There was a time when we discussed retail and technology in separate conversations, almost as if the two were mutually exclusive. Technology meant the IT department kept the lights on and ensured that point-of-sale data was successfully received from the stores and processed. And tech innovation equated to deploying a data warehouse.
I over-simplified, but the reality wasn’t far removed from this scenario.
Not anymore. For many years, technology innovation has become an intrinsic and vital part of any retail business. We knew this; however, AI's explosion is transforming retail business models, and the customer experience, in ways we could barely have imagined just a few years ago.
The retail industry, driven by customer expectations and the need to manage a growing cost base, has become a fertile ground for technological innovation. And virtually everywhere one looks, from chatbots to check-out, AI is transforming the industry.
2025 will be the year when the novelty value of generative AI wears off; after all, there are only so many 'monkey riding a giraffe on the moon' images we can create. In its place, as we are beginning to see, real-world, practical use cases are now appearing. The U.K. and Ireland are emerging as leaders in AI adoption globally, with 76% of C-level executives identifying as AI "experimenters" or "enthusiasts,” according to BearingPoint.
Apart from the more obvious applications, where else is AI being used to improve the experience for retailers and consumers alike?
French company VusionGroup provides retailers with smart digital labels and pricing automation for their physical stores, however, more recently, they have been using AI to deliver what they call the “connected store”.
Using AI and shopper data, they analyze, tailor, and optimize planograms for cross-selling and similarly, for promotions, AI is used to simulate and craft optimal promotional plans and track performance.
The company especially operates in the grocery sector where knowing not only your inventory but where it is in your store is critical. Roy Horgan, Group SEVP Strategy, Marketing, and Communications at VusionGroup told Fortune, “The question that keeps coming up is, can you tell me what's in our store and where it is?”
He doesn’t believe that every retailer is going to deploy all their tools, however, through their “Vusion Live” experience center, he says that they can demonstrate a real-time live view of what is happening in store, from the totes to the shelf, the shelf to the picker and the picker to the customer.
In contrast, a relative newcomer, Nibble, is an AI negotiation platform that allows e-commerce retailers to automate negotiations at scale, agreeing on a price with the customer, on the retailer’s website, within boundaries they control.
Nibble CEO, Rosie Bailey told Fortune, “Most retailers use it to nudge a consumer into making a purchase, possibly outside of a traditional sale period, however, it's sometimes used as a stock clearance tool where you have a large number of very diverse products that you need to clear at the end of the season”. And because it's a natural language conversation, it captures the agreed price and why the customer either purchased or abandoned it.
Having revived their “never knowingly undersold”, price promise, John Lewis has invested in AI-driven software from Israeli software company Quicklizard. This software allows John Lewis to capture and match all the prices from 25 major retail competitors, including, for the first time, online brands.
John Lewis claims that this allows them to be “more dynamic” on pricing, with store staff able to update prices daily.
AI and latterly gen AI are permeating virtually every aspect of retail businesses; to date, much of that activity could be likened to sandpit activity—a great deal of enthusiasm to trial and explore the potential.
In 2025, we should expect to see this begin to mature into embedded retail processes and become part of the fabric of every successful retail business.
