Artificial Intelligence and broadband were already eating retail for breakfast. In the first half of 2019, we saw 19 retailer bankruptcies. And with the COVID-19 pandemic, the retail apocalypse is only accelerating.
S&P Global Market Intelligence has now tallied over 49 bankruptcies in 2020, the highest in over a decade.
What’s coming in this retail era is astounding.
For example, why drive when you can speak? Revenue from products purchased via voice commands is expected to quadruple from roughly US$2 billion today to more than US$8 billion by 2023.
VR, AR and 3D Printing are converging with AI technology, drones and 5G to transform shopping on every dimension. And as a result, shopping is becoming dematerialized, demonetized, democratized, and delocalized… a top-to-bottom transformation of the retail world.
In today’s blog, we’ll discuss the future of retail, including a deep-dive into AI and its far-reaching implications for the industry.
Let’s dive in…
NOTE: Understanding how to use exponential technologies like AI to transform your business is a key area of focus during my upcoming Abundance 360 Mastermind in January.
A Day in the Life of 2029 - Powered by AI assistant
Welcome to April 21, 2029, a sunny day in Dallas. You’ve got a fundraising luncheon tomorrow, but nothing to wear. The last thing you want to do is spend the day at the mall.
No sweat. Your body image data is still current, as you were scanned only a week ago. Put on your VR headset and have a conversation with your AI assistant.
“It’s time to buy a dress for tomorrow’s event” is all you have to say.
In a moment, you’re teleported to a virtual clothing store. Zero travel time. No freeway traffic, parking hassles, or angry hordes wielding baby strollers.
Instead, you’ve entered your own personal clothing store. Everything is in your exact size… And I mean everything. The store has access to nearly every designer and style on the planet.
Ask your AI assistant to show you what’s hot in Shanghai, and presto—instant fashion show. Every model strutting down the runway looks exactly like you, only dressed in Shanghai’s latest.
When you’re done selecting an outfit, your AI assistant pays the bill. And as your new clothes are being 3D-printed at a warehouse—before speeding your way via drone delivery—a digital version has been added to your personal inventory for use at future virtual events.
The cost? Thanks to an era of no middlemen, less than half of what you pay in stores today.
Yet this future is not all that far off…
Let’s begin with the basics: the act of turning desire into purchase.
Most of us navigate shopping malls or online marketplaces alone, hoping to stumble across the right item and fit. But if you’re lucky enough to employ a personal assistant, you have the luxury of describing what you want to someone who knows you well enough to buy that exact right thing most of the time.
For most of us who don’t, enter the digital assistant.
Right now, the four horsemen of the retail apocalypse are waging war for our wallets. Amazon’s Alexa, Google’s Assistant, Apple’s Siri, and Alibaba’s Tmall Genie are going head-to-head in a battle to become the platform du jour for voice-activated, AI-assisted commerce.
For baby boomers who grew up watching Captain Kirk talk to the Enterprise’s computer on Star Trek, digital assistants seem a little like science fiction. But for millennials, it’s just the next logical step in a world that is auto-magical.
And as those millennials enter their consumer prime, revenue from products purchased via voice-driven commands is projected to leap to US$8 billion by 2023.
We are already seeing a major change in purchasing habits. On average, consumers using Amazon Echo spent more than standard Amazon Prime customers: US$1,700 versus US$1,300.
And as far as an AI fashion advisor goes, those too are here, courtesy of both Alibaba and Amazon.
During its annual Singles’ Day (November 11) shopping festival, Alibaba’s FashionAI concept store uses deep learning to make suggestions based on advice from human fashion experts and store inventory, driving a significant portion of the day’s US$75 billion in sales.
Similarly, Amazon’s shopping algorithm makes personalized clothing recommendations based on user preferences and social media behavior.
But AI technology is disrupting more than just personalized fashion and e-commerce. Its next big break will take place in the customer service arena.
According to a recent Zendesk study, good customer service increases the possibility of a purchase by 42%, while bad customer service translates into a 52% chance of losing that sale forever. This means more than half of us will stop shopping at a store due to a single disappointing customer service interaction.
