Retail Technologies to Watch in 2019: Part 1

    Posted by Engine Room on Jun 26, 2019 6:08:37 PM

    Artificial Intelligence might sound like a distant, far-off concept, but it's not as futuristic as we might think. 

    According to Juniper Research, retailers’ global spend on AI services will reach 12 billion USD by 2023more than three times the estimated total spend for 2019. Consequently, consumers can expect to see the implementation of new technology both in-store and behind the scenes. Furthermore, the use of virtual assistants is expected to increase significantly within the next five years. 

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    How will AI impact the future of the retail industry?

    This article takes a look at the biggest problems retailers have been encountering in keeping up with the changing times, and how AI guides this transition by assisting in the technical aspects of business operation, creating smart environments to engage consumers and enhance the shopping experience, and to construct an impressive online presence to stand out among competitors.


    • Bridging Staff Shortages
    • Automated Shopping
    • Smart Speakers & Chatbots
    • Engaging Shoppers
    • Shift in Employment
    • Brand-Customer-Relations

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    So, what is AI?

    AI is a division of computer science that deals with enabling machines to showcase qualities of human intelligence, in other words technology that copies human behaviour

    In retail environments, this technology manifests in machine learning algorithms that are used in analytics and customer-relationship management (CRM) platforms to enhance the quality of customer service. Another example is the use of chatbots on store websites to provide immediate customer support.



    Understaffing can have a massive impact on the effectiveness of the day-to-day running of a business and a shortage in well-equipped staff leads to poor store management and inadequate customer service. Implementing AI services can assist in completing tasks that are not efficiently executed by human staff, taking care of technical behind-the-scenes processes while providing room for the latter to be placed in-store.

    AI technology can provide practical assistance where sufficient staffing proves to be a challenge, for example comparing prices across different product brands and monitoring where cleaning and/or restocking is necessary in-store.


    Another example of using AI as a solution to limited staffing is using data from previous sales to determine peak shopping times and consequently forecasting when increased in-store staff will be needed. 

    Understanding demand and supply has always been a crucial part of successful business management – even more so with the rise in experiential retail installments like pop up shops and once-off events. Smart checkout systems operated by AI technology have high-value potential in taking inventory and determining future demand.

    AI robots are able to provide valuable business intelligence (BI) by monitoring consumer behaviour to predict future sales patterns.

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    There is a notable movement towards smarter, more automated, cashier-less checkout systemsBut is that what shoppers want?

    In 2017, Walmart developed Scan & Go, an AR-based product comparison scanner for their mobile app that enabled customers to instantly compare prices and pay for items without having to stand in checkout lines. Four months after rolling out this technology in more than 100 stores nationwide, Business Insider Singapore reported that Walmart decided to put an end to this service due to the low engagement it received from shoppers.

    Compared to how well Amazon’s Amazon Go service is doing, Walmart killing their self-checkout app raises the question: what are consumers’ demand for digitalised shopping?


    Amazon Go, introduced in 2018, allows customers to visit one of the handful of Amazon Go stores and scan and pay for products through a personalised barcode from the mobile app.

    Considering the differences between Walmart and Amazon, the success of Amazon Go could be attributed to the brand primarily establishing itself as a digital retail platform as opposed to Walmart, with which shoppers may feel more comfortable as conventional brick-and-mortar

    Following the trial of Scan & Go, however, Walmart continues to experiment with various implementations of AI technology to facilitate a more convenient shopping experience, like Check Out With Me, a mobile checkout device that enables cashiers to speed up the payment process.


    Mimicking methods of online retail – like tracking customers’ shopping history – can guide retailers to better assist consumers, increasing the chances of selling a product.

    According to KPMG’s ‘Retail Trends 2019’, the two most substantial areas of AI development will be smart speakers and chatbots.


    Smart speakers enabled with voice-activated virtual assistants rapidly increased in popularity from 2017 to 2018 – it almost doubled in users from 14% to 27%. KPMG estimates that the steep climb in consumers who employ conversational virtual assistants in their day-to-day lives will drive these numbers up to 55% by 2022.

    Consequently, this holds significant possibilities for voice-controlled shopping, placing AI services almost mundanely in the centre of the household and essentially changing the way consumers interact with digital technology.

