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What It’s Going to Take to Unlock AI’s Potential

The retail industry continues to lean into the idea that experiences and personalization are the keys to enabling retail to reconnect with an increasingly distracted, fickle consumer. Often executing on these goals requires employing artificial intelligence. But for all of the industry’s talk about AI’s potential, much of it is still unrealized.

At last week’s NRF Big Show in New York, exhibitors discussed the reasons retailers are hung up when it comes to implementing AI and how they can get unstuck and moving forward.

“The challenge for traditional retailers is essentially a change of culture and seeing themselves as technology companies and e-commerce companies. That is what’s holding them back the most, the culture change that is going to come,” said Yael Citro, vice president of marketing at online search firm Twiggle. “They will have to reinvent how they see e-commerce and the in-store experience.”

This culture shift was a top talking point for several speakers at the event.

For intimates brand Cosabella, switching from wholesale only to a business model that includes direct-to-consumer meant “we had to change the mindset of everyone in the company,” said president and COO Silvia Campello.

Similarly, Lori Flees, who’s charged with leading Walmart’s Store No. 8 incubator, described the ways in which her team has had to operate outside of the retailer’s typical processes in order to foster tech startups.

Marne Levine, COO of Instagram, said companies must adopt a “mobile mindset” in order to reach consumers, meaning they have to be willing to go faster, work on shorter lead times and experiment—basically change their entire approach.

It’s daunting to think a whole organization has to change, and the scope of that task has paralyzed some companies, making it impossible for them to onboard innovation.

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“Change can be painful, time consuming and sometimes costly. And as such, this can be a hurdle for some,” said Curt Thornton, COO of Provision Interactive Technologies, the issue is bigger than AI.

While it’s only natural to be afraid in the face of uncertainty, Thornton suggests store execs focus on the potential benefits of AI, which should serve to outweigh the initial fears. And the sooner they do, the better.

“[Retailers] are fundamentally missing the long-term perspective by not asking the many tough questions that include: ‘Can I compete as a retailer without embracing new technologies?’; ‘Is technology the change-agent of retail?’”

Once retailers have embraced the reality that it’s not if, but when when it comes to the adoption of technologies rooted in AI, the question becomes where to start.

The answer, according to Sanjay Kupae, AVP of alliances and marketing for Manthan Systems, is everywhere.

“It can’t be one area. It’s rethinking everything we are doing. It’s a whole system that needs to be realigned with the consumer,” he said.

[Read more about the value retailers are placing on innovation: The Tech Investments Retailers are Banking on for Improved Customer Experience]

But how are retailers, who are already drowning in an ocean of other demands, supposed to onboard AI as well? Sabine Gruen, head of industry marketing retail at connected commerce company Diebold Nixdorf, said it’s tending to all of the other fires that have kept some in retail from being able to focus on technology.

As a result, she said, they’re getting further and further behind as their systems get further and further out of date. “Another limiting factor is retailers’ legacy IT infrastructure that does not allow a quick and easy deployment of AI solutions and distribution across communication channels,” she said.

For those that have recognized the value of data, often times they don’t know what to do with it once they have it. “Cross-channel data needs to be thoroughly analyzed to produce predictive analytics that can forecast what consumers are interested in buying, sending them targeted promotions, and ultimately, navigating them to the right shelf,” Gruen added.

E.Y. Snowden, CEO of merchandising execution software provider One Door, said to get to that stage takes what most retailers lack today. “You need a powerful tool to translate success into AI,” he said. “That’s what really excellent retailers are doing today.”

Another thing these top performers are doing, is recognizing that they’ll only succeed through collaboration, which is a new concept for these traditionally insular organizations. “There is an instinct to want to do everything in-house; that is going to change,” Citro said. “There’s no way retailers are going to be able to leverage technologies to their full capacity and stay competitive if they don’t work with third parties.”

—Reporting by Genevieve Scarano