Retail is dead. Or is it?
Charts such as this one by the U.S. Census Bureau created a streak of panic throughout the retail world, which led to the frequently repeated assertion that retail is dead. As the overall trend of shopping at brick and mortar stores declined and e-commerce grew, online shopping emerged as a much more attractive option for consumers looking to battle inconveniences such as parking, crowds and stock availability .
These doomsayers claimed that e-commerce posed an existential threat to traditional retail stores. True or not, shifting customer preferences have led many retail brands to rethink how they approach their customer experiences both online and in-store, and luxury brands are no exception .
The question facing retail today is how to enrich the overall customer experience and add value beyond simply providing merchandise. Successful retailers are interested in a mindset shift from being mere sellers to true purveyors of experience .
USING MACHINE LEARNING TO IMPROVE CUSTOMER IN-STORE EXPERIENCE
Fashion powerhouse Burberry found the answer to enriching customers experiences in the form of machine learning. The company is using this technology in innovative ways as part of its overall strategy for increasing sales. Moreover, they are making the shopping experience at their brick-and-mortar stores just as advanced as their online experience .
Its unique machine learning model asks customers “to voluntarily share data through a number of loyalty and reward programs. This information is then used to offer personalized recommendations, both online and in-store. When an identified customer enters a store, sales assistants use tablets to offer buying suggestions based on their customers’ purchase history as well as their social media activity. If Burberry knows that a customer has recently bought a particular coat, for example, assistants may then be encouraged by the app to show them a handbag which is popular with other buyers of the coat” .
This type of highly personalized shopping experience is usually confined to an online retail space . As a result of their efforts, Burberry announced, “their investment in personalized customer management programs had resulted in a 50% increase in repeat customers” .
In the short term, Burberry is improving both its online and in-store shopping experiences. However, as the company continues to use machine learning as an integral part of its process improvements, the long-term focus will be even more important. Although it has improved customer relations within the store, the company looks to expand its machine learning to deliver business value through making better products, creating cheaper processes, and providing more insightful analysis .
MACHINE LEARNING AND SUPPLY CHAIN PROBLEMS
One of the biggest challenges surrounding supply chain management is predicting future customer demands for a particular product.
Getting these predictions wrong in the world of luxury brands, however, often results in the destruction of overproduced goods. The destruction serves as a safeguard to prevent unwanted items being stolen or sold at a significant discount and eroding the high prices seen in its retail stores .
Burberry is no exception to this practice as it revealed in its annual report in July 2018 that it “had burned $37 million worth of clothing and cosmetics” . Not only does this hurt the company’s bottom line, but the perception of the brand’s gross waste is increasingly damaging to Burberry’s image amongst its target demographics .
By leaning on machine learning to combat its supply and demand problem, Burberry can use technology to take into account currently unknown causal factors that influence demand .
Burberry has spoken about its plans to roll out AI tech into other areas of its operations, including production and product development, although here it appears to be moving more slowly . However, the cost of moving too slowly in these areas could prove even more costly.
Looking to the Future
As machine learning continues to grow, will customer’s perceptions shift to seeing data collection as an invasion of individual privacy?
Additionally, currently there exists little to no regulation concerning the collection of data in retail stores. Will this era of sparse regulation continue or will legal action change the course of this trend? 
Finally, Burberry must ask itself if it can afford to move slowly in using machine learning within its supply chain management.
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