How AI & AR Are Changing the Way Retailers Do Business

So, picture this: it’s Thanksgiving afternoon, post-football. The table is set, and the family is just sitting down for a feast. Uncle Tim has downed more than his share of the red wine, so everyone is desperately trying not to say anything that could be mistaken for a political comment. We don’t want a repeat of last year. As a result, the conversation starts to fizzle out after “How was the drive over?” and “Is that a new sweater?” have run their course. Out of the corner of your eye, you spot mom’s new toy from Amazon and decide to take a chance…

“Alexa, tell a Thanksgiving joke”

“What did the mother turkey say to her disobedient children? If your father could see you now, he’d turn over in his gravy”

Cue uproarious laughter.

Now, not only have you saved Thanksgiving, but you’ve used artificial intelligence (AI) to do it. Amazon’s Alexa, Google Home, and Apple’s Siri are all examples of how AI has spread into our daily lives. Of course, AI has many, many other applications that are far more useful than keeping Uncle Tim’s opinions at bay, including some very exciting uses for brick-and-mortar businesses.

In this article, we’ll take a deeper look at artificial intelligence as well as augmented reality (AR), another piece of technology slowly infiltrating our daily lives. We’ll define both, and answer some basic questions about how each are being integrated into retail and other businesses.

First things first, what is artificial intelligence?

Artificial intelligence, as defined by Merriam Webster, is “the capability of a machine to imitate intelligent human behavior.” In retail, it generally refers to the use of machine learning and analysis to improve one or more business functions including customer recommendations, payments, or even logistics and delivery.

For a deeper dive into AI, watch this Ted Talk: The Basics of AI for Business

Where have I seen AI before?

As mentioned above, personal assistants like Apple’s Siri use artificial intelligence to add items to shopping lists and tell you the weather. Another noteworthy example from the last few years is Amazon’s proposed delivery drones. The drones, along with autonomous vehicles by Uber, Apple and others, any vehicle that plots a course and then successfully moves from points A to B without human assistance is operating using artificial intelligence.

Okay, but I’m not traveling anywhere. How can AI help my business?

There are many AI applications sprouting up for brick-and-mortar businesses of all types, but one consistent theme for those that are successful is utility: companies that use AI to complete specific tasks will have greater success than those who use it for some type of novelty or entertainment function. In the case of AI (compared to augmented reality), there are some impressive uses that are not customer-facing, focusing on things like manufacturing and logistics. That is to say, there is potential for AI to benefit both the customer and the business, depending on the application. For companies using AR, most of the applications most directly impact the customer experience. But we’ll get to that later.

3 ways businesses are using AI to enhance their operations:

  • IBM’s Expert Personal Shopper, with Watson: product recommendations are arguably the most popular applications for AI in retail. IBM’s tool refines product selections based on customers’ responses to questions, and eventually serves a recommended product to match their desired criteria. And it’s supported by the dry, yet recognizable, yet almost loveable personality of IBM’s Watson, who consumers recognize from TV commercials and its rout of Ken Jennings on Jeopardy.
  • Amazon Go: This effort by Amazon to revolutionize convenience stores eliminates the checkout process. It starts as customers are required to sign in to their Amazon Go account when they enter the store. Then, an array of sensors placed throughout the sales floor, working with AI systems, identifies the products each customer selects as they shop. Once a customer leaves the store, their Amazon account is automatically charged for the items they’ve selected.
  • GE Manufacturing Solutions: General Electric is using AI to enhance the entire manufacturing process, from design to manufacturing to distribution, with an eye towards efficiency and optimization. In manufacturing solutions, GE boasts significant, demonstrable reductions in unplanned downtime and increased production for their manufacturing clients thanks to sensors and AI technology.

One important note for those interested in using AI in their business: regardless of the application, be prepared to feed your AI mechanism massive amounts of data. As mentioned in the Ted Talk above, AI is not smart right out of the box. It takes a lot of data and analysis for AI to begin producing results. This could mean massive costs at the front end to purchase applicable data, or a slow startup period while adequate amounts of data can be organically collected for analysis.

What about augmented reality (AR)?

The easiest way to define augmented reality is to compare it to Virtual Reality (i.e. altered reality through giant goofy headsets that cause people to fall over). Simply put, augmented reality is not an immersive experience and does not completely replace your field of view like Virtual Reality does. Instead, AR merely alters your viewpoint by enhancing or adding to the perceived surroundings when viewing through a screen.

Have I seen AR before?

Probably! The most common examples of AR in our culture would likely be Snapchat filters that allow users to superimpose bunny ears onto their heads or, around the Super Bowl, people can give themselves a Gatorade shower. Also Pokémon Go, where individuals of all ages spend countless hours chasing virtual creatures around their neighborhoods.

How can my business use AR to increase conversions?

Similar to AI integrations, the name of the game is utility. Businesses who make their AR experience enhance the customer journey with information or tools have seen great results and higher conversions. A few examples:

  • Ikea Place: Have you ever heard someone joke that it looks like an Ikea catalog threw up all over their home? Ikea place is kinda like that. This app allows users to virtually try out different Ikea furniture pieces throughout their home, in order to see if they fit the style (and size!) they need.
  • Converse Shoe Sampler: Think of this like a virtual shoe store, except you don’t have to wait for an employee to wander around the back room for a week every time you want to try on a pair of shoes. In this app, users can ‘try on’ different shoes by pointing a camera at their feet and swiping between different styles and colors to find their perfect pair of kicks. Built-in purchasing has also made this app a slam dunk.

Beyond uses like those above, augmented reality is also a phenomenal opportunity to give customers access to additional product information in the confines of a shopping aisle (or even a museum space). Research has shown that a customer’s biggest information desires while shopping are additional product details, reviews, and usage tutorials. So any AR application that would allow users to point their device at a product and access these additional data points would likely increase conversions and provide added value to customers. Perhaps more applicable to museums and attractions, AR could also be used to overlay a virtual tour guide or storyteller onto a user’s screen. This has the potential to free up floor space and allow guests to personalize their journey through a store or museum.

Learn more about how AR is being used in retail.

In case you were curious, AI & AR are not just a fad

It could be easy to dismiss AI and AR as just the newest craze, soon to be replaced by Bitcoin, Blockchain or whatever’s next in our collective nerd consciousness… but don’t! As retailers have begun adopting these technologies to pursue to their individual goals, customers have begun to expect them as part of their buying experience.

In the case of augmented reality, this is shown in results from a study by Apadmi, a UK-based app development company, who found that 29% of survey respondents—almost a third—believe retailers should invest more in Augmented and Virtual Reality platforms

(click here to download the report). This figure is likely to increase after the introduction of AR Kit and AR Core (from Apple and Google respectively), app development tools that greatly reduce the barriers to entry for Augmented-Reality-enhanced mobile applications.

According to a study by Adobe, artificial intelligence is currently in use by 12% of mainstream companies, but 30% of organizations have plans to use AI within the next 12 months. This presents a great opportunity for organizations to get ahead of the curve when it comes to AI integrations.

Well then, what’s next?

If you would like learn more about how AI and AR can boost your business and marketing potential, stay tuned for more information about AR and AI by joining our mailing list!