How to propel retail adoption of AI in SEA
Life under quarantine has altered consumer behaviour as we know it. Under lockdown, some 44 per cent of consumers in Southeast Asia have spent more on fresh and packaged grocery purchases online, a joint study from Facebook and Bain & Company found. This behaviour is expected to continue unabated with most continuing to shop online even in the future.
This behaviour offers manufacturers and retailers opportunities to drive long-term growth and competitive advantages. For years now, we’ve talked about the scale and beneficial impact of Artificial Intelligence (AI), yet adoption in the region remains low. A recent study by Microsoft and market intelligence firm IDC found that 67 per cent of retailers across the region have failed to integrate AI into their business models.
In today’s context, operating without AI is like taking a shot in the dark. At a basic level, AI applications can help brands make personalised recommendations based on their tastes, use chatbots to navigate online and offline stores, and learn what content resonates with their audience. The more sophisticated use of AI deepens our understanding of shopper behaviour and optimizes everything frommerchandising to pricing—and this is just the tip of the iceberg.
Businesses need to double-down
Don’t wait for the current crisis to end to make bold moves. Alibaba, for example, turned the 2003 SARS outbreak into an advantage by growing from a B2B e-commerce company to the number one marketplace. Now more than ever, businesses need to take a proactive approach in accelerating the adoption of AI solutions. Nobody can afford a three-year horizon to bridge their technological gaps. Regardless of their starting point, retailers must investigate and invest in the technology and focus on making the necessary transformations that put AI at their core.
This is what one Thai fashion brand LoonyStore did and achieved a 20 per cent increase in orders by using iKala’s AI-powered social selling tool Shoplus. Once you have the resources, leverage AI’s potential to discover emerging trends and changes in consumer preferences. Already, more progressive retailers are using AI capabilities to detect consumer trends early on.
Establish AI hubs
Admittedly, adoption is not always a simple proposition. There are complex ethical, legal, and security issues surrounding it and to drive large-scale adoption, interventions from policymakers and industry players are essential. Countries will need to strengthen their digital infrastructure, talent pools and have strong regulatory frameworks in place. Fortunately, Singapore is something of a thriving hub for AI innovation. In 2016 alone, the country awarded S$2.82 billion (US$1.98 billion) worth of info-comm technology contracts through thegovernment’s Smart Nation initiative.
Following the global pandemic, the government has doubled down on its commitment by increasing its ICT spend by 30 per cent to S$3.5 billion to fuel digital technologies including AI to help businesses recover from the pandemic.
There is a strong case to be made for establishing other hubs in the region to support specific AI initiatives and broader adoption.
Creating an enabling culture
Being technologically-savvy is no longer an option for businesses – it has to be at the core of their survival and success strategies. The most fundamental organisational shift required for implementing AI is to embrace data-driven decision making and the onus is on business leaders to drive that shift.
One McKinsey study found that firms that have successfully deployed AI technology at scale reported nearly twice the level of C-suite support as those from companies that have not adopted any AI technology. Doing this trickles down to everything else you do as an organisation including the way you hire and train your talent to harness the right tools and technologies.
Southeast Asia is emerging from the impact of the pandemic, but our ways of living and working have been changed for good. This is the time for businesses to revamp their strategies, leverage the right support systems and prepare for a new dawn.
The writer is CEO/co-founder at iKala, an AI-solutions company in the digital transformation and data-driven marketing space.