Is Artificial Intelligence Ready to Rock Retail? Takeaways from the NRF 2024: Retail’s Big Show.
Is Artificial Intelligence Ready to Rock Retail? Takeaways from the NRF 2024: Retail’s Big Show.
At a session at the NRF 2024: Retail’s Big Show, Amy Eschliman, managing director, strategic consumer industries, Retail, Google Cloud, predicted generative AI (genAI) could be as disruptive as the arrival of the internet or mobile phones.
“These massive transformations are nothing new to retail — the internet is a great example, it changed the way we shop; mobile phones, same thing,” she said. “Now it’s generative AI, which has the capability of transforming everything from the customer experience to the associate experience. It’s got tremendous potential, and it’s a really exciting time for retail because of this technology. It’s about the ability to synthesize and analyze information that we had did not have before. The possibilities are really endless.”
AI and genAI were either the primary topic or at least touched on across panels at the NRF show while AI-backed innovations were widely on display on the show floor. The event was held January 14-16 at Javits Center in New York City.
Sucharita Kodali, VP principal analyst, Forrester Research said “a lot of what is most powerful about AI already exists” at retail, citing recommendation engines, payment fraud protection, store labor optimization and fulfillment analytics as examples. She said, “These are the tried & true tools that are built on machine learning and in some cases, deep learning, that have been established and valued over time.”
However, she said outside some generated text and chatbots, the most promising benefits of genAI involve marketing content. GenAI applications for marketing applications include writing ad headlines, e-mail subject lines and product descriptions; summarizing customer reviews; and creating images.
Many panelists remained optimistic that AI will tackle repetitive tasks to free up staff to tackle more creative endeavors, including enabling associates to interact more with customers, rather than replace jobs.
Macy’s CFO and COO Adrian Mitchell said the retailer has made “lot of progress” applying AI to pricing science, continues to experiment with AI-powered personalization and inventory allocation, and is exploring a wide range of “simply automation.”
”What we’ve learned is two things,” said Mitchell of Macy’s AI approach. “Number one, it can definitely make your business simpler. It can help you execute better and help you make better decisions. What we’ve also learned is you have to lean in because retail is a disruptive space. If you stand still, you’re falling behind with their customers, you’re falling behind the competition.”
Many sessions included caveats about the need for proper partners and infrastructure, employee training and buy-in around AI, and particularly, accurate data. David Morton, Brooks Running’s director of enterprise data and analytics, said in a session on genAI and personalization strategies, “Good data is good decisions. Bring it back to the basics; understand your data foundation, whether it’s transactional, through a data warehouse, through that you’re working with is going to be storing that data for you.”
Also stressed was the benefit of experimenting with AI as the technology continues to iterate. Josh Platt, SVP of product and user experience at luxury e-commerce retailer Rue Gilt Groupe, said, “It’s a little like climate change, where you can put your head in the sand and pretend it’s not happening. Maybe you can do the same with AI. It’s coming, and so you have to embrace it, and you have to start to experiment across your business with both internal productivity opportunities and consumer-facing opportunities.”
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Other themes at the annual show continuing from past years at the conference include omnichannel retailing, social media, last-mile logistics, sustainability and corporate social responsibility.
Earvin “Magic” Johnson, who has had a successful business career across movie theaters, fast-food franchises, insurance and other ventures after his legendary NBA run, offered some tips on leadership, including hiring the right people.
“For me, if I’m prepared, if I’ve done everything I’m supposed to do, I feel that I’m going to win,” he said. “And I only hire people like that — the same type of mindset, the same type of dedication, the same type of discipline, the same type of focus. That’s what I want. I want people running with me that have that same mindset.”
A panel of marketing execs at H&M, McDonald’s and Spotify addressed misperceptions around Gen Z, including their reputation for having a subpar work ethic and being digitally obsessed.
Linda Li, head of customer activation & marketing, H&M Americas said that while Gen-Z does “consume everything from digital platforms — they browse, they learn they experiment,” the generation also first shops at stores. H&M believes that can be traced to a desire among Gen-Z cohorts to socialize with friends as well as for self-expression. Li said, “As brands and retailers, it becomes incumbent upon us to really be able to deliver on in-person experiences that can be differentiated and that can allow for that aspect of personalization and self-expression.”
Lee Peterson, EVP, thought leadership and marketing at consultancy WD Partners, highlighted new survey data showing consumers are increasingly prioritizing the functional and technical aspects of shopping, leading them to prefer the ease and convenience of online shopping. However, when asked what they liked about shopping in stores, the top responses were emotional, including discovery, inspiration, associates and the store’s “vibe.”
Offering Yeti’s experiential flagship in Austin as an example, Peterson’s core message was that physical stores need to deliver something beyond what’s being offered online - whether through visual merchandising, great associates, store design, establishing a sense of discovery, merchandising, or music – to entice customers and bring “fun” back to retail. Peterson said, “Consumers don’t have to go to stores anymore, they have to want to go to stores.”
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