Against a backdrop of acknowledgement that artificial intelligence (AI) will impact retailers in many ways, the sector is experiencing a major level of investment aimed at creating the infrastructures that will enable businesses to fully utilise the power of the emerging new technologies.
This was an underlying theme from the Retail Technology Show at Excel London, where retail and hospitality executives along with technology specialists converged to share ideas and seek to map out the future of the sectors that continue to move at an increasingly fast pace.
Summing up the situation, Kate Jones, executive partner at IBM, says: “Everything is happening all at once, with tech evolving fast. In the last 12-24 months, I’ve never experienced technology moving at this pace. Retailers who win will be those who take advantage of that technology … it’s about tech solving problems for retailers.”
In the thick of it is Anthony Houghton, group CEO of Holland & Barrett, who revealed the business has committed investing £300m to boosting its technology capabilities. This involves a mix of in-house built offerings and third-party bought-in technology (from 100 partners) including new tech for its stores and a major overhaul of the supply chain underpinned by the implementation of AutoStore in the distribution centre.
“All parts of the business are now tech-enabled,” he says. “We’ve invested massively in the data stack and are evaluating it. Next is how we serve up the data. AI and machine learning will be utilised way beyond ChatGPT. It will be using one version of the truth, so no duplication of the data.”
This has been recognised as a major challenge for electricals chain Currys, according to Dean Kramer, chief services officer at the firm, who says the need to make data discoverable – for Currys employees and externally for chatbots – is vitally important, and he is making the company “foundationally ready for the world of shopping through chatbots”.
But he admitted that the much-vaunted single customer view is still some way off for the business. “We’re three out of 10 with it,” he says. “We’ve amazing information on our customers but we are not in a place where we would like to be in equipping colleagues with this single view of the customer. We are on the journey because it’s a big opportunity, but there is still lots to do.”
This ability to supply information to its employees is vitally important because the company has 4,500-5,000 stock keeping units per store – and there is a lot of complexity around many of these goods. Kramer says equipping colleagues with knowledge across the range and the shopping history of customers when interacting with them is becoming more important to the business, and obviously AI has a major role to play in this.
This truly is an alignment of people and AI. Even with 300 physical stores – down from a previous 1,500 – as much as 70% of sales still touch a physical store in some way as part of customers’ multiple channel journeys, so Currys has positioned its employees (armed with data) as the differentiator.
“We’ve a consistent selling model that is the backbone of how colleagues are inducted and trained,” says Kramer. “This links to [measuring] customer satisfaction. As tech evolves, we’ll deploy more tools [in stores].”
People are also integral to the technology transformation that is taking place at clothing retailer Matalan. “Colleagues are 100% at the heart of what we’re doing,” says Phil Hackney, the company’s chief operating officer. “We need to tap into that expertise. They live and breathe it as they do it every day. They just focus on the outcomes, and this centres on the customer experience. They are passionate about the small details.”
With only 20% of Matalan’s revenues derived digitally, the transformation is at the top of the agenda of the firm’s new owners.
It’s an all-encompassing overhaul, according to Katherine Davis, chief retail officer at Matalan. “The transformation was a priority for the new owners, to improve the whole customer experience – technology, visuals, brand experience and the product proposition,” she says. “We’re thinking of an omni-channel journey.”
Among the partners it is working with is Toshiba, which is delivering a whole new capability at the point of sale in its stores, including the introduction of self-scan terminals. Matalan is being very careful with such initiatives as they must not only unlock efficiencies, but also improve the experience for customers. This includes small aspects, according to Davis, who says: “In the pilot stores, we’ve called it Express [highlighting speed for shoppers] and not Self-scan, because we want the whole journey to not be about tech … and not be forcing the customers down one way in-store.”
Hospitality sector
Similar care has to be taken in the hospitality sector, where the likes of Itsu and Leon restaurants have removed some of the order and pay-type kiosks they had installed after recognising that some customers prefer the face-to-face experience.
This highlights how this customer-facing industry has similar challenges to that of retail. Ian Chambers, digital director at EasyJet, says: “We’ve lots of disparate systems and legacy systems, which is more prevalent than in retail. Integrating with the airports, ticketing systems and cross-border makes it more complex. The industry is trying to tackle it, but it is hard work. We’ve 20-25-year-old tech on old systems that was built in-house.”
Legacy technology is also a challenge for Joanna Montgomery, head of digital at Butlins, who says 80-85% of bookings are via digital channels, but the tech stack is having to catch up with this scenario. The complexity is boosted by the broad proposition at Butlins that includes lots of on-site products and services, which includes retail stores.
As Jim Hingston, digital and technology director at Azzurri Group – whose brands include Zizzi and Ask Italian – explains: “The tech to support hospitality is fragmented. Over time with the digital channels and the delivery aggregators it has been hard to put together and join up the tech.”
This lack of joined-up technology has added to the challenge of building loyalty programmes for hospitality and leisure businesses. Chambers from EasyJet is vocal about the shortcomings. “We’ve been poor at segmentation and rubbish at personalisation,” he says. “We have EasyJet Plus, and we are looking at loyalty as strategically important.”
Work on loyalty has also been taking place at Marks & Spencer, which has recently re-launched its Sparks card. Archie Norman, the firm’s chairman, says the focus is to use the shopper data it collects to deliver a more tailored experience. “We want to talk to people individually and not have a single wasted email sent to them,” says Norman. “We make using the card worthwhile by showing them relevant products.”
He also highlights the challenge all retailers face from the growth in cyber attacks. As technology services, and third-party providers of them, proliferate and employees face more phishing attempts along with AI-powered impersonations, the risks are heightened.
“Never assume your systems are impregnable,” he says. “It’s a false assumption. Recent cyber attacks have been impersonations rather than [flawed] technology. And check your insurance. A year before the attack, we’d doubled our insurance and we received £100m from them. Although the attack has cost us over £300m.”
