The Impact of Automation in the Retail Industry

13 Nov 2018

The impact of artificial intelligence’s role in the retail industry is a hot-button topic that continues to be a divided issue. Some champion the use of automation while others question its effect on local employment. With the rapid advances in technology, it is understandable to feel anxious over its influence in the retail industry.

In order to progress and stay competitive, companies must not be resistant to change and adapt to new technologies. However, going to the other extreme of fully automating every aspect of your processes may not be wise either. The need for human interaction is still critical, often welcomed, especially in the retail industry. At the same time, meeting the challenges of daily demands can be augmented through automation.

The Benefits of Automation

It’s undeniable that automation can help increase productivity in any industry. Through self-learning algorithms, AI-based services can assist customers in providing a better online shopping experience. With its capability to process large amounts of data, AI can become tailor fit to every customer.

From this description alone, it’s easy to see how powerful AI and machine learning is for the retail industry. It allows companies to predict customer preferences through analysis of browsing and purchase patterns. With the breakneck speed information is processed online, utilising automation to keep up with consumer demands has become more necessary.

Concerns with Current Technology

On the other hand, a fully automated retail industry is a serious concern for many. While automation can spark an increase in productivity, it risks the employment and livelihood of some. In a 2016 Forrester report, experts predict that 6% of current jobs will have been turned over to automation by 2021, while another report predicts that in 10 years, over 7 million jobs in retail could be vulnerable to automation.

Human interaction is something that even the most up to date machines cannot perfectly replicate.

More than that, AI in its current state is still susceptible to errors that can easily be avoided by human intervention. In a previous article, we also discussed how AI’s biggest flaw is how it interprets context and content. More recently, IBM’s famous AI learning program Watson came under fire for giving unsafe recommendations for the treatment of cancer patients.

How the Retail Industry is Affected

In the case of retail, machine learning helps customers with other shopping recommendations by using their browsing habits and purchase history—providing customers with a more personal and targeted online shopping experience. While this sounds good on paper, it’s easy to overlook other factors that make AI successful. A lot of AI solutions require massive amounts of data. And the technology itself has not evolved enough to understand the nuances in human behaviour. To complicate things further, data breaches and other security concerns have pushed consumers to be more protective of their personal information.

Predictions for the Future

There’s no denying that automation will become more pervasive in the retail industry in the next few years. We already see companies use the technology for mundane, administrative tasks like chatbot support. What’s important, however, is how people adapt enough to the changes while not neglecting the real impact of human interaction. When all is said and done, customers still prefer talking to other people for assistance over a machine learning bot.

For retailers, embracing this new technology may be a challenge, but it can also be a welcome one. Amidst the bleak predictions mentioned earlier, new reports state that automation is set to create 58 million new jobs by 2022 across all industries, retail included. For them, AI and machine learning are tools and not a replacement of their workforce. The need for human input and interaction remains vital, especially in an industry where personal preferences and nuances vary from person to person.