Originally published in Forbes, Nov 23, 2020.
The most obvious way that artificial intelligence (AI) can impact retailers is to help consumers choose the right products when they shop. But there’s another less apparent way that AI is affecting retail right now that’s happening in places consumers don’t see. New AI technology from a company called Pactum is a very good example of how retail is changing from the inside out.
What Is Artificial Intelligence?
Artificial intelligence is different from other software in that the program itself performs problem solving and keeps improving itself. Artificial intelligence, like smart people, learns and improves from experience, understands what it did wrong and integrates what it learns into the software so that it doesn’t repeat mistakes the next time around. That’s not just amazing, it changes the way competition happens among creators of AI software. Here’s why: once an AI system is implemented, it self-improves immediately. It’s almost impossible for a competitor with an equivalent program to catch up; the same program created a year earlier will always have a year’s more experience to improve and the later-created program will never be able to match it. That has created a rush to create AI programs because being the second one to the starting gate is a far weaker proposition than in other businesses. The stakes are high to get into the market first with a system that works.
Why Retail Is A Target For Artificial Intelligence
Retail has all the right ingredients to be an AI proving ground: As an industry it’s enormous, with over one million physical locations, 42 million jobs (including ancillary jobs), innumerable daily human interactions and over $5 trillion in U.S. revenue. The scale is important because all the data created by that much activity can only be processed by a machine. It is also a highly competitive industry so AI companies that can offer an advantage to a retailer will find ready customers. All that makes retail a great laboratory for the development of AI.
Now At Walmart
Walmart’s WMT -0.2% size as the largest retailer in the world makes it the perfect place to test and develop new AI systems. And its reputation as a retail technology leader means systems that pass muster at Walmart have bragging rights and will get attention from other potential customers.
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