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AI is the Future—Here’s How Retailers Can Survive and Stay Relevant

Forget about the weather and fluctuating exchange rates. Retail’s newest enemy is named Alexa—and she’s not alone.

Alexa, the artificial intelligence (AI) assistant that powers Amazon’s hands-free Echo smart speaker, can play music, answer questions, even order an Uber. Not to be outdone, Google recently released Home, which features similar capabilities. Naver, a South Korean search engine, plans to roll out its own voice-recognition smart home system this year, too.

Far from a gimmick, AI and its learning algorithms look set to rule the world.

“These systems will become the gateways through which brands reach customers,” said Lorna Hall, head of WGSN Insight, speaking recently at WGSN’s Futures Conference in New York City. “They cut out footfall seamlessly, redirecting or rerouting the customer somewhere else, based on their choices which are based on the customer’s history and preferences and what they’ve learned about them…With that, the customer’s field of vision is likely to narrow significantly.”

To that end, retailers need to rethink and recalibrate what they do to amplify their brands to remain relevant beyond virtual assistants’ blessed circle of suggestions.

Rethink the physical space

“As an industry, we’ve been paying lip service to the experience store for a long time now,” Hall said, noting that retailers can no longer ignore that a shift in thinking is required around what physical space is supposed to achieve for the business. “You need to start rethinking your space in an era when virtual assistants are going to be trying to cut you out of the conversation—or you will just get cut out of the conversation.”

Take Cadillac House, for example. The space opened in June on the ground floor of the company’s global headquarters in New York City’s SoHo neighborhood and serves as a rotating location for concerts, interactive art installations and collaborative partnerships with the likes of the Council of Fashion Designers of America (CFDA) and Visionaire magazine. Timo Weiland, the first designer picked as part of Retail Lab, as the CFDA partnership is called, saw his e-commerce sales triple during his three-month residency.

Similarly, London’s 180 The Strand not only houses the British Fashion Council, London Fashion Week and Dazed Media, it’s also a hub for art, culture, fashion and food.

And the ultimate try-before-you-buy experience is offered at Pirch, a home store with several showrooms throughout the U.S., that hosts cooking classes so consumers can try out its stoves or offers after-hours appointments for people to demo its showerheads—yes, by taking a shower in the store—or bring in their dirty laundry to test-drive its washers and dryers.

“The future of the store is increasingly going to be about putting on active experiences to showcase products in theatrical ways,” Hall said.

Strategic partnerships will prosper

“In a world where algorithms are cutting you in and cutting you out of the customer’s line of vision, standing alone as a business will become increasingly difficult,” Hall added. “No brand is an island anymore. Strategic partnerships that weave you into other brands’ ecosystems are becoming key. We’re seeing this strategy start to build across industries and different segments, partnering in the experience field particularly or doing shorter, relevant collaborations.”

British department store John Lewis recently paired with Airbnb, offering potential hosts a chance to attend a series of masterclasses at its flagship stores in London and Birmingham to learn about customer service and marketing, among other tutorials. John Lewis also promoted the collaboration on its website, including a checklist of items every Airbnb host needs on hand, such as towels and bed linen.

Another example: Free People’s partnership with Yogascapes, a yoga retreat company, to offer brand-curated wellness vacations to places like Spain, Peru and Mexico. The latter is slated for six days in February, consisting of daily yoga, stand-up paddle boarding, natural beauty workshops and vegetarian meals. Guests will also receive $500 worth of Free People merchandise and a pair of Teva sandals on arrival.

“It’s really tied it in with the bohemian aesthetic of its clothes and its overall brand ethos around wellness and exploration,” Hall noted. “Seventy-five percent of millennials say travel, health and well-being are top of their priority list. Free People is really understanding what sort of partnerships they should be bringing to the table for their customer.”

Likewise, luxury e-tailer Net-a-Porter teamed up with Cathay Pacific for its first in-flight e-commerce venture. Cathay Pacific passengers can shop Net-a-Porter in midair from their screens and any purchases made will be delivered right to their hotel or destination on arrival in London, New York or Hong Kong.

“We can prepare for the changes to come by rethinking what permanent and temporary space should be doing for your brand or your business,” Hall said. “By reaching out beyond your own borders to collaborate and partner with other businesses to bring value to your customer and extend your network and reach by doubling down on developing new skillsets and teams within your business to deliver that FOMO (Fear of Missing Out) retail experience and by continuing to fearlessly experiment to understand AI and VR (virtual reality) in all its applications. And by doing that, you are building into your business the capability to remain relevant to the customer—even when they are in assisted, remote-control mode.”

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