AI for Retail

CHAPTER 1How AI Has Revolutionized Many Other Industries over the Last 20 Years

“History never repeats itself, but it does often rhyme.”

—Mark Twain

To understand how AI will transform retail, it's important to understand how AI has already transformed, or is transforming now, countless other industries. I've included some of my favorite examples for us to have a clearer understanding of what is going to happen to retail.

Just like in finance, the three prerequisites to look out for in all of these examples are:

1. There needed to be a step function in availability of accurate, real‐time data;
2. There needed to be a step function in task‐specific algorithms;
3. Someone had to have the courage to prove that this new model will work.

Once all three of these have occurred, the floodgates open, and AI infiltrates the entire industry with a ferocious pace. Let's dig into some examples.

Advertising Revolutionized by AI in 2000

Marketers have always been trying to get us to buy their product, go to their stores, or change our behavior in some way. Classic marketing strategy goes this way. First, identify your target markets/audience/personas, and then create campaigns per segment with ad placement to target those personas to maximize “conversion” rates per dollar of ad spend. For example, if you were selling luxury handbags, you would likely be targeting a core demographic of perhaps: only women, between 30 and 70, and of a higher economic status. We would then try to target that group ...