Successful innovation is built on confidence
In the world of retail, it isn’t so much the products and technologies that determine success, it’s the corporate culture. But retailers have a lot to face up to, according to Miriam Burt, retail specialist and managing vice president at Gartner. ‘It is crucial for retailers to have the capacity to evolve and incorporate new technologies such as ai, IOT, and virtual reality into the entire business. That’s why you also need confidence'.
What Miriam Burt has to say in Barcelona is sure not to fall on deaf ears. Retailers have a lot on their plate. The GDPR imposes privacy and security re.quirements on retailers, and economic influences such as increasing income equality are having an effect too. Brexit and the growing demand for sustainable, environmentally friend.lier, and less wasteful methods are posing challenges for the retail world. At the same time, emerging technologies such as machine learning, artificial intelligence (AI), Internet of Things (IoT), and robotics offer opportunities for retailers – if used correctly, that is.
All of these developments influence customer expectations, says Burt. ‘Ultimately, they determine how a retailer should act. Customers expect not only quality, ease of use, a good price, and sufficient availability, but also sustainability. Products must also be customized; some customers even want to co.create the product. With new technologies, all of this is possible. Younger generations in particular are using these types of technologies and their behaviors are putting pressure on the rest of society to adapt.’
INCORPORATING EMERGING TECHNOLOGIES
The first question that Miriam Burt will try to answer in Barcelona is: what do retailers want to achieve with new technologies such as AI, IoT, and augmented, virtual, and even mixed reality? ‘But also: what can’t they do better?’ as she puts it. ‘Do you just want to achieve transactionally higher volumes, or introduce customization? It is important for retailers not to get carried away with the idea that new digital tools and technological innovations are a cure-all. We should remember that the cost of AI is phenomenal, and you won’t get your investment back straight away.’
The second question is about applying the technology. How can retailers successfully incorporate emerging technologies in their operations? It’s important that retailers get rid of their internal silos and operate as a coherent living organism, Burt believes. ‘Artificial intelligence works with data spread across different parts of an organization. And not just within an organization, but also outside of it, with customers, suppliers, and other associates in their immediate network. If you want to make a success of AI and other innovations, you need a corporate culture where people share information with each other and do new things. Ultimately, confidence within a company is what gives you a competitive advantage, not necessarily the technology or product you are selling.’
And the key to successfully applying new technologies is merchandising, according to the retail company CIOs whom Burt speaks to regularly. ‘That’s where AI starts to create value, because AI is highly suited to improving customer propositions. Take demand forecasting, for example; a retailer should know where customer demand is and will be. This is even more important than before, because customers in 2019 are putting more and more pressure on retailers to reduce waste. They also want fresh products, not least for health reasons. So, how does a retailer know how much stock they need and how to make sure there’s enough on the shelf without the risk of waste? The answer is by using and exchanging data with as many people and organizations as possible, both within and outside the organization. That is how to use AI successfully.’
FIGHT FOR SURVIVAL
In this age of online shopping and stiff competition, retail companies that offer an authentic atmosphere are the most likely to survive, says Burt. ‘Only retailers that really understand what their mission is will be the survivors. That means going back to the basics of retailing and understanding how to make their customers’ lives simpler, better, and safer. This can be done using innovative technologies such as one-to-one personalization, but that isn’t necessarily the right solution for each retailer. Our way of life and, in turn, the way we shop have changed a lot through the use of technology. Many people do their shopping online, but there are still people who go into physical stores. Find out what Only retailers that really understand what their mission is will be the survivors the basics of your business are. How are your customers behaving? How do you use technology to support those behaviors? If you want to start using machine learning, then you need to have a lot of developers. Sometimes, it’s best to carry on with traditional marketing.’
Burt denies that the physical shops will soon be a thing of the past. She says that, globally, more bricks-and-mortar shops are opening than are closing, and only the total floor area of physical retail companies is decreasing. ‘We are getting smaller shops than before. A retailer needs to optimize the way they use the space that they still have available, and offer an experimental shopping experience. That’s the great thing about physical shops: you can talk to people and actually see and touch the products there. 60% of people still prefer using a physical shop, not just to buy something, but to be part of an experience more than anything. Only smaller shops, with the finest merchandise and new products on a frequent basis, offer the service that people come into physical stores for.’
