Machine learning and automation are not about to eat your retail job. They are about allowing you and your employees to engage in higher value, more exciting work, while off-loading routine tasks to machines. That was one of the early messages to come out of Shoptalk 2023.
While there has been talk of the need to adopt greater automation and machine learning technology in the retail space for several years now, the driving force this year is the state of the overall economy. In the session titled “Leveraging AI and Automation to Enhance Operations,” executives from Nordstrom and Panera discussed the environment in which high inflation is leading to shrinking profit margins and a push to improve operational efficiency.
In years past, the focus of machine learning technology in retail was to improve the customer experience with things like recommendation engines to suggest similar products for cross-selling opportunities. However, now machine learning is also about getting rid of deadening routine tasks that employees dread and free them up to use their skills and minds on solving higher value challenges or engaging in higher value activities.
Interestingly, Nordstrom’s Chief Supply Chain Officer Alexis DePree pointed out that artificial intelligence was useful not only for improving the customer experience but also the employee experience as well.
"We're not using technology for the sake of using technology. We are using technology to create better experiences for our customers and empower our employees and give them the chance to be successful each and every day,” said DePree at the conference.
One thing that gets overlooked with all the talk of automation and AI today is the necessity of still maintaining human experts that can use the technology and provide feedback to be used in improving the technology and the outcomes it produces.
“[The associates] certainly have a place at the table from the start, which is really important because we're not in the cafe everyday,” said George Hanson, SVP & Chief Digital Officer at Panera, about the implementation of new technology at the chain of bakery-cafe restaurants. “They are, and they are the experts.”
For example, to enable better customer experiences at Panera, the restaurant chain implemented what it calls “digital recovery.” This process enables Panera guests to flag mistakes with their orders online via app or the website and allows café associates to rectify the situation by reimbursing the customer or seeking some other accommodation. This is crucial for off-premise orders, where the customer cannot go to the café counter to have an issue resolved.
Panera is even currently piloting a proactive accommodation policy, where if an order is going to be late, the restaurant chain’s employees can proactively credit the customer ahead of time.
Panera, according to Hanson, has a simple way of determining whether to proceed with a technological solution. “The guest wants to come and have a great experience. They want to pay for utility, and they want to be treated with respect…. Anything that helps that is good and anything that risks that is bad,” he said. “And so we try to keep it very simple. If it is [at least] neutral for the associate, but great for the guests we go ahead.”
However, it’s not only customer facing functions that are benefiting from new technology. Behind the scenes operations are also becoming more efficient. As DePree said at Shoptalk 2023, something the pandemic revealed is how complicated the supply chain has become, and how something historically seen as cost center and a cost center alone can also serve as a source for creating value.
In that sense, what Nordstrom is seeing in supply chain management is also what is starting to happen in the chargeback management space. A mind numbing routine task like creating an evidence file and representment letter to respond to a chargeback can now be done by a machine. The entire process can now be automated and controlled by artificial intelligence. That means employees on customer service or operations teams at merchants can now focus on building and maintaining positive customer relationships to keep the business healthy, and hopefully prevent chargebacks from happening in the first place.
Roles that were dedicated to responding to customer credit card disputes can now be focused on higher value activities that increase customer satisfaction, customer lifetime value and other key metrics. Meanwhile, a machine utilizing machine learning technology can yield more recovered revenue than the humans shifted to higher value work. In short, another operational cost center for merchants can become a source of value.
Two major lessons to take from the sessions at Shoptalk this year, are:
If you are interested in taking these lessons and putting them into practice in the realm of chargeback management, contact us at Justt.