AI for Retail

CHAPTER 2The Three Myths of How AI Will Transform Retail

Before we discuss how AI will transform retail, let's first address how AI won't transform retail (at least in the next 30 years). Many believed that we would have flying cars as far back as 1885. Similarly, many currently believe that Amazon Go will automate cashiers in the next few years. Others swing the pendulum completely the other direction. Retail executives in the early 2000s said publicly that e‐commerce “was a fad” and asserted that AI cannot possibly set planograms, order produce, set labor schedules, etc., as well as or better than humans. The last of the common narrative that I hear often is that we will not need B&M (brick‐and‐mortar) stores at all anymore, as self‐driving cars will “bring the store to your home.” The accuracy of these narratives is clear once you examine the economics a bit closer. Let's explore each one.

Myth 1: Amazon Go (and the Me‐Too's) Will Eliminate Cashiers Globally

2017 was a huge year for B&M retail. First, the largest Internet retailer in the world (Amazon) entered B&M retail with a $13.7B acquisition of Whole Foods to encroach into the huge revenues that Walmart, Kroger, Albertsons, and others in B&M enjoy.

Shortly after that, Amazon launched their second salvo, called Amazon Go, a completely frictionless checkout experience leveraging modern advancements in AI. For those who do not know, Amazon Go is a very impressive system where they deploy hundreds of depth‐sensing cameras ...