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APAC retailers warm to AI amid roadblocks

Retailers in the Asia-Pacific region believe artificial intelligence is key to their success, but lack the skills and infrastructure needed to harness the technology

At Coles, one of Australia’s largest retailers, automation, artificial intelligence (AI) and data are being used to optimise everything from its supply chain through to picking and pricing efficiencies.

The company has a team of more than 30 data scientists who analyse more than a billion customer transactions a year. It is also looking to provide data on food provenance, in a bid to enhance the retail experience.

But retailers such as Coles are still in the minority in the Asia-Pacific (APAC) region for now, according to IDC.

In a study commissioned by Microsoft, which supplies cloud and AI capabilities to Coles, 71% of retail decision-makers believe AI is instrumental to their organisation’s competitiveness over the next three years, but just a third have embarked on their AI journeys.

While many retailers prioritise transforming the customer experience and leveraging data for operational efficiency and insights, they currently lack behind leading firms in other industries in terms of infrastructure and capabilities to successfully implement AI.

They also underestimate their workers’ intention to reskill, with almost half of them citing the lack of time on the part of employees, along with the lack of suitable courses.

Those that have adopted AI reported improvements of 16-19% in customer engagement, business intelligence, profit margins, competitiveness and innovation. By 2021, retail organisations in the region expect AI to drive a further improvement of between 37-44% in those areas.

“Upended by a $1.5tn e-commerce market, retailers in the region must quickly adapt to savvy, connected consumers that generate a trail of digital and omnichannel footprints that can be analysed,” said Raj Raguneethan, regional business lead for retail and consumer goods at Microsoft Asia.

“These footprints are generated from consumers combining channels like mobile, app, in-store and desktop throughout the purchasing process.

“To stay competitive, a shift to intelligent retail is required to add ease, convenience, customisation and automation – across business processes and operations, customer experiences, and the very products and services offered,” Raguneethan added. “This can be done by turning to cloud and AI tools as the underlying, connective tissue for digitisation and business transformation.”

The potential of AI in the retail industry has been a boon for local technology companies such as Trakomatic, a Singapore startup that has developed an AI technology to recognise shoppers who have opted into customer loyalty programmes.

Upon entering a mall, these shoppers would receive personalised messages that could recommend a pair of trainers if they are a sports enthusiast, for example, and direct them to the store. When the shopper arrives at the store, the system alerts the service staff via their devices, who can then engage the customer and offer a personalised experience – or additional discounts.

Trakomatic’s technology was introduced at Lenovo’s flagship store in Singapore to address these demands, enabling ground staff to recognise, anticipate and serve customers proactively with data and insights.

“Delivering great customer service is never easy for any brick-and-mortar store, as customers now increasingly demand nothing less than seamless shopper experiences across traditional and digital touch points. Ultimately, this helps staff make more informed business decisions,” said Constantia Ang, sales director at AddOn, a Lenovo distributor in Singapore.

According to IDC, retailers are the second biggest spenders on AI systems in APAC, accounting for 10.2% of total spending – a tad behind financial services – in a market where spending was slated to reach $6.2bn in 2019.

The AI momentum will continue unabated over the next four years, with spending on AI systems set to grow to $21.4bn by 2023, with a compound annual growth rate of 39.6%.

“Artificial intelligence is having an impact across many industries with widespread utilisation, but it is still at nascent stage in Asia-Pacific,” said Ritika Srivastava, associate market analyst at IDC Asia-Pacific.

“From providing chatbots for better customer service to improving operational efficiency, industries like banking, retail and professional services are spending on this technology at scale,” she added.

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