Retailers that are looking to stay one step ahead, are increasingly looking to artificial intelligence (or AI) to help understand the millions of data-points readily available to them in-store. AI has been changing the world around us and retail was one of the first consumer industries to put different forms of it to use. \n In 2019, Harvard, released a white paper, positing that the 2020’s would be the decade of artificial intelligence in the retail space. It’s hard to argue against when the turn of the decade saw the launch of the all-knowing, but still prototypical Amazon Go store. But aside from Amazon, where does the rest of the retail world fit in when it comes to artificial intelligence?\nMost of the talk in retail prior to 2019 seemed to be about the fear of artificial intelligence replacing jobs in the industry, but there was a fundamental misunderstanding over how AI could really be utilized. \nSelf-Scanning checkouts were one of the the first highly visible forms of AI that affected the personal shopper experience. However, checkouts are merely robotic tills, where a customer can scan their own items, and then place them onto a weighing scale before completing their transaction. \nThis is not artificial intelligence as we truly understand it today. AI today is being used to help enhance a store’s operations, to make the lives of floor staff and management easier, and to compliment, not to replace. The most common areas where retailers would like assistance from AI tend to revolve around:\n\nCustomer Experience \n
⁠Customer experience can be enhanced by learning about those in-store. A shopper can be anyone entering a store location, but a customer is the person that actually purchases a retailer’s wares. 
⁠AI can customize a shopper’s experience and retailers can make better decisions for their store if they know who their shopper is, how long they usually browse, and what items tend to be seen together in baskets, or who is most-commonly seen at the till. 
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⁠Having access to this information can allow a retailer to capture more revenue from their highest average spenders, or even increase spending from those shopper groups who are commonly seen entering but perhaps don’t spend as much. 
⁠\nStore Layout
⁠\nStores can be limited by their shop floor and retail space. Some retailers strive to give each store uniformity, and make an experience in one location, as identical as possible to a location halfway around the world, giving their shopper base a sense of familiarity and comfort. Other retailers allow their individual store locations to make theirs their own, whilst selling a mostly identical range of items. 
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⁠Each layout, no matter the brand or location, poses different challenges, and knowing how best to use space to ease a shopper’s journey can be an ongoing project for retail teams. AI can be used to map shop journey, from the way people enter the store and which directions they walk in, to how regularly shoppers make it to certain aisles, changing rooms, or secluded sections of the store, where retailers may like to see more activity or engagement.
⁠\nInventory management
⁠\nAI can play a huge role in inventory management, from knowing precisely how many units of stock are on the shelves to how many units are available to go out on shelves. Retailers have been toying with ways to check shelf availability for years, some larger chains, with the resources to spare, have invested in object detection technologies as a way of knowing when shelves aren’t full or heat-mapping technologies to predict when aisles will get particularly busy. 
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⁠Robotics are in some cases used to scan aisles, resupply shelves, and even assist shoppers in their requests. These technologies have advanced in the previous decade enormously but are perhaps still a little too experimental and expensive for the SME retailer. 
⁠\nForecasting 
⁠\nForbes described it as when data meets AI, and used the newly coined term “omnichannel” to describe changing consumer habits, where a blend of location intelligence, transaction histories, and consumer profiles, all compiled using artificial intelligence was the most effective way to predict consumer trends and spending habits. 
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⁠AI can be used to forecast trends, especially when forms of it are used to show a retailer their shopper demographics and how they interact in-store. Measuring a shopper base while examining sales in tandem, can allow retailers to predict where the next product push needs to happen or where prices should be altered to increase revenues and capture additional spend. \n\nThese are just some of the more notable areas where artificial intelligence is being incorporated into physical retail. While tech leaders have been debating its merits for over a decade, one consensus appears to be that retailers who refrain from embracing AI, can of course continue to function as they always have, but they will constantly have to compete with other businesses in their space who are using AI to their advantage.

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What are the most common uses of AI in Retail today?

