Southeast Asia's retailers are using AI to create to a new shopping scene

Step one for retailers is to develop data collection expertise. Big data is the key to generating actionable insights into customer preferences that deliver the optimum, individualized shopping experience.

AI is already playing a role in retail, with a presence so pervasive it typically goes unnoticed by shoppers. Consumers grown used to having questions answered by voice assistants on smartphones - and increasingly by home assistants – are relying on AI for their information. Unlike Baby Boomer and GenX shoppers, millennials are typically happy to go to smartphone’s voice assistant or a website rather than make a phone call and wait for an available human assistant.

Gartner Inc. forecasts that AI will handle about 80 percent of consumers’ questions by 2025, up from about two percent in 2015. Queries on everything from store hours, to locating merchandise, stock availability, product features, and much more will be answered by AI rather than human sales assistants.

Another AI tool retailers rely on for customer engagement is the chatbot: think of Starbucks using a chatbot to order coffee, Philips for information on lighting products, or Sephora for cosmetics. Among the most popular chatbot platforms are Facebook Messenger, WeChat, and WhatsApp.

Personalized one-to-one journeys through AI will be needed – taking engagement beyond the now taken-for-granted responses to customers’ queries via phone calls, emails, or Facebook messages. Successful retailers will reimagine customer service by anticipating what customers need before they even know they need it. With AI, retailers can predict and proactively address issues before customers reach out.

For big retail operations, efficient and intelligent inventory management is important. AI offers the ability to ensure stores have the right products at the right time. Visibility into the supply chain to generate insights into product trends is the goal. This enables predictive analysis for large supply chains. For large retailers, ROI in AI can be huge. Consider the volume of shipments needed for shopping events like China’s Single’s Day sales, or Black Friday in the US, Christmas and Valentine’s Day. AI algorithms have been able to deliver up to 426 orders per second. That turns into 36 million orders in a single day.

While there is little doubt that e-commerce will continue to see robust growth in Southeast Asia, the brick and mortar side of the business has reason to be optimistic. Millennials in the region view shopping as a desirable social experience that includes much more than the actual purchase. The shopping experience includes browsing, learning about new products and features, and while doing so, also meeting with friends and family, having meals or drinks, and spending time with friends “hanging-out” in air-conditioned shopping centers and stores.

In-store shopping is an integral part of local cultures across the ASEAN region and that is important for store operators to understand. Retailers who learn the lessons of effectively mixing online and in-store sales channels have a bright future. The new rule for retailers is that effective use of big data to better understand customers and potential customers, their consumer profiles, activity history, and behavior to generate customer insights and intelligent predictions for customer preferences.

Looking ahead, success for retailers in Southeast Asia will require new investment to link physical stores with online operations. Opportunities will be available for retailers who know how to leverage and combine the best of the physical and online worlds. Whether in online or in-store retailing, one thing seems certain: people will always want a personal, human touch in their shopping experiences retailers who best understand their customers will prosper.