AI: enhancement rather than replacement

My annual mid-January trip to New York City for the world’s premier retail technology event, Retail’s Big Show, organised by the National Retail Federation (NRF), highlighted how there is no escaping artificial intelligence (AI). Since last year’s event, it has arguably gone from a hyped-up technology looking for a home to a game-changer that is now genuinely impacting all parts of the retail sector.?

The use-cases for AI seem to have exploded over the past 12 months, and many retailers at the event detailed how the technology is being used to benefit their businesses. This ranged from generating marketing communications and other content, improving new product development processes, driving personalisation, boosting forecasting capabilities, enhancing customer service through the likes of intelligent chatbots, optimising inventory through the supply chain in order to reduce waste and improving the throughput of goods. I could go on and on.

Despite various organisations in retail having some difficulty grasping the technology and how to implement it, the sector is definitely forging ahead. The earlier perception that it is the harbinger of the death of many jobs is undoubtedly falling away. Half of shop workers are not worried about AI and automation replacing their jobs, with 31% believing it could positively impact their role, according to research from Scandit.?

There is a growing belief that AI can be used to empower people on the shop floor as well as in the C-suite. Speaking at NRF, Greg Cathey, senior vice-president of transportation and innovation at Walmart, said all employees have a company phone and access to the app. “With Generation AI we’ve democratised data…you can take all the knowledge in the company and give it to all the associates,” he said. “This is people-led technology power.”

Hospitality is not in such an advanced state. Consider that recent research from CGA by NIQ found that 76% of respondents accepted that hospitality is lagging behind other consumer-facing sectors when it comes to embracing AI. Hospitality is undoubtedly being held back by it still being, at heart, a people-driven business. The argument that no technology can replace the human touch still holds firm for many people.

But just as with retail, AI is not a replacement, it’s an enhancement. It can drive efficiency, which is much needed right now because the hospitality industry is surely heading for trouble – death by a thousand costs – unless it embraces solutions that optimise labour and operational practices that boost ever-decreasing margins.

That there is an acceptance the industry is a laggard is a good sign and suggests heads aren’t in the sand. There are further positives to be taken from the research also finding that 59% of hospitality leaders are curious about the prospects of AI and that 39% believe AI will be transformational. The whole sample also reckons AI will, to varying extents, be valuable to the running of their businesses.

Where things fall over is with the great uncertainty most companies have with how to move forward. Needless to say, it is the larger operators, with availability of resources, which have been undertaking research into the potential benefits of AI. I’d propose that it doesn’t really take that much research to find out that there are clear upsides to utilising the technology in hospitality.

There are plenty of examples of it being used increasingly effectively, including: within call centres; CRM systems; intelligently scheduling employee shifts; ordering and booking systems; analysing sales patterns to help with forecasting, sourcing and promotional activity; optimising food production; and the creation of marketing campaigns. I also came across AI being used in HR, with start-up TalentUnlimited not only filtering through job applications, but also using the technology to undertake actual job interviews and then delivering extensive feedback to applicants and employers.

The problem for many smaller businesses is that IT is such an alien beast. When I was recently reporting on The Athenaeum Hotel & Residences winning the Best Use of Innovative Technology Award in the Hotel Cateys 2024, it was evident that its impressive use of data and AI technology had been massively helped by its IT-savvy head of marketing.

If lavishly resourced IT departments are a nice-to-have, then companies should actively seek out IT-literate people within their organisations, wherever they are hiding. Empowering these digital natives already on the payroll would be a great boon. This, combined with targeting the friction and pain points in a business, is certainly a good starting point.?

Amid all the present uncertainty in the hospitality industry, one of the more certain future outcomes will be the increasing use of AI, just as has been the case with retail, so companies should get their hands dirty sooner rather than later.

Glynn Davis, editor of Retail Insider?

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.