The power and impact of the AI retail revolution

As retailers continue to adopt AI technologies, their potential uses are opening up an entirely new world of opportunities to improve their operations and satisfy customers // By George Minakakis

Intoday’s highly competitive retail market, those looking to enhance their position must embrace the power of artificial intelligence (AI) in connecting and engaging with consumers. AI will revolutionize how retailers interact with customers through personalized recommendations, powerful browsing tools, targeted marketing messages, and exceptional customer service. Most people are familiar with ChatGPT, an AI chatbot with over 100 million subscribers, and its potential extends well beyond simple tasks like writing poems or essays for students. Ignoring this means losing out on a significant opportunity to stand out in a crowded marketplace.

Google, which has always been perceived to lead in AI development, was scrambling to kick off their version of ChatGPT, called Bard.Ai. Microsoft has just invested $6.0 Billion into further developing this product and its planned launch on Bing - Microsoft’s search engine. What’s all the hype? It’s the potential for consumers to use these and other AI Chatbots to conduct searches, far beyond what chatbots can do today. The implications are significant when it comes to engaging consumers.

Chatbots aren’t new. However, this AI application is very different and offers something that can change how we compete, and challenge retailers once more, as ecommerce and Amazon has done. It will not only become a powerful browsing and direct shopping tool on a search engine for consumers. It also has the potential to turn search engines into marketplaces as well. Of course, if that were to happen, Amazon, Apple, Meta, Shopify, and others would be looking at how they can get their share of the search engine pie. What’s at stake here is that 1 per cent of search engine traffic, according to Microsoft, is worth close to $2 Billion in advertising.

How does this impact retailers?

First, when consumers start collecting the information that they need to buy the right product, browsing on a search engine takes time. And, comparison shopping is even more time-consuming. Search engines are okay for simple queries, but when a consumer needs to define their search explicitly, the service today is inadequate. We roam search engines like hunter-gatherers of the 1990s sifted through the yellow pages.

The technology companies that brought creative destruction two decades ago missed the opportunity to create greater consumer convenience regarding online searches. Marketplaces and search engines have been too busy collecting visitor data and selling advertising. Even Alexa and Siri are limited. The revenue and profits of these organizations have been primarily driven by consumers conducting searches. This next revolution needs to be aggressively pursued and continuously improved.

With all this, OpenAi with ChatGPT comes along, and it has far more capabilities than just listing a group of options on a webpage. As we launch new Chatbots, a consumer can get very detailed in their search, and as long as the data the AI unit is working from is accurate, the customer experience improves substantially. With technology engaging consumers directly, it will be revolutionary. This also has the potential for the emergence of new business models.

Imagine a busy family that needs to replace their built-in oven. With little time in their day, they turn to their computer and conduct a quick search with the help of a chatbot. They ask this AI platform to list all the preferred brands of built-in ovens within a specific price range, their desired features, customer ratings, warranties, retailers who sell them, availability, and fastest delivery. In seconds a search is completed. They have an analysis to go through quickly. This would have taken an hour or more instead, and it’s delivered on screen in seconds in an easy-toreview table. And if they are ready, they can place the order online immediately.

Such a capability, combined with the vast amount of product data that search engines and vested retailers provide access to, could allow consumers to quickly compare products, ask questions, and place orders through the chatbot interface. It’s not farfetched, I had ChatGPT conduct this hypothetical search for the same appliance, and it delivered it in a table format. This will address many customer frustrations, from the time it takes to decide on the right product to choosing the right retailer, ordering it and having it delivered for installation.

Expediting browsing

The convenience of consumers shopping faster should not be dismissed by any retailer. A customer experience is about a higher service level that is consistent and convenient. A search like this can prompt consumers to stores to see and order, or they may just do it online. That sale will depend on how compelling a retailer can be. However, there is a warning here. Simply thinking that this is a traffic generator would be an error. It is a tool to expedite browsing and make shopping choices faster. Retailers need to be more engaged in this.

When it comes to attractive technology, things will change faster, and retailers will need to elevate their online capabilities in every aspect. A retailer’s website and its capabilities must be equally robust in communicating. Their visibility on a search engine will require far more effort and management to be recognized by an AI personal assistant. That needs effective advertising development and spending on the proper channels.

Risks and Opportunities

Unleashing large language model chatbots on search engines could negatively impact retailers not as sophisticated in their technology capabilities. Retail customers expect quick and seamless shopping experiences in today’s consumer landscape. If a retailer’s online platform is slow, awkward, or lacks the ability to provide real-time assistance for the user, they risk losing potential customers to more technologically engaging competitors.

During the pandemic, everyone rushed to be online with a website. It was never enough and will be less of an advantage shortly. And there is a strong likelihood that as human dependence and trust grow with AI, ecommerce will continue to grow faster. A retailer must be visible, which means fighting through all the noise. This time to get the attention of an AI chatbot designed to assist customers with their specific product search by providing recommendations, answering questions, and guiding them through the purchasing process.

Refocussing retail tactics

The competitive landscape will be more technologically intense when it comes to customer engagement. In light of this, retailers will have to refocus their tactics. That means defining chatbot-specific SEO strategies by identifying concise answers to common customer questions about their brand or product, resulting in a widening gap that’s pushing many retailers to join marketplaces that offer robust AI, SEO, and marketing services.

Major retailers with AI chatbots that can understand natural language entries will assist their customers in expediting their purchases. This level of engagement will create consumer expectations for all retailers to follow.

Retailing has always been challenging; we need to be prepared to level the AI playing field, regardless of the interface humans choose to browse and shop with, even though it’s early days and imperfect. It will be as powerful and influential a tool as the iPhone was when first introduced 16 years ago, decoupling us from our homes and computers and continuously improving our experience and convenience.

-------

George Minakakis is CEO of Inception Retail Group Inc. and author of The New Bricks & Mortar - Future Proofing Retail.