AI in retail: ‘The first movers in this space will gain a competitive advantage’

Retailers and their customers are benefitting from the power of artificial intelligence (AI) and advanced data analytics.

Having the right products on the shelves precisely when they are needed, delivering parcels at times when the customer is most likely to be home, store shelf signage personalised to the individual customer looking at it, and eliminating food waste. These are just some of the practical uses retailers across the world are finding for AI.

“AI is helping retailers become more efficient,” says Ger Perdisatt, Microsoft Ireland enterprise director. “Two core areas are to the fore at present - stock optimisation and predicting customer preferences. AI is great at assimilating and understanding large amounts of unstructured data in real time for these purposes. What Musgrave is doing in Ireland in these areas is very interesting.”

Musgrave Retail Partners Ireland (MRPI) head of platform and engineering Don Lynch explains how Musgrave takes a slightly different view of AI: “For Musgrave, the strategy is ‘augmented’ intelligence. It’s about providing our retailers and Musgrave colleagues with targeted suggestions to allow better and faster decisions to be made. This will continue to enhance the experience for our customers, keeping them at the centre of everything we do.”

Where the artificial intelligence comes in is crunching the vast amounts of information which flow into what Steve McKenna, MRPI director of IT, describes as the Musgrave data lake. The lake is being filled with data from a huge variety of sources, including the tills in the various stores, weather forecasts, supplier information - even GAA fixture schedules - and exists in Microsoft’s Azure cloud computing platform.

“In the old days we put data in very structured databases with different fields for first name, last name, first line of address and so on,” McKenna explains. “It was very rigid and difficult to expand the datasets being used. Now we can bring in both structured and unstructured data. In the past we couldn’t do a lot with that but now AI can discern patterns within it. Data flows into the lake from different sources and we use AI to understand it.”

One particular use of this form of AI is predicting consumer demand. “In Ireland the seasons can vary hugely and do have an impact on customer purchasing trends,” says Lynch. Using the power of AI, we will be able to look at our supplies, local weather forecasts and predicted customer behaviour to help ensure our stores always have sufficient stock on shelves to deal with those seasonal trends. This is being built with one of our Musgrave partners, DataChemist, and is hosted on Azure.”

It's also about using AI to improve the customer experience

AI is also being employed to reduce food waste. “We are passionate about ensuring we have the lowest possible levels of food waste,” says Lynch. “We are working with another partner, Spanish Point, to use advanced analytics to gain insights into our data and make predictions which will help prevent waste.”

An example of this in action is in the bakeries in many SuperValu and Centra stores across the country. “The technology could tell us when to bake what product, to have it ready at the right time for customers,” says McKenna. “And therefore we can reduce waste and dramatically improve the experience for shoppers at the same time.”

This is just the beginning, he adds: “This is a journey for Musgrave and you never actually stop. There is never a point where the lake is fully formed. You know you sell more ice-cream on a sunny day and then you see other products selling more if there is a GAA match on so we add the GAA schedule to the lake. A number of years ago this technology was beyond the reach of ordinary organisations. What’s happened recently is that the likes of Microsoft have come out with things like Azure, which has democratised the technology. Microsoft has put huge computing capability in the cloud for organisations like Musgrave to tap into.”

Other major retailers around the world are also working with Microsoft to realise the benefits of AI. “Otto, one of the largest online retailers in Germany worked with Microsoft to analyse three billion transactions to bring their stock levels down from five to seven days to just one or two days,” says Perdisatt.

“It’s also about using AI to influence the customer experience. US retailer Nordstrom has a mobile app which does all the usual clever stuff when you shop online but when you walk into a store with your smartphone it flips to an in-store app which tells you about the latest offers in that particular store and where to find them. It can also offer discount vouchers and so on. It is the bridge between the digital and physical stores and that is a really important engagement piece.”

Looking to the future, he says retail is potentially the “most fun industry to do crystal ball gazing as it is probably the one most impacted by digital transformation. The mix of digital and physical shopping is going to be increasingly prevalent. Kroger in the US is another example. When you bring your digital shopping list to the store their app directs you around the store to pick it up. The shelves light up for you with targeted ads and personalised messages. You can pay with your phone and never go to the till. This is already live in a number of Kroger stores.”

His advice to retailers is to start utilising the technology now. “A lot of retailers are put off because they think AI requires amazingly deep data science knowledge and skills. That’s not the case at all. Microsoft has off the shelf pre-built modules that organisations can use to get the benefits of AI straight away. The first movers in this space will gain a competitive advantage.”

[ here ]