Future Of Retail: Artificial Intelligence And Virtual Reality Have Big Roles To Play Posted on : Oct 24 - 2016

From artificial intelligence to virtual reality, emerging technologies are rewriting the retail playbook at a rapid pace, suggests J. Walter Thompson Intelligence in a new report called Frontier(less) Retail.

Launched in collaboration with WWD, the report explores the idea that brands and retailers are increasingly putting innovation at the core of their strategies. This relates to everything from digital integration through to the more future-looking technologies helping to shift their businesses forward.

Rebecca Minkoff has boosted sales with smart mirrors in dressing rooms, it notes, while Kate Spade has had a hit with Everpurse, a smartphone-charging handbag. It also attributes the success of Under Armour in part to its positioning as a tech-forward brand, and references Topshop’s new incubator program, Top Pitch, as a clever bid to achieve the same at a time when its young consumer base is more likely to spend on smartphones than splurge on streetwear.

Within all this, however, it is keeping abreast of change that is proving one of the industry’s biggest challenges. “The speed of innovation is so fast today that even companies which embrace transformative innovation are finding that the pace of change, rather than being incremental, is far more rapid than they could ever have imagined,” explains Lucie Greene, worldwide director of the Innovation Group at J. Walter Thompson Intelligence, in her introduction to the report.

As John Vary, innovation manager at retailer John Lewis, adds: “We try to focus on transformative innovation—that’s our mission—but the pace of change is happening so quickly, what we think will take five years happens in two.”

One of the key areas the report highlights for retailers to be aware of today is artificial intelligence. “As tech giants have developed deep learning algorithms, big data is increasingly being used to power insights in retail that formerly would have only emerged from human intuition,” it explains.

The advantage in this surrounds being able to bring the personalized experience of physical stores increasingly into the digital world.

And the good news is that consumers want it. Research from Sonar (J. Walter Thompson’s proprietary research unit), reveals that consumers are interested in how AI will be used in retail: 70% of US millennials, and 62% of millennials in the UK, say they would appreciate a brand or retailer using AI technology to show more interesting products. Furthermore, 72% and 64%, respectively, believe that as the technology develops, brands using AI will be able to accurately predict what they want.

The North Face is one brand that has been experimenting in this space already – working with a tool called the Fluid Expert Personal Shopper powered by IBM’s Watson cognitive computing technology, which enables users to have more intuitive search experiences thanks to its natural language capability.

Visual listening is another AI-related area that retailers are beginning to explore – using algorithms to examine photos on platforms like Instagram to see what consumers are sharing about their brands. And AI also sits at the heart of the conversational commerce trend in which the aforementioned natural language processing is integrated into messaging apps in order to drive sales.

“AI is no longer the stuff of science fiction and it is poised to disrupt nearly every industry over the next decade by supplementing human intuition. Retailers should investigate this space, if they haven’t already begun to do so,” the report adds.

Beyond this digital world, the role of technology is also playing an increasing role in the physical store, with the fashion industry particularly looking at creating more experiential spaces driven by entertainment and emotion.

“I’m excited about digital immersion in stores to create retail theater,” says Vary from John Lewis. “We want to create
a compelling complement to the online experience which people invest in emotionally. The move into services and cultural events is interesting. You have to experiment and solve real problems for people.”

Within this realm, virtual reality is proving especially key. Vary continues: “[VR enables you to] bring the catalogue and rooms to life. Putting people in the center of environments makes e-commerce more immersive, and will have a big impact on selling bigger items like furniture, as it will give them confidence to purchase.”

The number of active VR users is forecast to reach 171 million by 2018, according to a 2015 Statista survey, and retailers are starting to invest accordingly. Westfield predicts VR to become ubiquitous over the next couple of years, for instance, while others including Tommy Hilfiger, home improvement store Lowe’s, and The North Face again have also already been experimenting.

“Virtual reality is very hot at the moment, and that could change or completely disrupt the retail industry over the next 10 or 15 years,” says Guillaume Charny-Brunet of Space 10. “Once this technology is acceptable, a whole world of possibility opens up to retailers, and many other industries, to reinvent the way we used to do business.”

Sonar’s research shows again that consumers are ready for this, particularly those within Generation Z (in this report considered those currently aged 13-17 years old). They are particularly expectant of the experiential nature of stores, the report explains, with 80% of them more likely to visit a store that offers entertainment, and 80% saying the same about stores offering VR and AR technology. Meanwhile, 79% are more likely to visit stores that offer interactive experiences that help customize products too.

The Frontier(less) Retail reports also touches on some of the broader evolutions happening in this industry at present, from borderless buying to the future of delivery, alongside providing a deep-dive on business in China. But backing all of that, it additionally serves as a reminder to brands to get their omnichannel strategies right.

Immersive technologies aside, a “seamless commerce experience is paramount” with minimal gap between inspiration and purchase
as the key to success, writes Greene. As Chris Morton, CEO and co-founder of fashion e-commerce platform Lyst, tells the team: “Really solid omnichannel could be a huge benefit to the customer, but I just haven’t seen it happen at scale really at all. That’s what I’m most interested to see play out in the next three to four years.” Source