Innovation is an essential component to success in retail today as AI opens the doors to enhancing and scaling operational capabilities that businesses traditionally had to execute manually.Kostas Koukoravas speaks to Validify‘s CEO, Fergal O’Mullane, about the biggest innovations in fashion retail and how retailers can leverage AI technology to stay ahead of the curve.
Talk to us about your latest venture and how did you come up with the idea.Validify helps leading retailers access curated and vetted information on the latest emerging retail technology from around the world. I have been working in the AI retail tech space in London for the last 15 years, consumer shopping behaviour has transformed in this time on the back of transformative innovation, in particular, the use of smartphones and social media. The number of tech companies launching new solutions has also increased exponentially and retailers are finding it increasingly difficult to identify the right technology for them.We founded Validify to help retailers to discover groundbreaking innovation and to help streamline the selection and adoption process.
What are the most interesting applications of A.I. in the retail industry?It’s very early days for AI in retail. Artificial intelligence is an overused term and encompasses a number of areas from machine learning to deep learning all the way through to image recognition and natural learning processing (NPL) that underpins voice technology. At present, the application of AI in the retail industry is limited or in ‘pilot’ phase. Despite current limitations, there are interesting applications of AI in the areas of personalisation, stock inventory, search and customer service (chatbots) to augment retail operations.
AI in Retail: PersonalisationRetailers turning to machine learning and predictive analytics to serve up personalised content and outfit recommendations to their customers. Whilst conceptually not new (Amazon has led the way in this for years), the detailed level of customer and product attribute tags that can now be assessed in real-time significantly improves the personal experience.
AI in Retail: Inventory ManagementAI is used in retail to automatically analyse swathes of data to predict demand, forecast inventory and replenish in real-time. Can reduce stocks, excess build-ups and the need for markdowns. It also enables retailers to stock the store with different products depending on demographics.
AI in Retail: Image analysisPrevalent in the beauty industry, facial recognition technology being used to provide customers with personalised recommendations based on skin types. Image analysis also being used in-store to analyse customer footprint and sentiments in relation to the environment and product.
AI in Retail: ChatbotsThough still in relatively early stages, NLP is being used to enable these chatbots to interpret human language and sentiment in order to respond in ‘human-like’, conversational manner. Similar to the technology being used in Amazon Alexa and Google Home etc.
Can you give us some examples of the most innovative companies in retail? What makes them stand out?There are some great examples of innovation coming from both mature retailers and the newest online players.H&M is a great example of a company that used to lag behind. However, in recent years has deployed innovative technology across the business including investing in automated warehousing, employing AI-driven inventory management technology to its recent development of voice-activated mirrors in its flagship store in New York. Ikea is another great example of a company embracing innovation as a core pillar of their business. They continue to invest in new technologies such as Augmented Reality (AR) and Virtual Reality (VR) whilst partnering with Apple and Amazon to further their technology ambitions. They were one of the first to use AR in a practical application enabling customers to visualize the product in their homes without ever going near a store.On the other side of the spectrum, new retail incumbent Stichfix is innovating with fashion design, using AI to create and design garments reactively to consumer opinions/ buying habits.What makes these companies stand out is their understanding that innovation and technology is core to the future of their business, not an afterthought. In particular, these companies are willing to experiment with new technologies ahead of their competitors via trial and error. The acceptance that failure is part of the innovating process and the ability to move on quickly will enable these retailers to potentially stay ahead of the curve.
What are the biggest barriers to adopting AI and innovation for mature companies in retail?Mature companies are often burdened by legacy technology, processes that prohibit technology adoption and a culture that doesn’t foster innovation. Mature businesses working off legacy technology lack the agility to adapt to the pace of change we are currently seeing in the retail space. This is conflated by the elongated internal processes and decision-making often found in larger, more mature companies. The culture of ‘innovation’ has traditionally been harder to foster in more mature companies often seen as the responsibility of a single person/ team to manage. Without company-wide acceptance that innovation is necessary it acts as a barrier to adoption especially in the current climate where retailer budgets are under increasing pressure. Finally, many companies (not just mature) struggle to know ‘how’ to innovate, what technologies to employ and where to source them.
“…businesses need to take a more agile, test and learn approach to innovation…don’t be afraid to fail, but fail fast…this is the approach taken by the most successful businesses in the world…”