From chatbots to inventory, artificial intelligence is increasingly impacting evolving industries
A big challenge for retailers is how to leverage artificial intelligence to make their business more efficient and better convert potential sales.
Some AI strategies make shopping fun for consumers.
For example, Vancouver eyewear retailer KITS Eyecare Ltd. (TSX:KITS) uses AI-powered augmented reality to allow shoppers browsing its website to try on frames and see themselves wearing the glasses. This allows you to see what it looks like.
Other AI applications focus on operations such as customer service, inventory management, and store location selection.
One of the challenges retailers told BIV is that they believe there is insufficient data to make AI investments meaningful.
Retail consultants encourage these merchants to start collecting data so that they can ultimately put it to use.
“You need so many data points,” said David Gray, DIG360 retail analyst and principal.
“If a small business is trying to use AI using internal data, they may not have enough data to actually use it.”
Paul Dragan, who owns two Reckless Bikes stores, told BIV he considers himself in that category.
“We don’t have enough data at this point,” he said.
“We use customer relationship management (CRM) software.”
Gray told BIV that in some companies, senior management is to blame for not fully understanding AI technology and its opportunities.
Gray said management needs to have a structure in place to collect data for future benefits.
AI was top of mind for many retailers at Toronto’s largest annual retail conference, the Retail West Conference held by the Retail Council of Canada on Nov. 6 at the Hotel Vancouver.
Speakers across multiple panels discussed how companies are leveraging AI, and most attendees raised their hands when asked if they were using AI.
However, excluding those who said their use of AI involves basic searches on platforms such as Google’s Gemini, Perplexity, and ChatGPT, many retailers have yet to begin using AI to suit their business. It became clear that there wasn’t.
In some cases, executives may be using sophisticated software with built-in AI capabilities without even realizing it, Gray said.
Other owners of fast-growing small and medium-sized businesses are also actively investing in technologies that have evolved to incorporate AI.
Vancouver-based pants retailer Duer is one of them.
The company opened its eighth store earlier this month and is considering future store openings in six other cities. About six years ago, there was only one store, the original location on West Hastings Street.
Duer’s wholesale and e-commerce sales at the time were similarly a shadow of what they are now.
Duer’s director of e-commerce and technology, Calvin Roakes, told BIV that in 2018, customer inquiries were sent to a common Gmail account, with Duer staff scrolling through and manually entering each email. He said he answered.
Duer executives decided they needed to automate.
Roex said the company started using technology from California-based Gorgias to centralize customer service inquiries and begin tracking data.
Gorgias helped Duer implement a chatbot on its website to receive customer feedback in one place.
While Duer’s employees were still answering customer emails manually, the company began collecting data on the questions customers asked the most and the problems they experienced the most.
Since then, the technology has evolved to the point where AI can respond to Duer’s customers’ emails without the need for human intervention, Roex said.
Similarly, the chatbot on the company’s website is much more sophisticated and can assist customers with complex questions about products and issues.
If a customer starts asking the chatbot inappropriate questions, or if the chatbot can’t answer the question, it will be routed to a human upon request, Roakes said.
Cori Covent, head of AI and emerging technologies at Canadian Tire Corporation (TSX:CTC.A), said on a Retail West panel that the company also has humans constantly monitoring AI activity. I did.
“Our brand guardrails automatically apply to content that we believe has embedded bias, such as questions that may imply some form of racism, or content that may be inconsistent with our brand purpose. “We stop that conversation and hand it over to a human for a very quick evaluation,” she said.
Canadian Tire’s chatbot can also prompt website visitors to ask questions such as where they live.
Knowing that their home is in a city that typically experiences soft snow can help you decide what type of tires to recommend.
He said the chatbot might also ask potential customers if they would drive to Whistler to go skiing.
The answer to that question can change the chatbot’s product recommendations, as the driver may be in an environment with colder weather or more difficult roads.
AI helps retailers manage inventory, store selection, and marketing
Duer is one of many retailers leveraging AI for inventory management.
Lokes said the company’s stores are sometimes used as fulfillment centers, which can complicate the flow of inventory.
“We are using Toolio software and have created some level of AI to predict the demand that inventory should be allocated to retail stores and distribution centers,” he added.
It also takes into account sales data from previous years for various products, as well as trends in whether customers prefer slim-fit or relaxed-fit pants.
Proper inventory management is key for retailers, as Vancouver fashion house Lululemon Athletica (NASDAQ: LULU) revealed earlier this year.
Lululemon warned the market in March that it had made a mistake with its spring fashion line. Clothes were primarily black, white, and tan, and there were no colors that consumers wanted to buy. As a result, sales decreased and inventories increased. Stock prices fell steadily on the news.
Analysts downgraded the company’s stock this summer after the company suspended sales of its breath-through leggings line just weeks after its release due to poor sales.
Roex said the AI has not yet suggested changes to the colors or styles of Dewar products in light of global fashion data, but that could happen in the future.
Decisions about future store locations have also traditionally been made without the use of AI. This is primarily done by looking at where your e-commerce customers are based.
Roex said he can foresee a time when Duer will use AI to consider other factors, such as where complementary retailers are based and where the best demographic customers live. .
Michael Penalosa, president of VAMOS Development Advisors, told BIV that Ontario-based PiinPoint already has AI-based software to do this.
“AI requires more information, so you can’t just say, ‘Find me the location of a consumer electronics company’s store,'” he says. “It’s going to be garbage in and garbage out.”
If his customers are using PiinPoint, he said, they’ll need data showing where existing customers live, what they’re buying, what their buying patterns are and how often they visit.
He said it could also provide data on the company’s sales, where its competitors are located and what kind of target customers it is looking for demographically.
The result is quick and effective analysis, he added.
Michael LeBlanc, who advises retailers and hosts the Voice of Retail podcast, told BIV that many retailers are using AI to create long descriptions of individual products on their websites. He said he was there.
“Say you have 300 products on your website and you want to write a description,” he said. “Are you a one-person business or a two-person business? Get started with ChatGPT.”
He said small business owners can get stuck in a rut and end up using the same words and phrases they use when writing their own copy.
They could tell ChatGPT to change the wording or write marketing materials or social media posts, he said.
“For an e-commerce provider, what is the best description of this product and its benefits,” he said, which could be a recommendation message to the AI platform.
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