Speculation surrounding the future of retail continues unabated. But a stroll through the Innovation Lab 2023 at the NRF Big Show revealed the bets that startups have placed on retail’s future priorities and pain points, offering tech-based systems and services to either exploit or solve them.
The startups offer a glimpse into the innovation process. It operates on a continuum, where what starts as a murmur, evolves into a fad, and eventually becomes a business. Or the opposite where 90 percent of startups fail. This year’s crop demonstrated some promising applications and improvements to existing technology.
Artificial Intelligence Dominated
AI was the mother of all innovation in the Innovation Lab. As such, there were a multitude of AI-enhanced retail-related tech startups making the case for long-term relevance. Breaking down the broader category of AI innovation, the technology solutions converged in six key areas.
- Conversational AI
As visualization tools improve and call center services migrate from East Asia to automation in the cloud, AI models, trained on natural language patterns and sentiment perception are proliferating. Some applications were appealing while others were creepy, but the line between actual and synthetic humans in online engagement is blurring.
- Resale Optimization
Resale is complicated and profitability is elusive, but consumer demand has spurred a wave of brands announcing resale platforms. Naturally, services using AI to determine resale pricing strategies and authentication capabilities, along with less AI-dependent supply chain and distribution practices were promoting their effectiveness.
- In-Store Computer Vision Monitoring
Startups focusing on monitoring in-store activity, then processing the data through AI models for consumer insights and theft reduction had a large footprint in the lab. Sam’s Club and Lowe’s have joined Amazon Go in implementing computer vision pilots.
- Omnichannel Integration
AI-driven startups in omni-optimization services were omnipresent in the Innovation Lab. The startups demonstrated the latest advancements in the real-time integration between physical and online retail channels to inform merchandising, distribution, and fulfillment. Target and Sephora are among the leading retailers deploying platform integration in omnichannel strategies.
- Influencer Strategy
As influencer strategy migrates from mega to micro, AI offers social-commerce entrepreneurs an opportunity to better analyze follower data and match content creators and influencers with brands and products which they promoted to attendees.
- Automated Negotiations and Procurement Processes
The AI rhetoric and pitches began to blur at a certain point, but Pactum, an AI-fueled negotiation chatbot stood out. This dystopian-sounding AI application took some time to understand, but according to the company, has proven highly effective for clients. The software, which negotiates with suppliers, is trained on historic pricing data and pre-determined, acceptable trade-off parameters. The service is best suited for big box or large format retailers, and the company counts Walmart and the shipping giant Maersk as clients. According to the spokesperson, the chatbot, which was trained under the oversight of buyers and legal teams, can perform up to 2000 negotiations simultaneously.
Beyond Artificial Intelligence
While AI dominated the room, the Lab made space for innovations fueled by human intelligence.
- Tokenization and Loyalty
Amid the buzz and bust of NFTs in 2022, a test case for the digitization and verification of digital assets and ownership of physical goods via NFTs is gaining momentum, particularly in the luxury market. Blockchain verification, digital wallets, and NFTs are playing defense against counterfeiting, serving as opt-in CRM resources, encouraging circularity, as genuine items are verified before resale, and as loyalty benefit conduits. Arianne, a tokenization platform working with Richemont, Breitling, L’Oréal, AZ Factory, and others was on the Innovation Lab floor making a robust use-case argument for NFTs as a utility rather than a purely speculative vehicle.
- 3D and CGI Imagery
Mentions of the metaverse were scant. Instead 3D and virtual stores replaced the jargon this year. Design studios and virtual retail creators demonstrated photorealistic and virtual retail experiences as the tools and technology continue to improve. ByondXR was a notable presenter in this category creating and supporting virtual storefronts for Kiehl’s, NARS, YSL, Lindt, and Target, among others.
- Robotics, Drones, and Smart Shopping Devices
As self-checkout, last-mile delivery, warehouse efficiency, and shrink-reduction technology continues to improve, smart carts, baskets, lifting robots, and delivery drones were on display, pretty much everywhere.
- Waste, Excess Inventory Reduction, and Sustainability
I’ve already mentioned AI-supported inventory efficiency, but peer-to-peer inventory management and distribution tools were included in the broader innovation category. Shared last-mile logistics for retailers, and networked excess inventory exchanges were promoting dashboards, and connected services to reduce waste and goods destruction, supporting sustainability and ESG efforts.
Reverse logistics companies had a presence, but the drive for improved fit is the holy grail that could reverse the demand for reverse logistics. Companies demonstrating AR and LIDAR-supported fit optimization, as well as physical scanning devices, were on site. Missing from the conversation on fit are privacy assurances, always a concern when consumers are encouraged to share increasingly intimate personally identifiable information.
The Future of Retail
Overall, many of the startups were improvements and iterations on earlier retail technology. We seem to be hitting the point on the innovation curve where practical application of technology is taking hold. The solutions for resale optimization, automated negotiation, and tokenization stood out because they reflect an understanding of the industry and are responding to shifting demographics, economic drivers, and opportunities. Additionally, the proliferation of computer vision services represents the engine of innovation, turbo-charged by artificial intelligence, as it is applied to retail services.
The dominance of artificial intelligence in the current retail conversation is hardly a surprise. AI technology is reverberating through every facet of society, and its applications are increasing exponentially. This technology leap and the efficiencies it generates will present clear advantages and serious challenges with a myriad of implications, but for those speculating on the future of retail, a safe bet is that it will be powered by artificial intelligence.