Will we see AI’s impact on 2019 holiday results?

Discussion
Photo: @lelia_milaya via Twenty20
Dec 26, 2019
Gib Bassett

A majority of executives whose companies have adopted AI report that it has provided an uptick in revenue in the business areas where it is used, and 44 percent say AI has reduced costs, according to McKinsey’s November Global AI Survey Report.

Among the encouraging findings:

  • AI-use cases are most likely to drive revenue growth in marketing and sales, product and service development, and supply chain management.
  • AI-use cases are most likely to reduce costs in manufacturing and supply chain management.
  • AI adoption increased in nearly every industry in the past year. Retail has seen the largest increase, with 60 percent embedding at least one AI capability in one or more functions or business units, a 35 percent increase from 2018.

On the downside, only a small share of companies across industries are attaining outsized business results from AI. Moreover, McKinsey finds that some core practices are necessary to capture the value of analytics at scale, including aligning business leaders on AI’s potential across each business domain, as well as investing in talent and developing skillsets.

Even AI-high performers have work to do. Only 36 percent of respondents from these companies say their frontline employees use AI insights in real time for daily decision making, and just 42 percent systematically track a comprehensive set of well-defined key performance indicators for AI.

Adoption by business people is a function of ease of use and value, but also executive leadership and culture. Rationalizing your use case plans against the landscape of applications, tools, platforms, data science and IT capabilities at your disposal will make the most of your investments — so you can focus on the softer skills side of AI value.

DISCUSSION QUESTIONS: Do you think retailers overall are doing enough to ensure their investments in AI will pay off? Are retailers doing the right things to scale? Do you think we will see the impact of AI adoption in 2019’s results?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The balance with which the retail industry has applied AI across the full consumer experience, and the results they are experiencing, are encouraging."
"The McKinsey study shows promising business results for any retailer adopting AI. However, the study also calls out the real problems of employee adoption and cultural change."
"Companies that reap biggest benefits are the ones that enable analytics culture within the organization, meaning a significantly better culture of innovation..."

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10 Comments on "Will we see AI’s impact on 2019 holiday results?"


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Ken Lonyai
BrainTrust

Few businesses in any vertical are anywhere near AI’s potential. AI is still a nascent group of technologies. Even the term is about as specific as saying “I ate food last night.” To reach its potential, two things have to happen:

  1. The technologies themselves have to continue to evolve and “get smarter”;
  2. The application of AI needs to be use-case driven where it is the best set of technologies to create positive change.

AI is still getting only modest attention and is still a big sell due to skepticism and some false starts. In time, as proper uses show the upside of AI and more specifically machine learning, adoption and benefits will show themselves. I imagine that 2019 will show some AI positivity in retail, but overall, nothing patently obvious.

Susan O'Neal
BrainTrust
1 month 15 hours ago

Winning in retail has always been about anticipating and satisfying consumer needs and wants as efficiently as possible. Excellence in the application of AI at the anticipation stage (marketing, product) can only ever be as good as its application at the the end of the experience (supply chain, delivery, logistics). The balance with which the retail industry has applied AI across the full consumer experience, and the results they are experiencing, are encouraging. I’m excited to see what happens in 2020!

Suresh Chaganti
BrainTrust

In my experience, companies that reap biggest benefits are the ones that enable analytics culture within the organization, meaning a significantly better culture of innovation which integrates AI seamlessly into the day-to-day operational decision making.

Companies that view AI as an automation tool stop at using it as a Robotic Process Automation (RPA). Executives who don’t truly understand and internalize the AI’s capabilities will not be able to lead their organizations.

Brandon Rael
BrainTrust
AI is a key part of the digital transformation that all companies have to undergo in the modern age. We certainly have seen leading retailers such as Walmart, Target, Best Buy and the e-commerce giant in Seattle leverage the scalable power of AI to drive personalization, increase efficiencies and optimize their supply chain operations. However, it is quite challenging to quantify the success rate of adopting AI as it is much more of a marathon vs. a sprint. When we speak of the power of AI it’s a much longer journey, as the solution is continuously learning, adapting, and evolving to meet the needs of the company. There are short term quick wins in terms of personalized emails, and more efficient supply chain optimization planning etc. Yet, it will take years, if not decades to truly monetize and take advantage of the power of AI. The customer path to purchase is an optimal way of leveraging AI to drive a more seamless physical and digital experience. This is the battleground where retailers and brands should… Read more »
Michael La Kier
BrainTrust

All retailers are chasing the Holy Grail of AI solving their major issues. Today’s AI is far from realizing its potential to improve retail decisions, especially as shopping is not always a rational pursuit.

Harley Feldman
BrainTrust

The hardest part of any technology implementation is changing business processes to take advantage of the technology results. In the case of AI, there are likely recommendations from the results that deal with product selection, product correlations, and stocking levels that associates may find difficult to accept since they are different than their previous experiences. Education and training need to be done to educate associates as to why the changes are being implemented and the value they create.

As long as AI provides positive results for the business, its use will continue to expand. Retailers will learn lessons from using AI data including the impact of its implementation which will provide impetus to try more ideas.

Jeff Weidauer
BrainTrust

AI currently represents potential for improved results, but not much else. Most of the use of AI today is exploratory, and until retailers a.) fully commit to its use, and b.) abide by the findings, it won’t deliver the promised results.

Ken Morris
BrainTrust

AI’s impact will surely be felt but few retailers will communicate their secret sauce. The winners here will likely be leveraging some form of “prescriptive” AI. It’s not enough to just identify what occurred or predict what will occur. The idea is to do something about it in a closed loop process with notifications and management escalation.

These AI prescriptive bots are the key to AI success. When you capture remedial functions, activities, tasks and steps you can automate actions, and significantly increase performance and sales while reducing cost.

Michael Terpkosh
BrainTrust

2020 will be the year AI really starts to show big results or stalls for retailers. The McKinsey study shows promising business results for any retailer adopting AI. However, the study also calls out the real problems of employee adoption and cultural change. Any retailer moving aggressively into the use of AI better have an equally aggressive plan for employee change management and training. Without retailers considering AI’s effects on employees, the employers will never achieve their desired results.

Peter Charness
BrainTrust

Measurable results for holiday 2019? Probably not. Signs of promise? More than likely. At a moment of inflection where retailers struggle to find skilled staff, and at a time where retail is changing rapidly but still demanding lower costs for higher productivity, AI stands in the middle of the crossroads. By Christmas 2020 signs of promise will be turning into ROI — with a likelihood of there being continuous improvement from AI, as opposed to the typical one-time gains from most other technologies.

wpDiscuz
Braintrust
"The balance with which the retail industry has applied AI across the full consumer experience, and the results they are experiencing, are encouraging."
"The McKinsey study shows promising business results for any retailer adopting AI. However, the study also calls out the real problems of employee adoption and cultural change."
"Companies that reap biggest benefits are the ones that enable analytics culture within the organization, meaning a significantly better culture of innovation..."

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