The Consumer Electronics Show begins this week in Las Vegas, and Walmart CEO Doug McMillon is scheduled to kick off the four-day event with a keynote address about how technology—including artificial intelligence—is transforming the retail giant.
As Retail Brew reported previously, Walmart is investing in AI solutions to help forecast consumer demand and manage inventory levels across its footprint. Parvez Musani, SVP of Walmart Global Tech, explained at the time that AI is helping the retailer use a greater variety of data inputs, such as weather reports and economic data, to predict demand around the country.
McMillon’s address is arguably the highest-profile crossover between the retail and tech industries at the closely watched conference, but it’s certainly not the only one. Multiple sessions are on the docket in which retailers such as Alibaba, McDonald’s, and Instacart appear primed to offer a bullish view of the technology’s potential.
“Doug’s keynote, plus compelling experiences on the CES show floor, will show how we’re using technology to make our customers’ lives easier, enable our associates to build satisfying careers and make our business even stronger,” Dan Bartlett, EVP of corporate affairs at Walmart, said in a statement.
But is all this hype warranted? Some retail experts say that remains to be seen.
No silver bullet: Mark A. Cohen, director of retail studies at Columbia University, told Retail Brew that AI is currently “overblown” as a potential solution to the challenges facing retailers, and that he’s “very skeptical when the phrase or the concept of AI is bandied about as some sort of magic bullet or silver bullet—that if we just plug in AI or acquire AI or retain an enterprise that is built on AI, we will suddenly become successful.”
In his view, AI is just the latest term to describe something retailers have always done: “technology-based decision making.” The difference, he added, is that AI marks a “leap in the sophistication of search,” such that aggregated information is easier to access and generate useful information from.
Walmart’s own description of AI’s potential isn’t far off from Cohen’s, but it still sees the technology as “key” to better serving customers and managing supply chains.
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Cohen, for his part, urges companies to take AI boosterism with a grain of salt, “because human beings’ behaviors are not entirely analytically determinable and probably never will be.” How customers respond to a war or a pandemic will always be somewhat of a “wild card,” he said.
“When you get into the vagaries of consumer preference, you can infer a lot from an examination of the past, and you can use increasingly sophisticated technology to infer future behavior,” he said. “But it’s not a panacea.”
Staying positive: Predictive analytics, however, are just one potential use case for AI. The National Retail Federation (NRF) stated that “AI is poised to transform every part of retail”—and particularly consumer targeting via digital platforms, which is seeing the emergence of new players such as TikTok.
“The next wave of retail tech companies will help make this a reality by improving the efficacy of product merchandising, marketing creative/targeting and site experience,” Matt Nichols, a general partner at Commerce Ventures, told the industry group. “The growth of TikTok shopping and its ability to surface the precise product to the right person is the ‘canary in the coal mine’ for AI delivering on this promise.”
This promise could also deliver significant financial gains, according to a recent study. The research firm IHL Group found that AI could help Macy’s generate more than $7.5 billion in business improvements between 2022 and 2029, and that these gains would come from multiple parts of the business, including commerce, infrastructure, and merchandising.
But even this more optimistic view of AI shows the technology taking years to pay off.
“Every single conference I went to this year, all they were talking about was AI,” Lee Peterson, EVP of thought leadership and marketing at consulting firm WD Partners, told Retail Brew.
“But I think it’ll take a couple of years to figure out how it’s all going to play out.”