These are significant financial stakes. They’re also problems perfectly suited for an AI solution.
During the 2018 Google I/O conference, CEO Sundar Pichai demoed the Google Duplex, their next generation digital assistant. Pichai played the audience a series of pre-recorded phone calls made by Google Duplex. The first call made a reservation at a restaurant, the second one booked a haircut appointment, amusing the audience with a long “hmmm” mid-call.
In neither case did the person on the other end of the phone have any idea they were talking to an AI assistant.
The system’s success speaks to how seamlessly Artificial Intelligence can blend into our retail lives and how convenient it will continue to make them.
The same technology Pichai demonstrated that can make phone calls for consumers can also answer phones for retailers—a development that’s unfolding in two different ways:
(1) Customer service coaches:
First, for organizations interested in keeping humans involved there’s Cogito, a startup founded by MIT alumni that has built an AI customer service coach.
Based on the founders’ own research at MIT, the company can analyze customer voice intonation, using it to tell whether the person on the phone is about to blow a gasket, is genuinely excited, or anything in between. The AI then delivers behavior recommendations or “nudges” to facilitate more productive interactions.
Cogito has been used in more than three dozen call centers, helping human sales agents understand and react to customer emotions, ultimately making those calls more pleasant and more profitable.
For example, managers at insurance giant MetLife say that the program has improved customer satisfaction by 13%. It also helped agents, who take an average of 700 calls a week, become more efficient. One employee remarked that Cogito helped her cut her average call time nearly in half.
(2) Replacing customer service agents:
Second, companies like New Zealand’s Soul Machines (which raised $40 million earlier this year) are working to replace human customer service agents altogether.
Powered by IBM’s Watson, Soul Machines builds lifelike customer service avatars designed for empathy, making them one of many helping to pioneer the field of emotionally intelligent computing.
With their technology, 40% of all customer service interactions are now resolved with a high degree of satisfaction, no human intervention needed. And because the system is built using neural nets, it’s continuously learning from every interaction—meaning that percentage will continue to improve.
The number of these interactions continues to grow as well. Soul Machines’ customers include Google, Sony, the Royal Bank of Scotland, PricewaterhouseCoopers, Autodesk, and Procter & Gamble, among others.
And customers continue to prefer AIs over humans. More than 81% of customers say that they would chat with the company’s avatars again. And nearly 90% say they achieved their goals through engaging with the avatars.
For Daimler Financial Services, Soul Machines built an avatar named Sarah, who helps customers with arguably three of modernity’s most annoying tasks: financing, leasing, and insuring a car.
This isn’t just about AI—it’s about AI converging with additional exponentials. Add networks and sensors to the story and it raises the scale of disruption, upping the FQ—the frictionless quotient—in our frictionless shopping adventure.
AI technology makes retail cheaper, faster, and more efficient, touching everything from customer service to product delivery. It also redefines the shopping experience, making it frictionless and—once we allow Artificial Intelligence to make purchases for us—ultimately invisible.
Prepare for a future in which shopping is dematerialized, demonetized, democratized, and delocalized—otherwise known as “the end of malls.”
Of course, if you wait a few more years, you’ll be able to take an autonomous flying taxi to Westfield’s Destination 2028—so perhaps today’s converging exponentials are not so much spelling the end of malls, but rather the beginning of an experience economy far smarter, more immersive and whimsically imaginative than today’s shopping centers.
Either way, it’s a top-to-bottom transformation of the retail world.
Join Me at Abundance 360 in January!
If you want to understand how exponential technologies like AI are reshaping retail and other industries, then consider joining my Abundance 360 Mastermind Summit.
Every year, my team and I select a group of 360 entrepreneurs and CEOs to coach over the course of a year-long program. A360 starts each January with a live event and continues every two months with Implementation Workshops, in which I personally coach members in small groups over Zoom. (In January 2021, you have a choice of live “in-person” or “virtual” participation. See the A360 website for more info.)
My mission is to help A360 members identify their massively transformative purpose, select their moonshot, hone their mindsets, and leverage exponential technologies to transform their businesses.