AI has yet to match its disruptive potential in retail – report

Retailers are increasingly thinking about AI and machine learning for personalisation in retail

Retailers are increasingly thinking about AI and machine learning for personalisation in retail

More than 82% of UK retailers believe machine learning, as a subset of artificial intelligence, will have an impact on the retail sector, with 48% saying they’re currently using it in their business, according to Qubit’s latest report, Catalysts of Change.

The software company worked with Retail Week to gather input from over 70 industry executives on how disruptive technologies will affect their businesses, with broader AI as well as chatbots and beyond also discussed.

Shop Direct, whose main sales channel was catalogues for 80 years, is an example of a business successfully shifting its strategy to become a pure-play e-tailer focusing on personalisation and artificial intelligence for growth. “We’ve made big strides, but there’s a lot more to play for. We believe that artificial intelligence can change the game for us in data and personalisation,” Alex Baldock, CEO of Shop Direct, says in the report.

However, a majority of retail executives questioned are slower to embrace change, as 62% don’t currently use broader AI in their businesses. Retailers are still struggling with data collecting, which prohibits effective use of AI, says the report. A third of those surveyed say their data remains in silos across their business, preventing AI and a single view of the customer, while only a third have a strategy to collect and analyse data across all channels.

Of those who are deploying AI, the focus is on machine learning, with half of respondents saying they are using it to drive sales and anticipate demand, while 46% are utilising it to personalise offers and understand consumer behaviour. More than a third (38%) of those surveyed use machine learning to target customer segments, while just 4% use it to assess their competitors in the industry.

The major challenge is cutting through the noise of innovation to decide which truly transformative technology to invest in. Investment remains modest on that basis, with four in five retailers planning to invest less than £1m to introduce new tech, and almost a quarter investing less than £50,000.

One way to investigate whether innovative technologies will ‘stick’ is observing outside your direct category and spotting where disruption is taking place, the report suggests. Shop Direct’s Baldock admits to looking at the gaming and gambling sector, which are perfecting customer personalisation. Ladbrokes, for instance, has developed an engine that identifies when the user has placed more than five bets on the same type of sport, prompting them to then personalise the homepage to their favourite sport.

Similarly in 2015, ShopDirect’s Very.co.uk platform personalised its banner menu to display merchandise categories according to what the shopper had viewed the most.

Artificial intelligence is an increasing focus in the tech sector, and was the main theme at SXSW this year.