An enormous amount of activity takes place within retail locations, and depending on the size of a store, there could be thousands of shoppers streaming through on a given day. Until recently, most brick-and-mortar stores only had standard footfall to rely upon, along with daily sales figures from which to measure a particular store’s activity and profitability.\n\nRetailers now have a variety of options for measuring how each individual shopper has interacted in their store, from the entrance, through the aisles, and finally to the till. However, most retailers still struggle to understand to what extent a retail team’s efforts are being rewarded.\n\nExperience management company, Surveymonkey, attest that retailers typically use shopper data to affect equity, increase sales, and raise the profitability of a brand, category, or store, through shopper-centric changes to the retail environment and messaging.\n\nBut what exactly is meant by “Shopper Insights”? \nEssentially, they are the most important datapoints a retailer needs to know their shopper, increase profitability, change layout, change pricing, re-direct marketing, and generate more accurate conversion reports to assess opportunity spend. The insights most retailers are interested in are:\n\nWho is the shopper?\nWhat products are the shopper engaging with?\nWhat is in a particular shopper’s basket?\nWhen was the shopper in-store and when did they make their purchase?\nWhat leads to a sale and what leads to an abandoned basket?\n\nWhy a shopper is behaving in a certain way is a much more difficult question to answer. However, assumptions can be made from A/B testing, and measuring the impact of in-store changes. No two retail locations are the same of course, but once a store has access to the above metrics, they can then begin to examine the results of their changes. \n\n\n\n\nNo retailer will ever capture all of their opportunity spend because not every shopper is going to make a purchase. But retailers can use shopper data to boost sales from their highest spenders by catering more to them, or conversely, they can decide to raise the spend from their lowest daily spenders, by promoting items or bundles within store that these lower spenders are often seen buying at the till. \n\nShopper insights do not just stop at marketing and sales. They naturally progress into all other areas of store management. If you can analyse your shopper, they themselves will begin to tell you more about your stores. Even simple anonymized metadata can show a shopper’s movements, preferences, basket sizes, and purchase patterns. \n\nStore’s which have never been privy to these types of insights will then be able to cater to those specific shopper patterns. Ranging from shelf availability to space management, to staff rostering, retailers will know how their store works, and how it differs from sister locations. Many retailers are still getting to grips with what to do with the landslide of data available to them, but tools to manage the information are constantly being refined and being made more user-friendly. \n\nStores will always be updated, refined, and modernised, but as Herb Sorensen concludes in his book Inside the Mind of the Shopper, “Shoppers are spending more than money in the store. They are also spending their time and racking up angst. These are the three currencies of shopping”.

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What Can Retailers Do With Their Shopper Insights?

\n\n  \nSteve Dennis, in his 2020 book, \nRemarkable Retail: How to Win & Keep Customers in the Age of Digital Disruption\n, said that retail isn’t dead but boring retail is. Dennis’ experience is of working in tech innovation for large American retailers, from the late 1980’s to early 2020’s.\n\nSpeaking post-covid Pandemic, Dennis highlights in his book that even with the Ecommerce revolution that transformed two decades of retail, online sales still only account for 20% of all retail sales in North America. With 80% of overall sales still taking place in physical retail stores, he concludes that of course, retail isn’t dead, but perhaps boring retail is. \n\nBut what does Dennis mean exactly by boring?\nHe references what he believes to be the next tectonic shift in the retail world, comparable to the advent of ecommerce, and which we are all currently living through. He calls it the smartphone revolution. This has allowed most consumers to download shopping apps, compare prices, read (or watch) reviews, and order their items, all in the space of a few minutes. Scarcity no longer exists and there are retailers out there that can ensure speedy delivery processes, no matter where you are situated in the world. \n\nDennis feels that it’s the mid-market brands that are the most vulnerable in all of this. The brands that are not beating their discount competitors on price or their high-end competitors on in-store experience. He specifically puts the decline of J.Crew and Sur Le Table down to their failure to innovate, and landing too squarely in the unremarkable mid-market, causing them to lose hold of their long-established customer bases. He juxtaposes their fall with the strengthening of TJ Maxx, Lidl, BJ’s Wholesale Club, and Dollar General, all of which are profitable, with some aiming to open hundreds of additional stores across the US in the next few years.\n\nMoving more recently to the UK, on February 13th March, we’ve seen The Body Shop close all of its physical retail stores due the business falling into administration. Eva Thomas, journalist for the Retail Insight Network stated in her recent piece, The Body Shop: what went wrong, \n“Once an iconic staple of the British high street, the failure of The Body Shop is a cautionary tale for retailers.” \n\nShe also quotes, Dan Hocking, COO of advertising agency TroubleMaker, in the same article, “The Body Shop could have invested heavily in traditional media channels to drive consumers into stores, or pivoted to embrace social media and influencers, winning over a new generation and audience. In doing neither, it appealed to no one.” This statement from Hocking, almost perfectly echoes Steve Dennis’ points in \nRemarkable Retail\n. \n\n\n \nI’ve always thought of The Body Shop as an impervious high-street store. The phrase too big to fail comes to mind. Has it really been gone out of business due to Dennis’ idea of the boring mid-market retailer or were there several other key factors leading to its decline?\n\nThe above picture is from Dublin’s Grafton Street, a shopping street now seemingly filled with strong, upmarket brands, like Space NK, Doc Martens, Rituals, Canada Goose, Ted Baker, and The Lego Shop, each offering their shoppers something a bit more immersive and experiential. These stores are not just places to buy products. They are places where people can get expert advice from happy and knowledgeable staff, browse for as long as they wish, socialise, meet people, and have fun. Perhaps Is this the future of high street retail. Lines of stores where the retailing standards have been set so high that the unordinary can no longer function and are weeded out by the discerning public. \n\nIs the future of Retail at the end of both extremes?\nI’m sure if you asked a branding team, they’d tell you their ideal is for a shopper to walk into a store with a blindfold on and be able to tell you where they are by the sounds, the smells, the feel of the products on the shelves, and the overall aura of being in that specific and unique store. Steve Dennis’ points tend to favour the discount and the luxury. Are we now more likely to filter our shopping habits into the extremely low end and the extremely high end, cutting out the middle-market man?\n\nEveryone loves a bargain and trips to the likes of JYSK, IKEA, DFS, and Sports Direct, in order to purchase a large amount of quality goods at very competitive prices is appealing to everybody, no matter what your socio-economic level. Stores of this nature tend to be in retail parks, located amongst one another, and in spaces large enough to contain the vastness of their product selection as well as the vastness of their expected shopper numbers. \n\nIt's hard for me to agree entirely with the notion that boring retail is dead, but shopping is so often based on unconscious biases, and one person’s idea of boring can be very different to the next. But with the examples of store closures and administrations in the last number of years tending to be amongst Dennis’ mid-market miasma, perhaps there is more credence for brands to really optimise their omnichannel and embrace whatever consumer trends are thrown their collective direction. Dennis reverts to his phrase that markets are now more consumer led than ever, which I guess is a fancier way of saying “the customer is always right.”

