Despite the headline hype about the latest advances in artificial intelligence, including ChatGPT and rapidly evolving iterations, it’s worth pointing out that consumer companies have been using AI in some form since the dawn of the computer age. . The excitement of the time was equally intense, with an outlandish expression in an episode of the AMC series Mad Men, set in the 1960s advertising business.
The company is about to deploy its first mainframe computer, a monolith that occupies a significant portion of the company’s floor space in a New York skyscraper. This is a breakthrough in the ability to handle what was, at the time, large amounts of data. “Let every customer who walks through our door know that this agency has stepped into the future,” the helmeted partners celebrate.
It has taken 60 years and countless connected smart devices to realize this technology’s potential as an essential consumer research and marketing tool (albeit just buying socks online). If you’re probably not sophisticated enough to recognize that you don’t need socks (to see a parade of sock ads). From here, the pace of development will explode, and the consumer companies that get it right today will be the leading brands of the future.
One of the early examples of commercialization is a project by SPD-Group, a developer of customer relationship management technology for the retail sector. As described on the website, the project was for a supermarket, using video cameras throughout the store and software that could track individual customers as they moved down the aisles. The system was designed to alert staff if a customer has been staying in the same location longer than usual, allowing employees to locate and assist the customer.
Meanwhile, fashion brands like Brooks Brothers and retailers like Bloomingdale’s have reported increased sales where they installed Me-Aity virtual try-on kiosks. Step inside and within 20 seconds the scanner will measure her 200,000 points on your body to help you choose the perfect size.
The possibilities are limited only by your imagination. One day, a customer might walk into a Nordstrom, open an app on their phone, and be presented with a map of the store and suggested routes to guide them through the aisles they typically choose. Maps show precise product locations and personalized pricing based on specific data, store inventory data, and more. There’s also a chatbot for asking product questions and connecting to a personal shopper app, and it looks like you’re getting help from a real human.
At some point, these technologies will be available to all retailers, suggesting that the benefits for any one company will diminish over time. Not according to former Facebook executive Chamas Palihapitiya. In an interview this winter, he used as a metaphor an example cited by Omaha investor Warren Buffett for decades as a leading figure in capitalism. This is the story of the development of refrigeration technology. Buffett noted that the people who invented it made money, but it was brands like Coca-Cola KO that made the most money and used it to build empires.
“I think of these large language models as freezers,” Palihapitiya said. “It might make some money, but Coca-Cola hasn’t been built yet.” So what separates the winners from the losers?
“If you take 1,000 of the same inputs and feed them to Facebook, MicrosoftMSFT, GoogleGOOG, AmazonAMZN, they all come up with the same machine learning model. , the results could be significantly different.”
That “little stuff”? Real-time customer input. Technology comes and goes, but the fundamentals of retail – knowing your customer – never change.
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