Shoppers at an Alibaba x Guess pop-up in Hong Kong last year had the option of signing in using a Taobao membership code or a facial scan. The store used devices like gyro-sensors to observe customer behaviour, such as what garments they touched and what colours were most popular.
Since sales staff now had access to potential clients’ purchase history and preferences, they could focus on helping the customer instead of asking them what they wanted. “Facial recognition has the potential to provide the most personalised, frictionless service that luxury consumers expect,” says Rachael Stott, senior creative researcher at The Future Laboratory.
Guess’s Greater China market chief executive said in 2018 that the brand planned to introduce this technology in stores. Software provider SAP, which works with Harrods and Holt Renfrew, is developing technology that identifies and categories a customer’s personal style when they enter a boutique. Shoppers will get personalised recommendations from in-store screens based on what they were wearing.
Still, luxury brands might want to think twice before adopting this technology. Having customers check in before they enter a shop isn’t exactly a luxury experience and customers may raise privacy concerns over how they’re tracked.
However, time is likely to lead to wider customer acceptance. Stott says that Western consumers are more resistant to facial recognition compared to their Asian counterparts, but that is changing as the iPhone introduces this technology to daily life. Younger customers who grew up with social media are also less concerned with privacy, says Chris Sykes, chief executive at AI firm Volume, who thinks that youth brands will be pioneers of facial recognition in stores.
“With the younger audience, there is an expectation, especially with celebrity culture,” Sykes says. “It makes them feel good if they are recognised.”
The number one reason customers left Levi’s stores without buying anything was because their size wasn’t in stock, according to Detego, an inventory management software provider that works with the denim label.
Detego uses RFID (radio-frequency identification) to track all inventory and create AI-informed “planograms,” a dynamic plan that recommends ideal sizes and placement of inventory within a store. Meanwhile, the algorithm also gains knowledge that a particular size is in demand at a store, allowing it to readjust future inventory allocation.
Sales uplift from this practice is normally in the range of three to 10 per cent, says Luke Sinclair, a marketing executive at Detego.
AI can also inform store merchandising by grouping items together based on which pieces customers are most likely to buy together, says Custora CEO Corey Pierson. Retailers were surprised when AI taught them that the intuition of merchandisers wasn’t always right. “They thought [customers] would buy a collection, but in fact no one was doing that,” Pierson says.
Omnichannel brands are using online behaviour to inform in-store assortment by region. A Nike concept store in Los Angeles uses digital commerce data from its membership app to adjust the product mix every two weeks. Nike learned that its local customers enjoy running and fashion, so it furnished the store with Nike Cortez sneakers and running products in bright colors.
“For AI to be the most effective in-store, you need to have established a relationship with the consumer digitally for it to have any valuable and meaningful impact,” Stott, of The Future Laboratory, says. “Luxury brands have generally lacked that digital presence in comparison to mass retailers like Nike and Walmart, and haven’t invested in this area, therefore they do not have that data to act upon.”
This article was originally published by Vogue Business on 12th March 2019.
For more on how your brand can innovate your retail experience, book our Retail Futures presentation.