Post-COVID retail shift, Body Shop closure, and the rise of immersive high-street experiences. Explore evolving consumer-led markets.

Is Boring Retail Dead? 

Cognitive psychologist, Herbert A. Simon, outlined a decision-making strategy back in the 1950’s, where he combined the terms satisfy and suffice, to create satisfice, in order to describe those who make decisions that will satisfy a need adequately enough. This can be a decision as simple as what type of beverage to buy in a store or as complicated as choosing a job, a school, or life partner.\n\nThis idea has been studied again and again by behavioural scientists, especially in the field of marketing and consumer trends. Another Herbert, author Herbert Sorensen, stated in his book \nInside the Mind of the Shopper\n, that “money, time, and angst are the inputs that shoppers invest” when entering a retail location. \n\n\n\nThe idea of a satisficer is a shopper who is happy to come away from a store having purchased an adequate item to facilitate a need. However, on the opposite end of the spectrum, we have maximisers, a faction of shoppers who will generate a lot more angst while making decisions. \n\nCognitive psychologists like to think of the brain as a computer processor that tries to make decisions as quickly as possible. The brain doesn’t like being bogged down in stressful decision-making processes. In comparison to satisficers, maximisers tend to want to know all the options available to them before purchasing.\n\nSince learning about satisficers and maximisers from Barry Schwartz’s incredible book \nThe Paradox of Choice\n, I’ve realised just how much of a maximiser I tend to be, as a shopper. It might sound like a good thing to be a maximiser, but not when every visit to a shop to look at clothes, electronics, books, or whatever else results in a three-hour trip of indecisiveness. \n\nI’ll often have an idea of what I’m going to purchase that day, travel to a shopping district or centre and end up going in and out of several shops, pausing in-store with a desired item in hand, and then scrapping the whole process, and going back home on the bus with no new items and a wasted afternoon. This is the horror of being a maximiser. \n\nBarry Schwartz reasons that a maximiser cannot be certain they’ve made the right choice until they’ve assessed every option available to them.\n\nThe maximiser can’t know for sure that a particular pair of shoes is the best choice, unless they’ve visited literally every other shoe store, compared prices, and browsed every website to see if there’s a better price online. Then they might be compelled to check whether that online purchase will even be cheaper with the additional delivery costs or hidden fees. This added to the fact that there’s now a wait of 5-10 days to receive the item. \n\nIt doesn’t just need to be high priced items either. The scene from the Simpsons of Mr. Burns stuck in the middle of the aisle at the supermarket comes to mind, where he is paralyzed in a confused state, unsure whether he should buy ketchup or catsup. Adding to the humour of the scene is the fact that Mr. Burns is the richest man in Springfield and could easily just buy both options. \n\n\n\nProfessor of Psychology at the University of Michigan, Stephanie Preston, stated in a BBC article from March 2021, \nDo ‘maximisers’ or ‘satisficers’ make better decisions? \nthat by trying to maximise the outcome, by predicting the use and satisfaction that will come from this product, enormous amounts of time will be lost by the maximiser in the decision making process. \n\nAdding in a time limit for the decision will only add to the anxiety and will be more likely to cause buyer’s remorse from not having the time to truly maximise. She states as well that maximisers are more likely to be depressed, overly perfectionist, and prone to regret and self-blame. Barry Schwartz, in the same article, echoes that maximisers have the tendency to do better but feel worse, and that the main drawback to satisficing is that their decisions may not necessarily be the ‘best’ outcome that gives maximum return. \n\nThe conclusion from both is to try and get the best of both worlds, by not stressing over simpler, less impactful choices like a place to go for lunch or a household appliance, but take much greater time in maximising life’s more important choices. 

Are you a Maximiser or a Satisficer? Explore how decision-making styles shape your shopping experience and daily life on our insightful blog.

VisionR Blog

What are the most common uses of AI in Retail today?

What Can Retailers Do With Their Shopper Insights?

Is Boring Retail Dead?

When shopping, are you a Maximiser or a Satisficer?