A Study of what can AI bring to Retailing?

What is AI?

Artificial intelligence, as known as AI, is developing very rapidly during 2023. The definition of AI is?a system that could interpret and learn from a data set, and then settle on a specific goal or target (Kaplan, Andreas and Michael Haenlein 2019). There are many kinds of AI products that could solve various kinds of problems now, such as Chat GPT, Stable Diffusion and so on. For example, Chat GPT can read the language you input and try to solve your problem though finding the most reliable answer from their database. And these tools will bring new ideas and solutions for real-world retailing.?

Why AI??

“Why should we use AI?”, people may ask. What is the benefit of using AI in retail markets? To answer this question, we should have some further knowledge about AI’s advantages.?

1. AI could help the company increase sales in-store/online, increasing potential sales and improving supply chain efficiency (Shankar, 2018) by making mobile shopping more profitable, managing in-store experience and improving logistics. ?

1. Retailing always involves contact with many customers, which will produce many useful data during the process. By using these data, AI can deliver real-time and personalised advice to consumers (Grewal, Roggeveen, and Nordf?lt, 2017). It will create additional value for the consumer and increases potential sales.?

1. Most AI runs could on a graphics card or CPU (but very slow). Therefore, a server is enough to build and run the AI, and this could cut the cost for the company by cutting the number of employees who could be replaced by AI. It can also work 24/7, so the consumers would not have to wait for the response. ?

By using AI, the retail company could increase their profits and efficiency, and cut costs from various dimensions. Amazon is one of the companies using AI to speed up their delivery (Arjun Kharpal, 2023), and they can fulfil orders faster than before. ?

How (or where) to use AI?

So, what kind of AI should retailers adopt? Shank (2018) outlined 2 main ways that AI could affect retailing. They are from the demand side (such as personalisation and recommendation system) and the supply side (such as logistics, delivery) and so on. ?

The demand side of AI applications is more focused on customer-facing. For example, Amazon Go uses AI to manage auto check-out processes. And Alexa, Amazon’s AI voice assistant is also an example of a customer-facing AI application, they allow Alexa to process customer’s orders by voice.?

On the supply side, things are a little different. They are focused on non-customer-facing. An example is an in-store robot called Tally, have minimally interacts with the customers in-store used in Giant Eagle. They focus on managing rather than interacting with customers.?

Furthermore, AI could also be straddled both online and in-store. For example, Behr (paints) is using an AI application to suggest paint colours to their customers based on their reaction to many kinds of colours, and this brings them an increase of 8.5% in selling (Singeetham 2019).?

Things need to be noticed?

Although AI is a convenient tool to use in retailing. However, some issues still need to be highlighted:?

1. AI may not bring huge impacts on retailing in the short-to-mid-term, it may take time to show their abilities. Therefore, a reasonable expectation from the user is required (Guha et al. 2021).?

1. AI have its limits; it is not suggested to let AI fly solo in the service process. Especially in customer-facing circumstances. When AI is not able to solve problems for customers, the customers will feel they are not taken seriously. Therefore, the AI should be used as a tool, not a human staff.?

1. Using customers’ personal information to train AI may not be ethical, even may not be legal in some jurisdictions. Therefore, the company should be aware of the legal issues and ask for permission from the customers before using their data.?

1. AI-generated content may not be useful, and sometimes may not be right. This may cause damage to both the company and their customers if they just simply follow the AI’s guidance.?

Conclusion?

Overall, AI is a powerful tool, and it could bring profits for retailers. By choosing the right form of AI, the company could do better to help its customers and make more money. But some issues are needed to be addressed, otherwise, they may bring negative effects to the company.?

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References List?

1. Kaplan, Andreas and Michael Haenlein (2019), “Siri, Siri, in My Hand: Who’s the Fairest in The Land? On The Interpretations, Illustrations, and Implications of Artificial Intelligence,” Business Horizons, 62 (1), 15–25. https://www.sciencedirect.com/science/article/abs/pii/S0007681318301393?

2. Shankar, V. (2018), “How Artificial Intelligence (AI) is Reshaping Retailing,” Journal of Retailing, 94 (4), vi–xi. https://www.sciencedirect.com/science/article/abs/pii/S0022435918300769?

3. Grewal, Dhruv, Anne L. Roggeveen and Jens Nordf?lt (2017), “The Future of Retailing,” Journal of Retailing, 93 (March), 1–6. https://www.sciencedirect.com/science/article/pii/S0022435916300872?

4. Arjun Kharpal. (2023). Amazon is focusing on using A.I. to get stuff delivered to you faster. https://www.cnbc.com/2023/05/15/amazon-is-focusing-on-using-ai-to-get-stuff-delivered-to-you-faster.html?

5. Singeetham, Tanuja (2019), AI Insights From Behr Help Consumers Pick Their Paint Palette, Retrieved November 25, 2020. https://www.ibm.com/blogs/ client-voices/ai-insights-help-behr-consumers-pick-paint?

6. Abhijit Guha, Dhruv Grewal, Praveen K. Kopalle, Michael Haenlein, Matthew J. Schneider, Hyunseok Jung, Rida Moustafa, Dinesh R. Hegde, Gary Hawkins. (2021). How artificial intelligence will affect the future of retailing. https://moodleprod.murdoch.edu.au/pluginfile.php/3377040/mod_resource/content/3/AbhijitGuha_JR_2021.pdf?