Artificial intelligence, or AI, is a term that came into usage just 65 years ago. In the retail world,  AI enables computer systems to work together to create a personalized customer experience through recommendations, forecasting, inventory management, targeted promotions, and much more. 

We recently watched the excellent Netflix film called The Social Dilemma. According to Medium, this documentary-drama hybrid “examines the various ways that social media impacted and manipulated our human psychology. It shows what impact social media has on teenagers and how powerful its AI technology is to deliver the content that we want to be exposed to.”

Scary stuff, in some ways, especially when it comes to pre-teens and adolescents.  But from a retail standpoint, the most frightening use of AI is by our giant competitor Amazon.  From its in-home Alexa device to its mobile phone app, Amazon has created ways to learn as much as possible about its customers – often, like the examples given in The Social Dilemma, without the consumer being aware of the data being collected.  

This information allows Amazon to make recommendations based not only on purchases, but also on requests and browsing history.  According to Arek Skuza, “The role of AI in Amazon’s recommendation engine is enormous, as it generates 35 percent of the company’s revenue.” 

Chithrai Mani recently wrote for Forbes that “AI can transform every aspect of retail businesses. It replaces intuition with intelligence and gives retailers a vision for the future.” And while there is no doubt that online and big box businesses will continue to rely more and more on data collection, there is an opportunity (post-pandemic, at least) to counter AI with real intelligence – and yes, old-fashioned intuition.

The gathering of personal information online without explicit permission is not an activity most people admire, or even approve of. When asked a question in person, a shopper can decide how to respond, and can control the interaction.  Listening attentively, and acknowledging a person’s preferences and requests, are key elements in providing a great customer experience. We can use this information, freely volunteered, to provide merchandise suggestions, and to inform our inventory decisions.  Because we know that AI-generated personalized service will never completely take the place of service by a friendly,  real live person.

Happy Retailing,
Carol “Orange” Schroeder

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