Study: Don’t underestimate the value of AI
Brands that are not thinking about how to leverage artificial intelligence are already falling behind.
This was according to the Retail Revolution study from OMD EMEA, and Goldsmiths, University of London. It is based on 15,000 consumers across 13 European countries.
While brands are turning to more interactive technologies to engage shoppers, customers now expect “VIP treatment” when they shop. To drive the high-quality, personalized experiences customers now expect, retailers must consider how to embrace the next stage of those technologies: artificial intelligence.
According to the study, almost twice as many European consumers said they are as familiar with AI compared to those who are unfamiliar with the technology. Nearly a quarter of consumers already use an AI device or app, and 41% want to get one.
Meanwhile, 47% of consumers claimed they would act less patiently if they knew they were interacting with AI. Only 17% of consumers would reject help from AI across retail sectors. This was only slightly higher than those who said they'd reject any kind of assistance (15%).
The study did reveal two distinct groups of consumers that are reluctant to engage with AI: young people who don't think they need it and older ones who don't understand it.
Over a third (39%) of 18-35 year olds said they wouldn't consider having an AI-enabled device as part of their lifestyle said it was because they didn't need it. Another quarter said it was easier to use their existing default option.
The challenge for retailers is to create a balance between managing customer expectations, inspiring them about the benefits the technology, and deciding how to best to employ AI to create the shopping experiences of the future. However, the risk is that companies will focus on what the machines are capable of, rather than what customers want.
The key things brands need to consider when planning a deployment is where to put AI in the communication process, where humans have to take over, and making the whole process as seamless as possible. They should think about training the machines to work with the consumer to deliver value — a move that will encourage consumers to use them further. Brands should also think about matching different interfaces to different demographics.
"As an industry, we need to turn the bundle of technologies described as AI into services that people can care about, such as their insurance app or their cinema chatbot,” said Jean-Paul Edwards, Director of Strategy and Product Development, OMD EMEA. “It needs to be an upgrade to apps, e-commerce, and so on.”
Retailers that will succeed are companies that use AI to manage customers' expectations, while simultaneously inspiring them about the benefits the technology can deliver.
"People find it hard to imagine this stuff. Brands should inspire them, but inspire them around their everyday needs,” he added. “Brands need to talk about the benefits, not the features."
Women’s apparel retailer beats Street
J. Jill, which went public in March, reported earnings and sales that topped analysts estimates, but provided an outlook that slightly missed forecasts.
Net income totaled $11.9 million, or 28 cents a share, in the quarter ended July 29, up from $8.1 million, or 19 cents a share, in the year-ago period. Adjusted per-share earnings came to 29 cents, in line with estimates.
Total net sales increased 9.9% to $181.4 million, from $165.0 million in year-ago period, and topping estimates. Total same-store sales role 7.8%, also more than expected.
"Our second quarter performance demonstrated the continued strength of our omnichannel model and the disciplined, data-driven approach we take to our business," said Paula Bennett, president and CEO of J.Jill. "As we enter the back half of the year, we remain focused on delighting our customer with the product assortment and shopping experience she values while continuing to deliver consistent profitable growth.”
The company ended the second quarter fiscal 2017 with $28.7 million in cash and cash equivalents, compared to $13.5 million at the end of fiscal 2016. Inventory at the end of the second quarter fiscal 2017 decreased to $62.8 million compared to $66.6 million at the end of fiscal 2016.
For the third quarter, J. Jill expects adjusted EPS of 18 cents to 20 cents, compared with analysts' expectations of 20 cents. Same-store sales are expected to climb in the high single digits. For the full year, the company is expecting adjusted EPS of 81 cents to 85 cents, compared with a consensus of 84 cents
It opened two stores and closed four stores in the second quarter, giving it a total of 274 stores.
Best Buy ups full-year outlook on heels of strong Q2
Best Buy reported better-than-expected profit and sales for its second quarter amid growth for smartphones, connected home and wearable devices. But the retailer added a slight caveat going forward.
Best Buy's same-store sales rose 5.2% in the quarter ended July 29, easily topping analysts’ estimates for a 2.1% gain. But on the chain's quarterly call with analysts, CEO Hubert Joly said that he did not think that the mid-single-digit rise in comparable sales would continue, and that it did not represent a "new normal."
Still, there was no disputing the consumer electronic giant turned in a strong performance for the quarter. Net income increased to $209 million, or 67 cents per share, from $198 million, or 61 cents a share, one year ago. Excluding one-time charges, the company earned 69 cents per share, compared with a forecast profit of 63 cents per share.
Revenue increased 4.9% to $8.94 billion, versus an estimate of $8.66 billion. Online same-store sales jumped about 31%, helped by faster shipping and improvements to its checkout and search functions. In comments, Neil Saunders, managing director, GlobalData Retail, said that the key reason Best Buy is enjoying such strong growth online is a "joined-up proposition that allows customers to quickly and easily order products online and collect them in stores."
"From our customer data, it is also clear that there are large groups of customers who feel more confident buying online from Best Buy than other e-commerce only merchants, mainly because Best Buy has stores where they can seek advice, resolve problems, and return items," Saunders said. (For more, click here.)
In a statement, Best Buy CEO Joly emphasized the company's strong top and bottom line growth in the quarter.
"Against a backdrop of continued healthy consumer confidence, we believe broad-based product innovation is resonating with consumers and driving higher spend," he said. "And, with our effective merchandising and marketing activities, combined with our expert advice and service available online, in-store and in-home — we are garnering an increasing share of those dollars."
Best Buy raised its guidance for the full year. It now expects sales for the full year to increase 4%, compared to a prior forecast of 2.5%. It estimates income to rise 4% to 9% compared to a previous estimate for 3.5% to 8.5%.
"This updated guidance reflects stronger-than-originally-expected second half revenue performance with profitability roughly in line with our previous expectations," said Best Buy CFO Corie Barry. "The increased topline expectations are being driven by the anticipation of continued positive industry and consumer momentum, coupled with the impact of product launches.