    Chatbots are the second area of technology that is expected to remarkably grow in development in 2019. It is predicted that chatbots will become integrated in approximately 85% of all business sectors within the next year. Simulating human conversation through AI technology, chatbots facilitate a platform for personalised online customer support.


    The South Korean company, Future Robot, launched their advanced ‘social AI’ technology in 2009: robots that are programmed to interact with consumers by interpreting emotional responses through facial expressions and tone of speech, and responding accordingly. 30 of these robots were employed at the 2018 Pyeongchang Winter Olympic Games and the company estimates their value will reach 100 million USD by 2025.

    Similar technology can be seen at Seoul’s Incheon International Airport, where a robot is very efficiently employed to scan boarding passes and another to clean the airport’s floors while cheerfully interacting with anyone it passes by – much to passengers’ entertainment!

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    Virtual reality (VR) technology has proven a very helpful tool in creating unique and engaging customer experiences, ultimately enhancing the consumer’s shopping experience and perception of the brand.

    Macy’s, for example, implemented Marxent’s VR technology in 90 of their stores, providing customers with a VR headset enabling them to ‘design’ their own room by visualizing and virtually moving furniture around. This initiative has already seen a 60% increase in sales as well as a decline in items returned to the store.

    Similar technology has been used by retailers like Walgreens, Home Depot and Walmart to assist in store planning and product placement.

    A very practical implementation of VR technology is Specsavers’ ‘try-on’ service allowing customers to play around with different frames.


    The Nike House of Innovation, opened in New York in 2018, features impressive digital technology to create out-of-the-box customer experiences. Using AI services to implement instant check-out points and customized studios, the dependency on human staff is decreased. The store also boasts with other cool features like the popular Speed Shop where customers can reserve products online to try on in-store. Upon arriving at the store, customers find their reserved products in a locker that can be unlocked via their smartphones, which they can also use to pay.

    Not only is this highly effective on a practical level, but its futuristic nature leaves a memorable impression on consumers, increasing the chances of them supporting the brand in the future.


    Other examples of AI innovation in retail environments are Audi’s VR experience in showrooms allowing customers to virtually configure their dream car, and Sephora’s Beauty Hub inviting shoppers to test different makeup products by getting a virtual in-store 'makeover'.


    The surge in AI technology has given way to two major streams of concern, the first being the fear that digital technology will substitute human jobs, resulting in loss of employment, and secondly the risk that the heightened digital presence will create a barrier between the brand and the customer due to the decrease in direct human interaction.


    However, after analysing the job market in 29 countries, PwC’s international job automation study concluded that only 1% of jobs will disappear as a result of automation, of which AI is merely a subset. The more relevant concern in this regard is therefor not the loss of jobs as much as retraining employees to effectively work with AI.

    A global CEO survey by Forbes showed employers’ noteworthy concern about the availability of digital skills in their workforce – specifically in their senior leadership teams.


    Utilising AI services to their full potential requires employees to master basic skills, like understanding algorithms, knowing how to feed data and efficiently interpret results. At this point, AI does not pose a direct risk of large-scale unemployment, but rather begs the need to re-skill employees for digital technology. 


    This brings us to the next major headache AI has been causing retailers: the risk of brand-customer-relations suffering from the decrease in personal engagement.

    As discussed earlier in this article, AI technology holds incredible potential in enhancing the consumer shopping experience and enabling retailers to provide a higher quality customer service.


    But what if the retail environment becomes too artificial? How will AI change the way brands interact with consumers?

    A report by EY on the possible chasm AI creates between brands and consumers, emphasizes how consumers value time more than money. This means consumers use AI to take care of most of their buying needs, giving them more time to invest in the handful of brands who align with their own values.

    Furthermore, when AI is integrated in the commonplace aspects of consumers’ lives, it aids them to become ‘better versions’ of themselves. AI practices are not limited to retailers’ side of the fence – as digital technology becomes more and more integrated in our daily lives it affects both brands and consumers.

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    Stay tuned for Part 2 where we take you on an exclusive tour of Watch This Space, greater group's Melbourne-based digital agency lab to learn more about innovative transformations in the retail industry.

    Liked this article? Stay tuned for more industry insights, thought leadership and market news coming your way!

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