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Artificial Intelligence “Glass Box,” In-Store Personalization

Nikki Baird is Vice President of Retail Innovation at Aptos, a retail enterprise solution provider, as well co-founder of Retail Systems Research and a former analyst at Forrester Research. She discusses advancements in Artificial Intelligence that will help retailers ensure that AI isn’t making bad assumptions under the adage “garbage in, garbage out” as well as the trend toward in-store personalization in Part 7 of EcommerceBytes Online Selling Trends 2019.

Retail Breaks Out of the AI Black Box
First-generation AI solutions were simple – data in, answer out. Solutions were designed to protect the average end user from confusion and distraction. While black box solutions serve their purpose, they also limit the value organizations can extrapolate by hiding AI logic, which in theory could be used to teach humans what was learned that led to various recommendations.

In 2019, we’ll see more organizations move to glass box AI, which exposes the connections that the technology makes between various data points. For instance, glass box AI not only tells you there is a new retail opportunity, it also uncovers how that opportunity was identified in the data. It also provides retailers with an opportunity to check their data – and any public or aggregate data they pull in – to ensure AI isn’t making bad assumptions under the adage “garbage in, garbage out.”

This may sound more complex, because it is. Even with next-gen UX that simplifies the integration of AI into processes and workflows, retailers must invest in educating employees to make the most of these. But if we’ve learned anything in the last decade, data-driven insights aren’t a passing fad.

Retailers Cut the Creepy for In-Store Personalization
Since consumers leave a virtual crumb trail, it’s relatively easy to develop a good understanding of ecommerce shoppers’ preferences and make smart recommendations based on gathered data. As a result, online personalization has paid off. However, this success is much harder to replicate in physical settings where in-store technologies such as facial recognition and phone sniffing have a creepy factor.

All of the personalization that retailers have implemented to-date has been focused on generating insights based on observed behavior, and delivering those insights in an “impersonal manner,” by relying on technology to make product recommendations or order search results.

Store personalization has to be delivered in the context of the physical location and the employees at that location. Retailers have to figure out how to turn personalization insights into actions that store employees can deliver in a way that is not creepy – 2019 will see both retail #fails and some new successes, as retailers get better at translating the technology of personalization into the store environment.

Clienteling in the Age of Social 
Retail clienteling has moved beyond the traditional simplicity of a luxury retailer’s little black book, but there’s still a way to go from main street assisted selling for the practice to reach its full potential. In 2019, retail will adopt the next-generation of clienteling, extending its reach beyond the store and converting associates into 24/7 affiliate sellers.

For instance, Macy’s employee affiliate program, while currently limited, might grow to include any employee, enabling them with external communication, online storefront and social media tools, as well as a platform for communication with other associates. As retailers increasingly adopt this model, they’ll gain greater visibility into exactly how offline and online influence each other as consumers cross channels.

The Rise of the Storefront as a Service 
In 2019, ecommerce companies will increasingly go brick-and-mortar as they recognize the value of physical stores. However, digitally native businesses can and will approach the store in a fresh and unique way that takes a customer-first rather than inventory-first approach. Unique store formats will extend well beyond popular pop-up shops to include blended retail environments that infuse experiences and social spaces with shopping.

Introduction to Online Selling Trends 2019: Back to Basics
1) Diversification and Expansion Beyond Marketplaces
2) New Sales Tax Obligations
3) An Increase in Returns Combined with High Demand for Used Goods
4) Major Changes in USPS Rate Structure, Adoption of Voice Technology
5) Retail Convergence Accompanied by Tax Complexities
6) Increasing Cost and Complexity of Parcel Shipping
7) “Glass Box” in Artificial Intelligence, In-Store Personalization
8) Continued Dominance of Ecommerce by Amazon

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.