A.I. and virtual reality may propel future of retail (+video)

With new tech, see yourself on a mountain top from a store floor, or browse store aisles from your couch

retail cloud

As retailers look ahead to the way consumers will shop in the next five to 10 years, it's likely they'll be using technologies like artificial intelligence and virtual reality to keep customers interested.

Retail is no longer about having the latest products on the shelves in brick-and-mortar stores or having a cool website. It's becoming much more than that.

Some retailers already are working to merge their in-store and online efforts, which provides more information about their customers, allows better customer service and the chance to sell more goods.

But even that information won't be enough in the not-so-distant future to help a retailer succeed.

A retailer of the future might know when an online customer walks in the door of a brick-and-mortar store and will send over a sales clerk to talk to her about what she was looking at on the retailer's website the day before.

A retailer with an online presence but with physical stores only in major cities might enable customers in rural areas to feel like they're walking through store aisles from the comfort of their own living rooms.

These new ways to engage shoppers will require new technologies – including virtual reality and artificial intelligence -- to make them happen.

"What I do see happening is we are focused on taking advantage of delivering new experiences in the store," said Scott Emmons, enterprise architect of the Neiman Marcus' innovation lab, called iLab. "The pace of change has accelerated so rapidly and the amount of new things is coming at retailers so quickly, they're having to rethink how to handle evaluating and employing technology. It just keeps coming harder and faster. If you sit idle and let it pass you by, your competitors are going to figure it out."

This need, not just for technology, but for emerging technology, has caught some retailers by surprise since the industry hasn't been known for being in tune with tech or investing in R&D.

Today, retailers need to pay attention to what's coming and plan for how they will address the changes that lie ahead.

The North Face is one company embracing these new technologies.

"In a world where the assortment is endless, and price and convenience factors have been exhausted or are no longer a competitive advantage… consumers are going to want real interaction," said Cal Bouchard, senior director of e-commerce at The North Face, which is using artificial intelligence to help online customers find the right apparel, like a new jacket. "So I think technology that can further interactions, help brands and retailers tell stories and make consumers feel special will be the key."

So what technologies do retailers need to focus on? Here's what some major players had to say.

Virtual reality

Generally, the first technology that many retailers bring up when asked what will be important to their business in the next five to 10 years is virtual reality.

reuben arnold virgin atlantic Virgin Atlantic

Reuben Arnold is senior vice president of marketing and customer experience at Virgin Atlantic.

"Virtual reality or anything that helps the customer understand what they're buying is going to be important," said Reuben Arnold, senior vice president of marketing and customer experience at Virgin Atlantic Airways. "Virtual reality can explain more of the emotional side of it. You're able to put yourself in that experience, and it's more about how you feel and not just about what you're buying."

Virgin Atlantic has begun using a virtual reality experience and is working with Microsoft to develop not only the goggles needed but a Windows 10-based app. The experience, which the airline is using at trade shows and corporate customer meetings, is designed to let the customer see what it would look like and feel like to travel in Virgin Atlantic's Upper Class cabin.

"We usually show photos and talk about benefits," Arnold said. "But we pride ourselves on the experience and how you feel when you fly with us. We wanted to bring the experience to life. We were looking for a new and engaging way to show you how it feels to fly with us."

That's just the beginning for virtual reality in a retail setting.

Bouchard, who spoke at the recent National Retail Federation Big Show in New York, said she is watching the advancements in virtual reality technology and trying to figure out where and how The North Face can use it.

She envisions an in-store customer using a virtual reality system to see what it would be like to stand on top of a mountain and look down over the valleys below. VR could also be used to inspire customers to do more hiking or skiing, which might prompt them to pick up a new jacket, boots or gear.

For Emmons at Neiman Marcus, advanced virtual reality is the ultimate way to blend the digital and physical worlds.

cal bouchard north face smaller

Cal Bouchard is senior director of e-commerce at The North Face.

"As that tech matures, and you don't have to wear an alien headset and more regular people would use it, I think that's going to be a big play in retail," Emmons said. "In a virtual or augmented reality world, a pathway shows up on the store floor and leads me to the product I'm looking for. Or you pick up a top and you see a virtual top in a different pattern or color show up on the side. Maybe my digital store could pop up right in someone's living room. With virtual reality, my store could be anywhere."

For that to happen, the technology needs to be so easy to use that people of all ages are comfortable trying it.

Artificial Intelligence

Retailers also said the day when A.I. is commonly used to help customers find what they want – and even introduce them to new products and services they weren't aware of – is coming soon.

At The North Face, Bouchard said online customers, especially new ones, are finding A.I. helpful. Instead of simply scrolling through an online catalog of jackets, the company's A.I. system asks the consumer questions, like where and when the jacket would be worn and for what types of activities.

The A.I. system then offers jacket suggestions based on weather predictions, style considerations and activities. It's as close to having a human shopping consultant as they can get, Bouchard said.

Emmons said Neiman Marcus doesn't have any A.I. projects in play, but he is thinking about how the company could use it.

"A.I. would be the next obvious step with the personalization we want to do," he added. "If I have A.I. capability, I should be able to figure out who you are and answer [your questions] in a way that is relevant to you. It becomes a more natural interaction."

Marty Ramos, chief technology officer for Retail and Consumer Products and Services at Microsoft, said retailers can use artificial intelligence to analyze shoppers' behaviors, and to help customers shop more efficiently and to help them buy what they need.

Ramos told Computerworld that he wants his grocery store to be so "smart" that it will know when he would be running low on dog food and will deliver it to his home. When he walks into the grocery, information should pop up on his mobile phone telling him about any deals on products he routinely buys and reminding him of products he's due to buy.

"When I walk in the grocery store, [the store's mobile app would] maybe suggest a meal based on my health and wellness needs," he said. "This is what you need and these items are on sale and these are the aisles they're in. Help me figure out a budget plan where I still eat well but more cost efficiently."

The cloud

So what technology will companies need to more easily and (relatively) inexpensively work for them? The answer, many say, lies with the cloud.

Scott Emmons, Nieman Marcus

Scott Emmons is enterprise architect of Neiman Marcus' innovation lab.

Since the cloud enables companies to offload a lot of the work of setting up and maintaining major systems, it will come into play as retailers use more technology and bigger networks.

"The cloud brings the ability to have access to an enormous set of resources that wouldn't have been economically viable for you to build yourself," Emmons said. "I can allow stores that are far from the mother ship to have access to technology without having it on-premise. It's really about centralization of technology."

He added that as retailers use more new technology, the cloud becomes more relevant. In fact, Emmons said emerging technology as a whole is becoming more relevant to the retail industry.

"I think technology has always had a role, but it was more of a supporting role," he said. "It wasn't really about customer-facing things at all. The importance of tech and the customer experience has definitely skyrocketed over the years."

Jeff Kagan, an independent industry analyst, said companies like Neiman Marcus and The North Face should be keeping an eye on new technologies as they arrive.

"A.I., virtual reality and the cloud will obviously play a big role in retail going forward," Kagan said. "Initially, the early adopters will have the advantage, but eventually these technologies are just going to be a basic cost of doing business."

Copyright © 2016 IDG Communications, Inc.

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