Is Retail Ready for Predictive Shopping?

How would you feel if a retailer predicted your shopping habits, shipped goods automatically to your door and debited your bank account or credit card without your prior knowledge? Welcome to the wacky world of Predictive Shopping!

Although you may think that the scenario outlined above is science fiction, Big Data and AI systems have given companies all the tools they need to make Predictive Shopping a reality. Amazon received a patent way back in 2014 that would essentially allow Predictive Shopping to happen, as well as making it possible to deliver goods via automated drone. Everything is essentially in place already to drive this shopping revolution and has been for a few years now.

The fact is, Predictive Shopping is on its way whether you or I like it or not. But are consumers and retailers ready for this seismic shift in the way that we all shop?

The ‘Internet of Things’ and Retail

Technology companies have been laying the road for services like Predictive Shopping for a decade or more. The much-touted phrase ‘Internet of Things’ which sprang up in the early Noughties described households full of connected devices utilising Wifi to communicate with each other and external servers. We are now all so used to our ‘always on’ devices we don’t give them another thought.

Today we have web enabled heating systems, fridge freezers and security cams and that’s before we get into the growth of Smart Speakers from Amazon, Google and Apple. All these technologies have helped large retailers and technology companies gather vast amounts of information on our life and shopping habits so that AI systems can make informed choices on what we are likely to do next, what we are likely to want to buy and eat.

Gone are the days when the ‘Internet of Things’ required microchipped milk cartons and electronic scales to tell if you are running out of milk, the Terabytes of information collected on our shopping habits daily mean that large retailers like Amazon and Tesco don’t need to quantify exactly what you need as a consumer, what they already know about your buying habits means they can guess with astonishing accuracy what you are likely to want and need next.

GDPR and Predictive Shopping

We’ve all probably had thousands of emails recently from desperate retailers asking if we can please verify permission to be contacted. General Data Privacy Regulation, the much-publicised privacy law from the EU lays out a series of rules for data use, privacy and data handling security with the intention of protecting EU citizens from data breaches, data mis-use and malpractice wherever they may be on planet Earth.

Interestingly, although GDPR does miss the mark spectacularly in understanding the complexities of eCommerce systems, the people who wrote GDPR did think to write in clauses which may stop predictive shopping in it’s tracks or at least mean that explicit permission from consumers must be sought before using data for automated profiling and enrolment onto a Predictive Shopping scheme.

Clause 6 (1)(a) and 6 (1)(b) of the GDPR summary document from the ICO’s office clearly states that processing of personal data is unlawful if ‘consent of the data subject’ is not gained or any use of that data is not strictly ‘necessary for the performance of a contract with a data subject’, which basically means that those who currently hold your data can’t use it lawfully to predict your shopping habits if you haven’t explicitly given your consent for your data to be used in this way. Time to check the small print of that Clubcard or Amazon account you’ve just signed up for!

I am pretty sure that Amazon and Tesco’s legal departments are very busy at the moment trying to find ways around GDPR as it affects not only plans to roll out Predictive Shopping but also for instance Tesco’s own Clubcard scheme, which already uses data profiling to send you vouchers based on your previous shopping habits.

Are Independent Retailers Ready for Predictive Shopping?

Predictive Shopping requires vast amounts of personal data and extremely expensive Artificial Intelligence systems to operate. Most independent retailers would not be able to afford to collect, collate and utilise the amounts of data required to put together a Predictive Shopping system, that’s before you add in the complexities of conforming to GDPR.

Electronic Point of Sale manufacturers would have to integrate AI systems into stock control systems, goods ordering systems and accounting systems to allow independent retailers to utilise Predictive Shopping. This sort of integration work is prohibitively expensive for even large EPoS manufacturers as there are currently no ‘off the shelf’ Predictive Shopping AI systems with which to integrate. This means for the time being, Predictive Shopping is only a possibility for tier 1 retailers.

Do Consumers have an Appetite for Predictive Shopping?

The answer here is surprising. In 2014 a survey was undertaken and reported in the New York Times which suggested that at least for the American buying public a surprisingly large percentage supported predictive shopping . This may not be mirrored in post GDPR Europe however and traditionally shoppers in the UK have been more restrained in their shopping habits. More research would be needed on the appetite for such a seismic shift in retail, however given that we all seem to be leading increasingly busy lives, Predictive Shopping may actually be accepted as the norm in a few years and we will all wonder why people in the past actually went to the bother of ordering the things they needed manually.

This post has been written for WhatCost by David Fairhurst, Head of eCommerce with Intelligent Retail.

Intelligent Retail provide in-store PoS systems, eCommerce, mail order, telephone orders as well as online marketplaces for multichannel independent retailers. Their system, Connect, has been developed by a team that includes independent retailers, a business analyst trained at Harrods, software developers with over 20 years experience and an MBA qualified business manager. It came about when the owners of an independent retail business wanted a system to cover all sales channels in their company. The system enables retailers across the UK and Ireland to improve profitability and reduce costs through increased revenue.

David Fairhurst has been involved with Search Engine Optimisation and web development since 1999 and has spoken at many different retail and SEO conferences including Spring Fair and SES London.

www.intelligentretail.co.uk

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