How artificial intelligence is used in retail

ChatGPT seems to have taken the world by storm. Within the first week of the artificial intelligence (“AI”) based chatbot’s initial release on November 30, 2022, it had amassed over 1 million users; Fast forward two months and the technology developed by OpenAI had 100 million active users, making it the fastest growing consumer application ever launched. The draw for users? According to Uri Gal, a professor of business informatics at the University of Sydney, they are drawn to the tool’s advanced features, including its ability to provide quick, conversational responses to user input. At the same time, ChatGPT and competing chatbots have attracted widespread attention due to their “potential to cause disruption across multiple sectors,” including fashion and retail more broadly.

With companies in the fashion/retail industry using AI chatbots, SECOO Group has given a hint of what the status quo could be like. After announcing last month that it would be “conducting in-depth research and expansion into AI-generated content and ChatGPT-related technologies” to improve its customer conversion rate (an announcement that caused its Nasdaq-traded shares to jump 124 percent skyrocketed in February), the SECOO Group announced that it is one of the first partners to use the ERNIE Bot developed by Baudi. SECOO confirmed that it will adopt the Chinese search giant’s leading intelligent conversational technology in the field of intelligent luxury marketing as part of the first group of parties to adopt Baidu’s chatbot – dubbed “the Chinese version of ChatGPT”. what it bills as “the first landing of dialogical language model technology on the domestic luxury smart marketing scene.”

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In particular, the Chinese luxury e-commerce platform says it is interested in using chat-centric AI to “realize interactive dialogues similar to those of real people through ChatGPT technology,” as well as “the richness of text and to further improve video content related to luxury”. , goods point of sale description and other related content and greatly improve the [customer] Exchange rate.”

Alluding to the fact that the practical utility of AI and machine learning extends far beyond bots like ChatGPT and the yet-to-be-announced ERNIE, a February 2023 Rackspace Technology survey of 1,420 global IT decision-makers across all industries found that 71 percent of retail respondents indicated that artificial intelligence/machine learning (“AI/ML”) is at the forefront of their IT/business strategies. Specifically, 62 percent of survey respondents said they use AI/ML to predict business performance.

Using AI models to, for example, anticipate popular products by type/style and/or geography, and then make appropriate manufacturing/distribution and pricing decisions (to avoid over- or under-stocking and to support full-price sales) is a use case that companies in the retail industry have already deployed.

Case in point: Coach, Kate Spade and Stuart Weitzman owner Tapestry Inc. CEO Joanne Crevoiserat said in a Q2 earnings call in February that the company was “leverag[ing] new data analysis functions to optimize our product matching processes, such as For example, using artificial intelligence to forecast customer demand and better position stock and stores.” The result: “Increasing stock availability and ensuring our product was in the right place at the right time as we match supply and demand to provide an excellent customer experience.”

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Fortune isn’t the only company using AI — and/or touting the benefits of AI. Fortune reported March 1 that references to AI and related terms in calls to investors are already up 77 percent year over year.

Meanwhile, 61 percent of Rackspace Tech respondents said they are using AI/ML for data analytics, followed by 56 percent using it as a driver of innovation, and 52 percent using it to both “improve speed and efficiency as well as increase of speed and efficiency” to reduce risks in the future.”

In a separate but related note, 73 percent of retail respondents who have used AI/ML to power their business said it resulted in “faster profitability, higher productivity, higher revenue streams, [and] Reduced operational costs” and 72 percent cited “improved customer satisfaction and risk management” as a by-product of their use of AI. Regarding the top benefits to come from using AI/ML, 69 percent pointed to “more innovation and personalized advertising/marketing”, 66 percent indicated that “more understanding of [their] companies/customers,” 65 percent said “reduced costs of developing new products” and 64 percent said “the ability to hire/recruit new talent and increase sales.”

Finally, when it comes to AI adoption, many companies have been making efforts for years; LVMH, for example, announced back in 2021 that it had entered into a 5-year, AI-focused partnership with Google Cloud Platform to enable its brands to leverage new AI tools in “product development, global supply chain and logistics operations and Partners” , employee and customer interfaces; enables the development of new business use cases at scale and ensures the highest standards of customer service and support.”

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However, the reality for many looks like a more recent adoption of AI, according to Rackspace, which found that “more respondents have started their AI/ML journey over the last year.” This reflects “the fact that these technologies are being viewed as key to increasing efficiencies in uncertain economic times,” according to Rackspace, which also notes that the survey result “makes it clear that many companies “still struggle to embrace the technologies fully understand or realize benefits of AI/ML.”