A Retailer’s Survival is Dependent on Artificial Intelligence

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Artificial Intelligence global revenue was $643.7 million in 2016. It is expected to balloon to $36.8 billion by 2025.

44% of all U.S. Ecommerce sales in 2017 went to Amazon. Amazon says that 33% of their sales were driven by their machine-learning-powered recommendation algorithm.

Netflix attributes 75% of the content that is considered by their 125 million subscribers to their Artificial Intelligence recommendation system.

Clearly retailers need to incorporate Artificial Intelligence into their business plan. What is holding them back?

Artificial Intelligence technology is complex and fast moving. There is a severe skills shortage in sourcing employees who can make this technology work. Deploying AI can be too time consuming and expensive for most businesses to make a success on their own.

Yet retail companies have massive amounts of data on their customers and their shopping experiences. There is so much data that the difficulty in analyzing it has led to conversion rates of only 2-3%. The retail industry has sat on this data for too long. The winners in the retail Artificial Intelligence revolution will be those that make the data work hard for them. Their data can help them predict customer behavior to boost sales and revenue. They can forecast demand based on buying patterns to optimize stock and inventory holdings.

Here are some of the products and services that are evolving from focus on using Artificial Intelligence to interpret all of this data:

Web Shops

Retailers are taking your shopping information and turning it into a targeted shopping experience. It is more intimate and more effective.

Online Chatbots

Customer service that can instantly answer your questions and assist you in your shopping.

In Store Intelligence

Making the experience more interactive using video analytics to see how many times you look at a product and how you compare it to other products. Noting the areas of the store that you don’t visit versus the ones that you do.

Virtual Mirrors

You don’t have to go to the trouble of trying on that dress or that lipstick. You can see how it looks in a virtual mirror.


Utilization of robots for manufacturing, inventory management, supply management and delivery has been around for a while, but retail robots to replace humans is just starting. Starbucks has begun to replace some staff with automated machines to make more consistent drinks and speed up the order and delivery process.

Targeted Ads

Yes, these have been around for a long time, but individually targeted ads are getting better and better. These can differ from store to store or from product category to product category.


It is an exciting time to be in retail. Scary, too. How each organization is able to incorporate Artificial Intelligence into their business plan will be a strong indicator of their ability to survive.

Interested in an analytic job search or in hiring an analytical professional? Contact Smith Hanley Associates’ Data Science and Analytics Recruiter, Nancy Darian at 312.589-7582 or ndarian@smithhanley.com.

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