This article is provided by BRC Associate and Partner, Google.
__________________________
New research from Google and WIRED Consulting reveals how AI can benefit retailers and consumers alike. Sophie Neary, managing director of retail and FMCG at Google UK, speaks to the team behind the report.
Retail leaders are among the most adaptable in the world. Faced with challenges such as the shift to mobile, supply chain disruptions, and the cost-of-living crisis, the best have consistently demonstrated an almost uncanny ability to emerge stronger and more attuned to their customers’ needs. But the rapid rise of artificial intelligence (AI) is a change on an entirely different scale.
As Alphabet and Google CEO Sundar Pichai has said, the development of AI is “as big as they come”. But what does this mean for retail and its leaders specifically? It’s my firm belief that AI will transform the retail landscape and the consumer journey for the better — a belief backed up by our recent report produced in partnership with WIRED Consulting, Upgrading How We Buy.
I joined Charlie Burton of WIRED Consulting and Sarah Ashley from Google’s Market Insights team to explore its key findings and the exciting opportunities that lie ahead for retailers.
The report highlights a challenge many of us recognise as consumers: the overwhelming number of choices online and the resulting difficulty in making purchase decisions. How can AI address this?
Sarah: On the one hand, we’ve never been more spoilt for choice — the range of available brands, products, and services is now extraordinarily vast. The downside is that 67% of consumers believe that making the right decision requires more effort than it used to.
For retailers, this increasingly complex path to purchase, often referred to as the messy middle, can translate into lost sales, abandoned baskets, and missed opportunities.
AI-powered tools have the potential to streamline the decision-making process by understanding shopper intent, reducing research time, and offering personalised recommendations. Consumers are already using images and now video to search for “hard-to-describe” items or get an instant summary of product details. This is made possible by AI, and people want more of it. A significant majority (79%) welcome AI’s assistance in understanding their needs and suggesting relevant products.
The key is ensuring AI genuinely serves consumers and isn’t just tech for tech’s sake. Google’s Circle to Search feature is a prime example. It transforms a simple image into a shopping opportunity, simplifying product discovery and potentially introducing consumers to new retailers.
Chatbots are arguably where we’re seeing the fastest and most visible impact of AI advancements on the consumer experience. What do retailers need to know to get ahead?
Charlie: As we explore in the report, the latest generation of chatbots has advanced significantly thanks to generative AI, enabling them to understand natural language fluently and produce compelling responses. Nowadays, you can ask questions in everyday language and receive relevant, real-time answers.
A phrase we’re probably going to hear a lot more of is “conversational commerce”. This refers to the use of AI-powered chatbots and virtual assistants to act as sales advisors and help consumers make decisions based on budget and preferences. Retailers should be following the development of this technology closely.
I’m interested in how AI-powered tools could lead to a scenario where “marketers will need to become technologists”. How can retail leaders ensure their marketing teams develop the necessary skills and knowledge to thrive in this evolving landscape?
Charlie: The report emphasises that marketers won’t necessarily be competing with AI, but they will be competing with other marketers who leverage AI more effectively. While we know AI’s current capabilities, the future is not yet written and is almost certain to surprise us. The best approach, and one marketers will be familiar with, is to adopt a mindset of continuous learning and experimentation, with a culture that supports this.
Sarah: Facilitate open dialogue within your teams. At Google, we host AI demo slams during meetings, where team members share and demonstrate innovative uses of AI. These quick sessions foster collaboration, spark creativity, and offer a quick way to share useful ideas that could benefit our work or inspire a colleague.
One of the surprising insights in the report is the potential for AI to bring more joy to consumer decision-making. That’s something retailers will want to hear more about.
Sarah: AI tools aren’t just about convenience or removing pain points in the customer journey. They can also elevate the shopping experience altogether, unlocking new avenues of enjoyment and minimising regret.
For example, Chanel’s virtual make-up try-on introduced me to new products I wasn’t initially seeking, while IKEA’s Place app lets users visualise furniture at home, reducing the chances of dissatisfaction later.
Charlie: One joyful aspect of real-world purchasing that has been hard to emulate digitally is the impulse buy. But the evolving ability of AI models to process various data modalities, including text, imagery, and audio, allows consumers to express their desires more naturally and effortlessly, which may come to change this.
What’s more, AI is increasingly adept at spotting subtle signals of intent, enabling retailers to present the right message to the right person at the right time and potentially sparking those impulse purchases.
Progress isn’t a given
Change is inevitable, and the inconvenient truth is that progress is optional. Embracing AI and the willingness to experiment, learning from wins (and mistakes), and adapting to new ways of working will be crucial for growth, both now and in the future. But if there are two industries that are capable of rising successfully to such a challenge, it’s retail and marketing.
Want to learn more? Download the full Upgrading How We Buy report and gain further insights from Charlie Burton in AI in Consumer Journeys, part of Google’s Accelerate series.