The use of VR and AI in retail business

By Bahige El-Rayes, Partner at Kearney

The COVID-19 crisis has shaken retail business to the core. Small businesses are at risk of failure and the future looks turbulent for larger enterprises too. Many are expected to adopt digital tools like artificial intelligence and virtual reality and accelerate e-commerce. However, the big challenge is how to pivot profitably and do it in a short amount of time. Below we examine how retailers are adapting with the latest in digital, including AI and VR.


Shift to a Touchless Retail

The store of the future will likely require a more touchless experience. While many digital concepts introduced pre-COVID19 seemed ahead of their time – the business and social case for those technologies has become much stronger in a world fighting against a pandemic.

The store of the future will likely have a selection of a few elements – checkout free experience,  inventory visibility, picking robots, smart mirrors, connected rails to enable online and offline shopping and virtual and augmented reality to allow the personalisation of a product.

“Smart” mirrors implemented in some stores can tell your size, showcase recommendations and help you choose products. A major high-end fashion retailer has adopted an RFI D powered clothing rack that recognises movement of products and transfers them to a wish list on a smartphone app.

Digitising Back of the House

One of the major benefits of using AI in retail is the way it enables adaptation to the unexpected. It optimises the efficiency and agility of the supply chain – something that’s even more important today as we face a reduced workforce and limitations as a result of the lockdown.

For example, a digital twin utilises IoT, sensors, AI and machine learning to create a digital version of a supply chain. This allows retailers to anticipate anything from breakages, to peaks and troughs in customer demand – saving time and money, and preventing setbacks. Recognising these trends, Kearney has built a lab to allow businesses to develop a supply chain twin and explore impact on their operations.

Additionally, using SKUs and AI technology can help retailers optimise inventory – more antiquated methods of forecasting like excel spreadsheets are notoriously unreliable, resulting in wastage and loss of profit. AI and machine learning analyses data on a more granular level and determines what quantities of different SKUs are needed down to the exact number, which ensures retailers can keep pace with their customers’ ever-changing attitudes and that supply is in line with demand.

We’ve also seen great use of VR for optimising supply chains. In retail, VR can make the design element of supply chain management easier through allowing designers, engineers and architects to visualise multiple designs at once.

Getting there

Implementing all of these technologies can be costly. Leading companies evaluate what will be essential to the customer journey and what will most benefit the customer. In addition, the costs saved through digitising supply chain and back of the house can and should be reinvested in creating the store of the future.

COVID-19 has accelerated this need to adapt and evolve. To ensure continued business success, retailers need to consider how to deploy the latest products in AI and VR both for efficiency and customer engagement. It will not only facilitate and improve back of house operations, but it will also result in more satisfied and loyal customers now, and in the future.

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