Seeing the Light on the Positive Impacts of AI/ML for Retailers

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In this special guest feature, Tom Buiocchi, CEO of ServiceChannel, discusses how new technologies such as AI/ML and modern facilities management (FM) software can help retailers be on the “right” side of creative destruction, a process where new technologies disrupt old ways of doing things in favor of more speed, automation, intelligence, and efficiency. Tom joined ServiceChannel as an Executive Director in 2014. He has more than 30 years of experience leading growth companies in both technology and energy services, including Jeda Networks (interim CEO), Drobo (CEO), Mohr Davidow Ventures (Executive in Residence), Brocade Communications (CMO), Rhapsody Networks (Vice President Marketing), Enron Energy Services, FMES (co-founder and COO), and Hewlett-Packard. Tom has a Bachelor of Science in Electrical Engineering from Union College and a Master of Business Administration from Northwestern’s Kellogg School of Management

Too often, the topic of artificial intelligence and its technology cousin, machine learning, (AI/ML) quickly erodes into condemnation about them being job or industry “killers”. An Oxford University study predicts that almost half of all American jobs are at risk due to computerization, especially as AI/ML tech goes mainstream. And a Pew Research survey states that most Americans believe robots or other machines will do most of the work currently done by humans in less than five decades.  It’s reminiscent of the same misguided predictions when personal computers first came out.

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It is also missing the point. New technologies have always disrupted old ways of doing things in favor of more speed, automation, intelligence, and efficiency – a process known as creative destruction. For example, how many gas lamplighters are still employed in the world today? As scary as it may sound, creative destruction has proven to be beneficial for people and businesses, as the new ways create more jobs, markets, and innovations than they destroy.

Navigating through creative destruction successfully is a do-or-die proposition for the retail industry, which accounts for more than $22 trillion in just the United States alone. Prevailing thought says that creative destruction will mean the end of the brick-and-mortar retail model, as shoppers go more and more online. That is a short-sighted view, and one that is just not backed up by historical realities.

It is true that retailers cannot merely operate as they did in the past and expect to thrive. “Build it and shoppers will come” can no longer be the operating model for investing in and managing retail facilities. Instead, retailers have to transform their stores and shops into destination spots that offer unique, intrinsically pleasing shopping experiences not available through online only.

This begins with keeping brick-and-mortar retail facilities in tip-top shape at all times or “Brand Uptime,” or the idea that the state of a retailer’s facilities has a direct reflection on the brand and the overall business performance.

This is where new technologies such as AI/ML and modern facilities management (FM) software can help retailers be on the “right” side of creative destruction. These technologies deliver unprecedented levels of visibility, transparency, and accountability for users – retail store managers and their facilities managers alike – by enabling them to make smarter, more data-driven decisions when it comes to their FM operations.

The process involves the continual and automated gathering of information from three layers of the store: front, back, and headquarters. Each layer plays a role in contributing to customer experience; however, the front and back of the store are where improvements are needed most in order to adapt. The powerful combination of AI/ML and service automation abstracts the complexities of this process in order to make predictive and even prescriptive analytics possible.

This can benefit retailers in several ways:

  1. By converting data analytics into insights, which provide retailers with new perspectives and deeper understanding of their facilities operations that they can use to improve their customers’ shopping experiences.
  2. By empowering retailers to convert their buildings and equipment into “smart” facilities and machines that leverage data from sensors, telemetry tools, and analytics that can provide infinite value in optimizing the maintenance and extending lifecycles of these critical assets.
  3. By slashing OpEx by eliminating outdated and inefficient business models. An obvious target for retailers is outsourcing facilities management to brokers and other third-party firms, who can add significant costs in order to meet their own cost structures and profit margins.

Retailers spend an estimated 20 percent in added maintenance costs by utilizing legacy approaches such as outsourcing facilities management repair and maintenance (R&M). With more than $100 billion spent on R&M each year in their supply chain, this adds up to be more than $20 billion that retailers are not using to invest back into their stores.

These are all considerations that traditional retailers are grappling with the emergence of new technologies designed to replace legacy retail business models. Not every retailer will survive this creative destruction of their industry. However, the retailers who will make it will likely have one thing in common: they’ll learn to embrace advancements such as AI/ML and service automation as a way to revamp their organizations and deliver a whole new customer experience.


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