What was once the stuff of science fiction, artificial intelligence is transforming the business landscape as we know it. And it’s growing as insights-driven businesses grow eight times faster than global GDP...
As companies seek to emulate success, embracing artificial intelligence (AI) is becoming one of the biggest imperatives in business today. It’s no wonder, with quirky startup turned $100-billion entertainment company Netflix attributing 75 per cent of content consumed by some 125 million subscribers to its AI recommendation system.
Retail is one sector undergoing an AI-driven revolution, with predictions of application and services in the market reaching $27 billion by 2025, up from $713 million in 2016, according to the Artificial Intelligence in Retail Market Report 2018-2025. But, as with all revolutions, there will be winners and losers. We’re already seeing the winners emerge and AI is at the centre of their story.
Amazon is leading the way, with AI infused into its product recommendations and every part of its retail operations. Now more than a third of Amazon’s sales are driven by its machine-learning-powered recommendation algorithm, a form of AI, and 44 per cent of all US ecommerce sales in 2017 went to the retailer.
The technology is pivotal in driving the retail revolution, becoming as critical as a customer relationship management or automated marketing system for the sector’s big players. With a unique ability to make more informed decisions and act as a catalyst for business growth, the next wave of success is not possible without AI.
However, while leveraging AI and data is one of the most important things a business can do in this day and age, it’s also one of the most challenging. The technology is complex and fast moving, there is a severe skills shortage and, most importantly, deploying AI can be too time consuming and expensive for most businesses to make a success of it on their own.
In response to this, Peak has taken the big idea of helping businesses do great things with data and developed its innovative AI System, enabling businesses to bring AI and data into the heart of their operations to drive growth through insights and optimisation.
The AI System acts as a centralised brain that is fully managed by our team of data scientists, applying machine-learning algorithms to data generated from multiple sources to deliver valuable insights continuously. These insights are then fed into wider business systems to drive automation, decision-making and ultimately improve the business’s bottom line.
For retailers, this could mean anything from predicting customer behaviour to boost sales and revenue, to forecasting demand based on buying patterns to optimise stock and inventory holdings.
Our cloud-based AI System has already been adopted by a number of retailers. Online motoring service Regit used it to predict when it’s 2.5 million users are likely to change their vehicle, enabling the company to send those customers relevant communications. This increased sales by 27 per cent in just 30 days and reduced Regit’s operational costs by 35 per cent, enabling them to staff their call centre at the optimal times of day, when sales were most likely.
There is much talk about high street stores struggling against online competition. Our research recently found that growth of online retailers is double the rate of those operating in-store, so by 2028 ecommerce will own a large portion of the market and account for 32 per cent of all sales made in the UK.
There is a huge opportunity for retailers here if they want to outperform the competition and catch up with big players such as Amazon, but they’ll need to move quickly to become smart – and AI is the only way to do it.
What was once a luxury is no longer an option and over the next few years this will become clear. The companies that fail to utilise AI and the insights it generates to optimise revenue and efficiencies will struggle. The winners in the retail revolution will be those that make their data work hard for them.
As originally seen in 'Artificial Intelligence for Business' published by Raconteur Media on 23 May 2018 in The Times and online at www.raconteur.net.