Artificial intelligence will be important at every level of retail.
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When I talk to retailers about artificial intelligence, their eyes glaze over, like I’m speaking a foreign language and very few people want to talk about it. But it’s coming, it’s unavoidable. AI is going to pervade almost every aspect of retail, big and small.
Here’s a case in point: The EPA estimates that a supermarket of 50,000 square feet, that’s a large store but not excessively so, uses about $200,000 worth of electricity and natural gas in the course of a year. According to the EPA, about half of that cost is in refrigeration and lighting. Most such large stores have freezers that consumers go into to pick out their frozen food. But they also have a freezer in the back of the store that consumers don’t see, where they keep their inventory. Now imagine this: the store hires a very smart young college graduate just to watch that freezer in the back. That employee’s job is only to stand and watch the freezer door to minimize the number of times it gets opened and manage the thermostat accordingly to reduce the electrical cost. Over time, the employee learns how to make adjustments so that the door openings lead to the least amount of additional energy used to keep products cold.
Now imagine that instead of hiring a person, software could do the job. The software would have to learn how a store operates and the climate and temperature of the store region. That’s the idea behind a company called COI Energy Services. In just a few hours, they can install and set up their software. Over a year’s time, they will save a supermarket of 50,000 square feet $60,000 on their electric and gas costs, that’s 40% of their total costs. That’s not theoretical, Publix Supermarkets, the fifth largest grocer in the country, uses the system and is rolling it out to all its stores.
If you’re Publix’s competitor with a store across the street from them, Publix can now afford to hire one more employee than you can because Publix is using AI to save $60,000 that you’re not saving. You could keep ignoring the potential of AI or you could do what Publix is doing and save the money. Only one choice is right but it means embracing a new and different kind of technology. It also means allowing technology to control certain things in the store, like the thermostat on the freezer, that has always been run by a person. That’s scary to many people; change is always scary.
You may say to yourself, controlling a freezer is one thing, what makes AI so important?
Here’s what: A company called ProQuo AI uses artificial intelligence to do one of the most high level judgment jobs in retail: brand management. Based on the 16 criteria in the image below,
16 dimensions drive the decision making for ProQuo AI
Photo credit: ProQuo AI
the company chooses among 14 steps (image below) to improve the success of almost any brand’s performance.
ProQuo AI focuses on 14 types of improvements that it recommends to brands.
Photo credit: ProQuo AI
When you combine the nuances of each of these criteria and steps, there are literally billions of possible decisions that are possible and they get adjusted …….