Every brand in retail is talking about AI. We’ve read the reports, the articles, and the survey results about all the different pain points AI can solve for retailers. From all the chatter around groundbreaking innovations and the changing retail industry, brands understand this need for technology in order to adapt.
And there isn’t a shortage of technology solutions out there either—retailers have a ton of options.
Understanding this need, the need for tech, then why is it so difficult to actually adopt? Why are retailers still struggling to keep margins afloat and adapt to the digital consumer?
What’s the biggest problem with AI in retail?
According to a recent interview with José Chan, Professor at Parson's School of Design, on a recent episode of Fashion Made: Product Innovation’s podcast, the problem with AI is this:
“The problem is, they don’t exactly know how to leverage it or what is right. So, the big problem isn’t the technology – the big problem is the human problem of change management.” – José P. Chan, Professor at Parson's School of Design
The biggest issue, according to José, is answering questions like:
- How do I take this (technology) into my existing company infrastructure? (Specifically, for established retailers who are trying to catch up to the new retail companies and leverage different types of technologies)
- How do I stitch this digital strategy into my corporate strategy, break down the silos that I have, and make something viable, measurable and work for my particular organization?
^ This is a huge barrier.
You could even go as far as to say the biggest problems facing AI are humans.
It’s the change management component and figuring out how to integrate it within existing processes.
“The tech itself can solve incredible problems, but if you can’t apply it consistently or you can’t get actionable insights from it, then it’s like a piece of software you spent a lot of money on that you just don’t use.” – José P. Chan, Professor at Parson's School of Design
The change management involves many layers – one involves the strategy. And two, even with the strategy, it’s ensuring that it is actually used in specific areas.
That being said, it’s also important to highlight that you don’t need technology or AI to solve every problem. As a business CEO or c-suite exec, you can’t just throw things at your business, expecting a silver bullet to solve all your problems.
No, it has to be very “surgical”—this particular tech is going to solve for this particular problem.
I know, easier said than done.
However, José shares a really insightful example of how The Children’s Place tackles the digital journey and how their CEO focuses on five crucial pain points to ensure success:
- How to make the product right
- Getting the right systems into place (one cohesive system that will allow a clear view of inventory across the company)
- Finding new revenue streams that would help them get cash flow in a difficult time
- Store fleet optimization–making sure their stores were built the way the customer wanted to shop (e.g., considering size, space, display, etc.)
- Adding a digital strategy that actually goes with the corporate strategy and addresses all of the pain points as needed (by breaking silos and structuring different functions to work seamlessly together)
The biggest takeaway for retailers from these considerations and the journey towards successful digital adoption really boils down to this:
“In order to have a digital journey become a successful journey – a lot of support has to come from the c-suite and everybody else across the organization. If that doesn’t happen, you can have the best technology in the world, but it’s not going to make a whole lot of difference.” – José P. Chan, Professor at Parson's School of Design
This type of business transformation has to start somewhere – and it has to have support across all levels within the organization. Top, bottom, middle.
In order to change, retailers need to be willing to change.
Take a listen to the full episode below! 👇