The tills are alive: The rise of AI and voice commerce in supermarkets

Posted by
Rurik Bradbury
Head of Global Communications and Research
Tuesday, January 23, 2018 - 12:27

The implementation of voice commerce in supermarkets has hit the headlines of late as the rise of artificial intelligence (AI) technology begins to revolutionize even the most mundane moments of our everyday lives. While automation in the grocery sector is still at an early stage, a new battle is starting between major supermarkets and this technology will be on the front lines.

The hybrid store: where online and offline meet

In August, UK online supermarket brand Ocado released an app for Amazon’s Alexa voice assistant, enabling customers to add items to their shopping lists using voice technology (if they own an Amazon Echo smart speaker). Around the same time, Amazon announced major price cuts at Whole Foods, a recent acquisition, throwing down the gauntlet to primary competitor Walmart. This salvo followed the announcement that Amazon Prime would be integrated directly into Whole Foods checkouts – further evidence that a strategy of digital and AI enablement is crucial to Amazon’s plans to master the industry.

It’s very clear that Amazon is creating the first “hybrid digital supermarket”, where your (digital) Amazon account is heavily integrated and interacts with your offline shopping experience. Voice commerce via Alexa is an obvious way the online and offline worlds will intersect, and it looks like a key weapon as Amazon launches a technology arms race, radically rethinking and digitally enabling its new stable of supermarkets, to outflank traditional competitors.

For another piece of evidence, look at Amazon’s near-humanless Amazon Go concept supermarket that launched last year in Seattle. This allowed shoppers to enter a store, pick up the items they wanted and walk out, with no need to queue at a checkout. It used technologies including computer vision, deep learning algorithms, and sensor fusion to automate much of the purchase, and charge the customers’ Amazon accounts as they walked out the door.

Given Amazon’s track record of growth and domination in so many of the sectors it has entered, today’s large supermarkets need to be on high alert, prepared to implement innovative technologies to keep pace with the retail giant.

The battle of the grocers

How should they respond? To compete, they must obsessively stand in the customer’s shoes and offer them experiences powered by software that is not only useful, but also simple to adopt and integrate into their shopping habits.

Two key points. First, when competing with Amazon, remember that they are not a “supermarket” but a software-powered grocery experience – it’s a different mentality altogether. They will shift the goalposts not by inches but by many feet. And second, the software space is different from other industries and needs a unique approach.

Because bots and voice assistants are software-based, the best approach is to be iterative and data-driven. If possible, start small, experimenting with and integrating these new technologies until you get (in startup parlance) “product-market fit” with a customer base, then scaling them up after that. Almost all of the great software startups in the last 15 years have emerged from small experiments, where sceptics initially said “oh that will never work” or “that’s a feature, not a product”.

Grocers can also respond by making sure their data, SKUs and tagging are high-quality, as this is foundational for adding new commerce channels and very frustrating for customers when retailers get it wrong. The pressure will certainly be on, as Amazon is relentless both in terms of tech rollouts and price-cutting. Companies need to move quickly.

Voice technology beyond the supermarket shelves

The re-emergence of voice technology — or more accurately, voice-enabled bots (this is a totally different space and technology than yesterday’s painful IVRs) — is also paving the way to change consumer habits in areas far beyond our weekly shop.

Alexa itself was a surprise success product and it is used for shopping far more than people tend to realize. Among Alexa owners, over 70% have bought something using the product and 45% of owners have done so repeatedly, according to data from LivePerson. That’s an amazingly quick uptake for such new technology, which only promises to grow in popularity as it becomes increasingly sophisticated and affordable.

Essentially, Alexa is a “chatbot” but done in an audio format. We are seeing similar trends quietly taking off in text-based bots across a huge range of industries; voice technology is following a similar trajectory. After the hype of 2015 and 2016 – a false dawn for bots – there is now real activity and momentum, with successful products such as Vodafone’s TOBi chatbot and customer service initiatives such as RBS Assist.

We’ll see a huge shift to AI technologies like voice tech and bots this year, and especially next year. LivePerson’s data shows that 50-70% of customer service discussions could be probably answered by bots, which has huge implications for how companies communicate with customers. And for brands, the costs savings versus human labour are far too high to sit back and ignore. It seems that Amazon, as often, is onto something. Like Alexa, we should be listening out for what is to come next.

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