers.
The scope of AI is not restricted to intelligent and autonomous management, routing, helpdesks and personalised recommendations, although these are important.
It can also add immense value by automating the flow of data in reverse order—as it originates at the retailing end, and moves through the distribution, warehousing and manufacturing points—and making it available to the ecosystem. Today, this important insight is either not available at all or takes a very long time to show, at which point it is not actionable.
Domino’s Robotic Unit (DRU).
Besides improving their supply chain, retailers are deploying various AI technologies to automate a number of operations to enhance both efficiency and experience.
Dominos has taken the Australian pizza industry by storm with a wave of AI integrations, including drone deliveries and the development of Domino’s Robotic Unit (DRU), which includes automated rosters, stock orders and a virtual customer assistant who can log your Margherita order through voice-activation.
The Association of Tennis Professionals recently curated an augmented tennis shopping experience, while Samsung works with local Australian retailers to realise the possibility of ordering groceries directly from your fridge.
‘Mobile-first’, the tagline of any modern tech enterprise, will soon be made redundant by AI-first technology trends. Physical retailers can still leverage AI to advise them on how to micro-merchandise their shelves or offer micro-services in-store to hyper personalise the shopping experience.
A simple but significant application could be as obvious as using AI to man the long queues at the exchange counters—enabling sales staff to focus on the cross-sell and up-sell opportunities tied to the exchanges.
A truly futuristic future
The Australian retail industry has barely scratched the surface of the AI opportunity, which according to Gartner will cover 85 per cent of customer interactions by 2020. Our own research says that 66 per cent of respondents from the retail vertical agree that AI is fundamental to the success of their organisations’ strategy.
Retailers have a unique opportunity in AI that is perhaps not available to their counterparts in areas like manufacturing or telecoms. Given their direct and frequent proximity to large sections of people, retailers can take a lead role in familiarising both employees and consumers with the advantages of new technology in a friendly, non-intrusive manner.
Whether it is the cobot [collaborative robot] in the warehouse or voice-activated shopping assistants, these can go beyond the hype and help people understand the possibilities that technology can unfold and the causes it can serve.
Automation in a warehouse.
Holding back
Of course, there are barriers too. The somewhat misplaced treatment of AI as an IT responsibility has often halted adoption. Ethical concerns around the dangers and details of AI implementation are paramount for almost three quarters of Australian enterprises, and a shortage of the right technology skills in retail is another challenge.
In fact, Australia’s STEM [science, technology, engineering and maths] education and tech talent limitations were prevalent in the Infosys study, with Australia ranking last in access to the skills needed to deploy AI technologies. But the biggest barrier by far stems from employees, who fear change and redundancy.
These fears, while understandably felt by over half of Australian workers, are unfounded. Sure, AI will take away a number of routine, low-end jobs in short order. Retailers will automate mediocre-skill roles that make up the big fat middle of their workforce.
But as AI continues its inevitable climb up the job hierarchy ‘commoditising’ roles that were once considered skilled, it will free up substantial talent resources that progressive retailers will be compelled to look to deploy into human endeavours with larger components of creative thinking and problem finding.
These people will then engage in pursuits such as writing innovative new data co-relation models, making business sense of it, rethinking their operating models, and finding super-creative new ways to keep their fingers on the consumer pulse.
AI will help them succeed in these roles by performing supporting and otherwise onerous, time-consuming tasks. In doing so, it will actually amplify human achievement. And for this, retailers will have the robots to thank.
Harsh Gulati is the senior director & regional head, manufacturing, retail, CPG and logistics Australia and New Zealand at Infosys.
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