Alibaba's FashionAI Sets the Bar for Retail Experiences

August 28, 2018 Karl Hellman

Photo credit: BusinessWire

The idea that brick-and-mortar retailers should incorporate the interactivity of online shopping experiences has been suggested by retail luminaries for some time now. Frank Grillo, CMO of Harte Hanks, and Kim Whitler, Professor at University of Virginia, Darden School of Business, suggested it in their analysis of retailing in 2018. Some retailers—True Religion, for example—are beginning to integrate online capabilities with their brick-and-mortar stores.

Now we can add another reason to go to Hong Kong, in addition to deep discounts on upscale brands and fabulous dim sum. Namely, a customer-interactive brick-and-mortar store has just opened there: Alibaba, the world’s largest retailer, opened FashionAI in Hong Kong.

You walk into the store and check in with your Alibaba ID code, or if you set it up, a face scan. The store now knows you and all your past purchases and characteristics.

You take an item off a radio-frequency identification (RFID) enabled rack, and you see the item displayed on the adjacent mirror equipped with artificial intelligence (AI). You see size and color options and ideas about complementary items to complete your ensemble. You choose the items you want to try on, put them in your virtual “bag” and get assigned a dressing room.

An employee pulls the items from stock and delivers them to your room. Want to try another color? The employee will bring it to you—you never have to leave the dressing room. Ready to purchase? Just take the items you want and walk out. The app will bill you.

See how the store works in this video:

A shift in how we look at brick and mortar

Brick-and-mortar-centric retailers sometimes worry about how they can make the physical store compete successfully with digital retailing. This is the wrong way to look at retailing. It’s product- and channel-centric rather than customer-centric and working backwards from the jobs buyers want to complete.

Alibaba’s FashionAI is an example of how retailers can seamlessly weave together the capabilities of brick-and-mortar and digital retailing to create a remarkable, entertaining and useful experience for the customer. The stores illustrates what can be done if a retailer is truly customer-centric. Both stores are examples of innovative, entrepreneurial retailing.

Entreprenuerial retailing

The old model of brick-and-mortar retailing was based on physical distribution of a wide assortment of products. And while there are many customers who still patronize brick-and-mortar stores for this reason, brick-and-mortar stores are no longer the only choice available to consumers. Some customers prefer digital channels to meet their physical-distribution needs. Brick-and-mortar retailers must become entrepreneurial. They must innovate and create new strategies that go beyond physical distribution and expand the customer needs they address.

John Deighton of Harvard Business School says retailers need to be “…creating customer experiences….Why? Because invoking a customer experience, by which we mean the sense of having encountered something out of the ordinary, needing to be made sense of, something fun, is deeply rewarding.” Deighton cites examples of brick-and-mortar retailers that are succeeding by creating stories that bring the in-store customer experience to life.

Alibaba’s FashionAI is the ultimate customer experience

Digital retailing has made incredible strides in discerning who the customer is and how best to serve her. Bringing this understanding of the customer into the store makes the retail experience all about the customer.

The interactive technologies—the RFID-enabled racks, the AI mirrors, your selections magically waiting for you in your dressing room, the hundreds of cameras and sensors, the auto-magic billing—make a store visit like a trip to Disney World. In fact, the trip to stores like Alibaba’s Fashion AI is better than Disney because the experience is all about you, the customer.

Amazon is experimenting too

Amazon is also experimenting with integrating digital and brick-and-mortar retailing. In January of this year they opened their second Amazon Go store in Seattle.

It’s a large convenience store (3,000 square feet compared to the typical 1,800 C-store) where you can pick up pre-packaged breakfast, lunch, dinner or snacks from an assortment of upscale sandwichs, salads, breads and bakery prepared by local specialty shops. They even have a selection of chilled juices, wine and beer.

You swipe in with the Amazon Go app and hundreds of cameras and sensors track the items you pick up. No need to stand in line to pay—you just leave and are auto-magically billed on your Amazon account.

Customers report spending about two minutes to grab lunch and go.

Not sure whether to buy the chicken salad or the turkey? There’s a friendly, tech-savvy person to help.

Amazon reports they are pushing the boundaries of “computer vision and machine learning.” And their ultimate goal is to create a customer experience that is fast, “effortless and magical.”

Amazon Go’s experience in action:

What Alibaba FashionAI and Amazon Go have in common

Both Alibaba and Amazon are focused on creating amazing customer experiences first and foremost. The digital and brick-and-mortar technologies are enablers—not the main show.

Both stores have real human beings as staff. Would an app to answer questions or a robot to deliver merchandise be less expensive and perhaps even more accurate? Perhaps, but both Alibaba and Amazon know that people like to talk to people. The technology makes people more effective, it doesn’t eliminate them.

Both stores use technology to eliminate the delay and hassle of paying. No lines. No searching for the bar code to make the scanner work. No requirement to use a stylus to make an illegible signature.

Main take-away

Gone are the days when brick-and-mortar retailers could succeed by managing online retailing as a separate line of business. Today’s state of the art is to integrate all the advanatages of online shopping with the try-it-on and take-it-home advantages of brick-and-mortar stores outfitted with RFID racks, AI mirrors, cameras and sensors.

As Rogers and Hammerstein wrote: "The farmer and the cowman should be friends." The digital retail experience and the in-store experience do not need to be enemies in a zero-sum game. The entrepreneurial retailer can combine them in a single customer-centric experience.

About the Author

Dr. Karl Hellman is President of Resultrek Inc., a marketing and sales consulting firm. Karl is the author of The Customer Learning Curve (with Ardis Burst, 2004) and his clients include best-in-class companies such as JP Morgan Chase, Wells Fargo, UPS, and Coca Cola.

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