Retail Innovation Summit 2018—The Three As of New Retail

Retail Innovation Summit 2nd

KEY POINTS

  • The Coresight Research team attended the Retail Innovation Summit organized by the Hong Kong Retail Technology Industry Association (RTIA) on July 5 in Hong Kong. The Chairman of the RTIA Ricky Chu believes real-time analytics, service automation and artificial intelligence (AI) are key to retail innovation.
  • Microsoft has introduced its “virtual agent” to seamlessly integrate the human element and AI. When its virtual agent cannot provide the answers, customers’ queries will be directed to human agents.
  • With the goal of developing Hong Kong into a smart city, the government and retail industry leaders should focus more attention on encouraging innovation in the retail sector.

Retail Innovation Summit—the Three As of New Retail

The Coresight Research team attended the Retail Innovation Summit organized by the Hong Kong Retail Technology Industry Association (RTIA) on July 5 in Hong Kong. The Chairman of the RTIA Ricky Chu kicked off the event with opening remarks depicting his vision of the three As of new retail:

  • Real-time Analytics
  • Hyper-personalized service Automation
  • Artificial Intelligence

There are plenty of use cases of these technologies in retail. For example, real-time analytics can be applied to enable dynamic pricing with competitors and to analyze consumers’ behavior to determine the right product in the right quantity to sell. Hyper-personalized service automation allows recognition of customers to provide them with personalized products quickly. 

Chu also shared his vision of how a smart city can be achieved through big data. Smart devices, sensors and cameras are important sources of data necessary to create a smart city. Market research firm IHS Markit estimates there will be over 75 billion smart devices by 2025. Chu noted that there are currently over 200 million cameras set up in China, fostering the development of smart cities in the country. The Hong Kong government can speed up the pathway to Hong Kong becoming a smart city by providing more open government data sources to the public with the necessary application programming interface (API) for computer programing. 

Microsoft’s Virtual Assistant to Blend Human and AI

Edmond Chang, Technical Solution Specialist, Business Applications at Microsoft, introduced Microsoft’s solution to blend human and AI as a retail solution to improve customer service for retailers. Although chatbots have become popular, the level of satisfaction they bring to customers is low, giving answers that do not necessarily correspond to customers’ queries. Microsoft introduced its “virtual agent” to seamlessly integrate human and AI. When its virtual agent cannot provide the right answer, customers’ queries will be directed to human agents. Over time, the virtual agent will gradually learn to handle more customer queries. In fact, Microsoft has achieved some success in its early applications. 

One multinational IT company that utilizes Microsoft’s virtual agent for its customer service is Hewlett-Packard. It handles 70% of customers’ requests and achieving an 85% accuracy rate in interpreting these queries. 

The virtual agent can generate customer profiles automatically through conversations with customers. For example, a customer says he wants to choose a gift for his wife. The virtual agent will interpret that information and, similar to human intelligence, will infer that the customer is a married man, probably aged over 25 and record this information in its customer profile database. The virtual agent can then promote related products to similar customers in future. 

Thoughts on the Role Retail Plays in a Smart City

Business leaders also shared their views on what Hong Kong needs to do to become a smart city. According to Chang, the Hong Kong government is not focusing enough attention on innovation in the retail sector. In a recent government-released paper, Hong Kong Smart City Blueprint, “retail” received only two mentions in the entire report. Chang believes the government needs to pay more attention to the retail sector in order for Hong Kong to become a smart city. 

Andy Wong, Group Information Technology Director at leading Hong Kong apparel retailer G2000, pointed out that Hong Kong was once considered a “shopping paradise,” but has since lost some of its shine from the growing challenges faced by e-commerce and Chinese tourists going to Europe or the US to shop. The retail industry and the Hong Kong government will need to make a concerted effort to encourage innovation in order to keep Hong Kong’s retail climate vibrant. Introducing smart retail solutions and new retail experiences to consumers will be vital. For its part, G2000 is testing a 3D body-scanning machine that scans the customer’s body in 40 seconds to provide tailor-made shirts. Wong believes innovations such as this are helpful to ensure Hong Kong’s retail sector continues to thrive.

Takeaways

A combination of real-time analytics, service automation and AI are key to bring retail innovation to consumers. While chatbots are not 100% ready to take over all aspects of customer service, blending human and AI is a start to improving the customer service experience. Retail plays a crucial role in a smart city, and the government and retail industry leaders should focus more attention on encouraging innovation to ensure Hong Kong’s retail sector continues to thrive.