AR and VR have been pushed to the sidelines as Artificial Intelligence commands center stage. Retail and ecommerce gatherings like Shoptalk are placing more focus on AI driven technologies, like Amazon GO and self-driving cars, showing AI’s potential for disruption across a variety of industries, including furniture retail.
AI’s hard and fast entrance onto the scene and numerous applications are leaving many retailers confused about what it really is and how they can ensure their business doesn’t fall behind. In this blog post, we’ll walk through what AI is, how it could impact your business in the future and what you should be doing now to set your business up for success.
What is Artificial Intelligence?
Artificial Intelligence or AI is an umbrella term for any technology that performs tasks that normally require human intelligence, such as speech recognition, understanding language, decision-making, visual perception, etc.
Today, there are many different applications of AI and many of them overlap and interact with one another to create more complex AI use cases. Self-driving cars, for example, use a variety of AI applications in a combination of cameras, radar, lidar (a detection system that uses light from lasers) and sensors to guide them. Because of the overlap of these technologies, there is a lot of confusion on what AI is and how it is applied. Here are a few different types of AI applications you’ve probably heard about recently:
|Machine Learning||An application of artificial intelligence (AI) in which a computer program can learn from and adapt to new data without human interference. Machine learning is used across a variety of AI applications to enable technologies to improve with increased data.|
|Speech Recognition||An application of AI that enables a device to recognize and understand speech, by digitizing the sound and matching its pattern against stored patterns. Voice search and virtual assistants like Siri and Alexa utilize speech recognition to identify a spoken query and match a response.|
|Computer Vision||An application of AI that works on enabling computers to see, identify and process images in the same way that human vision does. Automakers are using computer vision to teach self-driving vehicles how to understand and react to objects on the road.|
Why all the buzz now?
Artificial Intelligence is not a novel term. It dates back to Alan Turing who suggested in the 1950’s that machines have the capabilities to use logical reasoning and data to make decisions, just as humans do. Since then the idea of AI has never gone away, but with the advent of the internet came increased computational power and availability of large data sets, which has both advanced AI and made it more widely available for businesses to use.
How will AI impact my business?
I wouldn’t bet on a terminator-like takeover with IBM’s Watson greeting your customers any time soon. While there is a lot of investment in AI, most of that investment is spent in R&D and acquisitions and mostly by Silicon Valley’s giant, cash-rich, digitally native companies. So if you’re not investing resources in building the furniture retailing robot—don’t worry, you’re not behind.
That said, furniture retailers and other businesses will benefit from advancements in AI in a number of key ways. AI technologies are able to process data and information infinitely quicker than humans, making them more apt to identify trends and patterns that can be missed by human analysis. AI in retail offers a tremendous opportunity to automate operations, cut costs and improve sell-through. Here are some examples:
|Sourcing||AI-enabled forecasting could use a variety of data based on previous sales, trends, weather, etc. to predict the variety of styles and quantities of furniture to warehouse, minimizing costs due to buying related errors. According to a Mckinsey Global Institute study, AI-enabled forecasting has the potential to reduce forecasting errors by 30-50%.|
|Pricing||Setting pricing on furniture is dependent on many factors including season, time of day, weather, competition, geographic location, device usage and much more. AI can use a variety of these data sources to automatically adjust pricing, increasing sales and minimizing losses.|
|Marketing||AI will enable you to promote products at the right place, right time and with the right message. Using a variety of data sources, you could theoretically personalize pricing, displays and tailor messaging all in real-time.|
|Merchandising||We are already seeing many different point systems leveraging AI, including machine learning recommendations, visual search, and more. AI technologies will only improve in this area to allow you to personalize the online experience based on individual preference, buying history, browsing data, location, time of day, etc.|
What should I be doing now?
While there are many ways to start utilizing AI-driven applications today, retailers need to do their due diligence before making the leap. As with all new technology investments, preparation is key to reaping future benefits. Here are some steps you should begin to take now to ensure your business is set up for a future in which AI will be a competitive differentiator:
- Get your data ecosystem in place
In order to leverage the power of AI-based technology, you need to have the data available to power it. The furniture industry has traditionally been a step behind in technology and automating processes, particularly when it comes to sourcing and product data. If there are any manual processes in your supply chain, fix them now. A seamless and cohesive data ecosystem will give you the ability to jump quickly on trends worth investing in.
- Develop a culture open to change and innovation
In order to successfully integrate AI into your retail business, you need a culture that is open to change, collaboration and data-driven insights. The most significant impact you can make now is encouraging your staff to leverage data to make decisions. High performing teams in the future will need to fully understand how to use data-driven technology and analysis to their advantage. Empower your teams to start towards that goal now.
- Choose a technology partner who can help you invest wisely
There are many different technologies out there touting AI claims. Some of them are valid and can have the potential to increase your sales. Many of them, however, are simply too early to invest in. It can be hard to separate fact from fiction in this area to find the technologies that will truly make an impact on your business. Take predictive recommendations as an example. While machine learning recommendations can increase sales, it is still a young technology and many retailers are seeing merchandising errors that machines have yet to pick up on and require human intervention.
A trusted technology advisor can help you identify the partners whose tools will enable you to benefit from the power of machine learning technologies, while still giving you control to optimize them for your furniture retail business.
Rarely in history do we find ourselves at the crest of a massive technological and cultural wave, with seemingly limitless access to information and data driving this change. AI’s capabilities to improve output, minimize costs and increase returns will undoubtedly impact all industries, including furniture retail. It’s an exciting time but one that is fraught with uncertainty. Blueport Commerce is here to guide you through these new and innovative technologies to help you make smart investments for the future of your business. Reach out to us today to talk more.