AI-Enabled Personalization Will Change the Narrative of Stores in Decline
Retail personalization has long been the domain of the e-commerce retailers that redefined the concept of local retailing by bringing it to a geographically unrestricted audience at scale, leaving traditional retailers scrambling to combat their new, impersonal identity. And as retail stalwarts shuttered their doors and malls became modern American ghost towns, the narrative that stores couldn’t serve the modern consumer appetite continued to gain momentum.
Of course, until recently, e-commerce boasted exclusive domain over the ability to identify and target consumers with personalized content based on their unique shopping behaviors and histories. Fortunately, the growth of omnichannel retailing helped introduce enterprise-level consumer insights to physical stores. The integration of online and offline channels allowed stores to leverage more comprehensive, accurate and timely shopper data to create more strategic assortments and experiences across channels.
Although the narrative of retail stores in decline still persists, it's a tale now told in spite of certain key realities, not because of it. Not only have many physical retailers continued to grow, but online pure-plays are also regularly establishing a physical footprint. And, most importantly, it’s a growth built on a technologically sound foundation.
Successful retailers have, as a general rule, invested resources in store systems built to deliver value by not only addressing the functional needs of their use case — the point of sale, loyalty, coupons, fulfillment — but also by aggregating and synthesizing the data created by the users of those systems.
However, even these systems are limited by the very rules-based algorithms that made them superior to manual analysis. By replacing rules with machine learning, AI-enabled applications are able to identify much more complex data relationships and trends. By freeing the technology from its prior limitations, the full breadth of the data becomes a playground for building deeper relationships with customers.
The prevalence of systems built to aggregate massive data sets, collected from nearly every imaginable touchpoint, allow AI-enabled applications to analyze billions of unique combinations, identify trends in each consumer’s behavior, predict future behavior and needs, and even understand the limits of a shopper’s loyalty to a certain product or category. Critically, behavior data is no longer exclusively derived from online activity, meaning retailers can maximize the competitive advantages stores have over their e-commerce peers.
The opportunity to fully capitalize on both online and in-store activity has often been referred to as the “Holy Grail” of omnichannel retailing. It’s quite possibly the most significant threat that Amazon.com brings to the grocery industry through its acquisition of Whole Foods, and that, in reverse, Walmart introduced with its Jet.com deal. These mega-retailers are, at a large scale, working to identify efficient ways to establish single sources of truth for consumer, product and market behaviors that ultimately allow for personalized experiences across all channels, including in-store. The sooner other retailers find ways to leverage their data sets to create personalized experiences in-store, the better positioned they will be once those companies inevitably deliver on that promise.
Now is the time for retailers to embrace and implement AI-enabled personalization solutions in their stores. The retailers that commit to developing deeper, more personal and more authentic relationships with their customers, built on data from every touchpoint and analyzed in limitless combinations, will be the winners of tomorrow’s retail race. Once the concept of AI-enabled personalization in stores moves from prophecy to pervasive reality, the narrative of an industry in decline will look more like an old wives’ tale than a death sentence.
Michael Jaszczyk is the chief technology officer and U.S. CEO of GK Software, a store technology solutions provider.
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