Stephan Schambach is the Founder and CEO of NewStore, a modular, mobile-first omnichannel cloud platform for retail brands worldwide.
The pattern is often the same. An innovative technology emerges, gets overhyped as immediately revolutionary and then gradually finds its footing as its real-world capabilities and limitations become apparent over time.
Think e-commerce, blockchain, 5G, AR/VR and one of my personal favorites, RFID. Such is the case with AI, and perhaps more so because, unlike these other technologies, Hollywood has fueled the hype and told us for the last 50 years that AI would take over the world.
Breathe
After navigating the digital transformation of our industry for more than two decades, I’ve found it’s important to carefully assess the value and relevance of emerging tech before making strategic investments.
Jumping on trends without a clear understanding of their potential benefits and challenges can lead to costly missteps. When it comes to AI, there is a fine line between meaningful adoption and simply riding the wave of enthusiasm.
So, what should retail technology leaders expect? The current excitement around AI is primarily driven by advances in large language models like ChatGPT, not broader machine learning and data analytics initiatives.
While intriguing, I think these models are unlikely to immediately revolutionize retail productivity. I would bet their near-term impact will be limited to improving things like internal knowledge management and content creation workflows. Autonomous AI store associates displacing scores of human workers likely remains far off.
One thing is clear, though. Initially, the most realistic AI applications will stem from hyper-specific, incremental projects that address existing problems. As an example, technology vendors have already started working with brands to roll out AI-powered solutions for things like customer service bots, dynamic pricing algorithms, automated inventory tracking, personalized recommendations and enhanced loss prevention tools.
As these capabilities prove valuable at scale and more vendors begin developing similar solutions, AI should become more accessible for retailers. But as I’ve seen with other emerging technologies in the past, it will likely be a gradual process.
Thinking Fast And Slow About AI
The key is to balance openness to innovation with clear-eyed skepticism. Retailers should think fast, exploring AI capabilities with a willingness to run focused pilots and experiments and build organizational knowledge without betting the house.
But they must also think slow, rationally evaluating use cases, timelines and required resources rather than blindly following the herd. With this dual-speed mindset, retailers can tap into AI’s potential while avoiding the pitfalls of overhype and under-delivery.
You can adopt proven solutions that move the needle for your specific needs, rather than expecting overnight transformation. By being both receptive and critical, both optimistic and realistic, you can thoughtfully integrate AI where it provides real value while disregarding empty claims and flashy distractions.
To maximize ROI, retailers can also strategically integrate proven AI capabilities into their current technology stacks, relying on the specialized expertise of innovative vendors to develop and manage these tools.
While there is value in retail brands exploring AI innovation, I believe the highly specialized data science expertise required to tailor robust AI models is best left to vendors with dedicated resources, rather than retailers’ IT departments, which are focused on day-to-day operations.
In essence, retailers should resist the urge to transform into AI companies and instead, leverage the strengths of their technology partners.
The Retailer’s Guide To The AI Hype Universe
I believe that a pragmatic approach led by technology vendors is the way forward, but retail technology leaders still need to maintain a clear point of view on the latest AI breakthroughs.
The companies that successfully ride the wave of AI in retail will set themselves apart by their willingness to innovate, their grasp of realistic timelines and applicable use cases and their dedication to ensuring that the incorporation of AI enhances rather than detracts from the customer experience. AI for AI’s sake is destined to fail. And consumers will not embrace empty AI hype or technologies that worsen retail experiences through deception, annoyance or alienation.
To be successful in the short term, I believe any retail technology leader navigating the promise and realities surrounding AI should focus on the following:
1. Encourage Experimentation Within Your Organization
Create an environment that fosters experimentation. This includes providing the necessary resources and support for your team to pilot AI projects that align with your business needs. It’s also important to establish clear ethical guidelines to ensure these trials are conducted responsibly.
2. Take A Pragmatic Approach
It’s essential to be discerning when evaluating the potential of new AI technologies. Be wary of vendors who make grand promises and focus instead on proven use cases and practical solutions that address your organization’s specific challenges. Once these initial projects have proven their value, you can then consider scaling up and exploring more complex AI applications.
3. Prioritize Integration Over Isolation
When investing in AI, look for solutions that can be seamlessly integrated into your existing systems and processes. This is often more effective than pursuing standalone AI projects that may not align with your overall business strategy.
4. Foster Collaboration And Knowledge Sharing
Promote a culture of collaboration and open communication between different departments within your organization. This cross-functional approach can help ensure a comprehensive understanding and utilization of AI technologies, ultimately leading to more innovative and effective AI solutions that are tailored to your organization’s needs.
At the end of the day, I fully believe in the potential of AI to revolutionize retail as well as every other industry, but the transformation will not happen overnight. The path forward requires focusing on tangible AI innovations that customers value over empty hype.
By taking a pragmatic approach and honing in on practical solutions that address real-world challenges, retailers can leverage AI to enhance customer experiences, streamline operations and drive profitability.
Put another way, taking this more measured and proven approach can make AI the hero in your retail journey. The other path? I think you’ve seen that movie, and it doesn’t have a happy ending.
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