Fortunately, the future looks promising for retailers that are proactively addressing the shifting dynamics. A recent report shows that the retail industry could be the biggest beneficiary of artificial intelligence (AI) and machine learning (ML)2<\/sup>.<\/p>\n <\/p>\n The granularity and depth of customer- and SKU-level data in the industry create a wealth of opportunity for the retailer that can recognize patterns and draw forward-looking insights from this repository. Conventionally, the more common applications of AI and ML in retail so far have been grounded in Marketing & Sales: personalized recommendations (Next Product to Buy), targeted marketing campaigns, and assortment optimization. Increasingly, retailers are beginning to use the same technology in supply chain management, e.g., predictive maintenance or inventory control, as well as using analytics to make more critical M&S decisions, such as pricing and promotions3<\/sup>. In his recent letter to shareholders, Bezos states how ML can permeate all integral aspects of retail operations:<\/p>\n \u201cMachine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more<\/em>.4<\/sup>\u201d<\/p>\n <\/p>\n Case Study: Walmart <\/u><\/p>\n As one of the largest big box retailers in the world and a significant competitor to Amazon in the digital space, Walmart has exhibited a track record of taking AI seriously. Since appointing its current e-commerce unit CEO Lore, Walmart has taken strides in leveraging ML across major facets of its business, with both shorter and medium-to-long time horizons:<\/p>\n Its newly opened Sam\u2019s Club Now (Dallas) is a pilot store that will test all new technologies, including plans for augmented reality, voice navigation, and auto-filled shopping lists in the future8<\/sup><\/p>\n <\/p>\n Where next?<\/u><\/p>\n While the retailer has garnered the accolade of \u201cout-innovating every retailer under the sun, with the exception of Amazon12<\/sup>\u201d, there are further opportunities to consider to fully leverage its omnichannel presence in competing against Amazon. One idea to entertain is personalized marketing campaigns that utilize customer information form both in-store and online purchases. Walmart is already investing in ways to track better quality input from in-store shopping; marrying this with Walmart.com data can create as comparable of a dataset to Amazon as any retailer can, and allow Walmart to better predict its customers\u2019 demands despite significantly lower online traffic13<\/sup>.<\/p>\n Research14<\/sup> shows that customers that shop both online and in-store are 2-3x more valuable, and that Walmart shoppers who shop in-store that have been converted to shop online actually purchase more in-store afterwards. I would argue that the biggest asset Walmart has against Amazon is its physical store business: Walmart should continuously look at ways to generate value through synergies across channels.<\/p>\n <\/p>\n Further areas for discussion<\/u><\/p>\n Considering developments discussed so far, I would love to hear from peers on the following topics:<\/p>\n (Word Count: 795)<\/p>\n <\/p>\n 1 Franck, Thomas. \u201cAmazon closes in bear market a little more than two months after hitting $1 trillion market cap.\u201d CNBC, November 12, 2018. https:\/\/www.cnbc.com\/2018\/11\/12\/amazon-falls-into-bear-market-2-months-after-hitting-1-trillion.html<\/a><\/p>\n 2 Chui, Michael et al. \u2018Notes from the AI Frontier: Insights from Hundreds of Use Cases.\u2019 McKinsey Global Institute, April 2018. https:\/\/www.mckinsey.com\/~\/media\/mckinsey\/featured%20insights\/artificial%20intelligence\/notes%20from%20the%20ai%20frontier%20applications%20and%20value%20of%20deep%20learning\/mgi_notes-from-ai-frontier_discussion-paper.ashx<\/a><\/p>\n 3 Begley, Steven et al. \u201cHow analytics and digital will drive next generation retail merchandising.\u201d McKinsey & Company, August 2018. https:\/\/www.mckinsey.com\/industries\/retail\/our-insights\/how-analytics-and-digital-will-drive-next-generation-retail-merchandising<\/a><\/p>\n 4 Bezos, Jeff. Letter to Shareholders. April 12, 2017. https:\/\/www.sec.gov\/Archives\/edgar\/data\/1018724\/000119312517120198\/d373368dex991.htm<\/a><\/p>\n 5 Halzack, Sarah. \u201cWalmart\u2019s plan to get you in and out of stores faster.\u201d The Washington Post, February 28, 2017. https:\/\/www.washingtonpost.com\/news\/business\/wp\/2017\/02\/28\/walmarts-plan-to-get-you-in-and-out-of-stores-faster\/?noredirect=on&utm_term=.4472e712e711<\/a><\/p>\n 6 Peterson, Hayley. \u201cWalmart is building giant towers to solve the most annoying thing about online ordering.\u201d Business Insider, July 5, 2017. https:\/\/www.businessinsider.com\/walmart-builds-pickup-towers-for-online-orders-2017-6<\/a><\/p>\n 7 \u2018The Smarter Store: How AI is powering the future of retail.\u2019 CB Insights, November 2017. https:\/\/www.cbinsights.com\/reports\/CB_Insights_AI-Retail-Briefing.pdf?utm_campaign=ai-in-retail_2017-11&utm_source=hs_automation&utm_medium=email&utm_content=58295005&_hsenc=p2ANqtz-_jdv6RwKCZjOApRQcGUYjwsg-8VPpc0pOYsZVsBqeGOoz3w_iMLgNj-hswdMHW1-YDW_PoJ0FmkzrgyxVaMzH7rNK1Xg&_hsmi=58295005<\/a><\/p>\n 8 Iannone, Jamie. \u201cSam\u2019s Club Now \u2013 Reimagining the Future of Retail.\u201d Sam\u2019s Club, October 29, 2018. https:\/\/corporate.samsclub.com\/blog\/2018\/10\/29\/sams-club-now-reimagining-the-future-of-retail<\/a><\/p>\n 9 O\u2019Shea, Dan. \u201cWalmart CFO Biggs touts retailer\u2019s e-commerce build-up.\u201d Retail Dive, June 19, 2017. https:\/\/www.retaildive.com\/news\/walmart-cfo-biggs-touts-retailers-e-commerce-build-up\/445266\/<\/a><\/p>\n 10 Cheng, Andria. \u201cWhy Walmart is Investing in a Startup Founded by Former Leaders of Israel\u2019s Top Intelligence Unit.\u201d Forbes, October 23, 2018. https:\/\/www.forbes.com\/sites\/andriacheng\/2018\/10\/23\/why-walmart-is-investing-in-a-startup-founded-by-former-leaders-of-israelis-top-intelligence-unit\/#45041c0c6d73<\/a><\/p>\n 11 Hensel, Anna. \u201cWalmart plans to open a computer vision and machine learning office in Dallas on April 5.\u201d VentureBeat, March 6, 2018. https:\/\/venturebeat.com\/2018\/03\/06\/walmart-plans-to-open-a-computer-vision-and-machine-learning-office-in-dallas-on-april-5\/<\/a><\/p>\n 12 Ruff, Corinne. \u201cThe retail winners and losers of 2017.\u201d Retail Dive, December 20, 2017. https:\/\/www.retaildive.com\/news\/the-retail-winners-and-losers-of-2017\/513576\/<\/a><\/p>\n 13 Sevitt, Daniel. \u201cAmazon vs Walmart \u2013 The Battleground for Online Retail \u2013 Part I.\u201d The Market Intelligence Blog, April 25, 2018. \u00a0https:\/\/www.similarweb.com\/blog\/amazon-vs-walmart<\/a><\/p>\n![\"\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/AI-x-Retail-impact.png\")
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