Choosing the Right AI is Half the Battle

Retailers are adopting new analytical technologies, specifically artificial intelligence (AI), at an accelerated rate to keep pace in today’s highly competitive marketplace. In fact, a survey of North American retail executives conducted in early 2021, found that only 12% had no plan to implement AI into their merchant organization over the next 24 months. Choosing the right AI technology is critical and needs to be considered carefully and chosen wisely, but that is only half of the task. The other element is the change management, or organizational transformation component, which plays an even bigger role in its success, as AI is more complicated and misunderstood as a technology compared to other initiatives. According to a survey carried out by McKinsey, only one-third of “regular” organizational transformation efforts are ever fully successful. Implementing AI is a great challenge and not something that can be accomplished without considerable thought and commitment.

Why Some AI Implementation Initiatives Fail

The merchant function is the central hub of any retailer, therefore integrating AI impacts the entire company. From a change management perspective, the people component of the merchant organization emerges as the most important to manage successfully. Jobs will evolve quickly, career paths will change, day-to-day traditional repetitive roles will disappear and be replaced by ones requiring new skill sets.

The principal reason for initiatives of this type failing has been resistance to change. This is understandable as merchant processes have remained relatively unchanged and successful since the 1970s, and for those retailers still around today, the question always becomes “why fix something that isn’t broken?” But, as is widely recognized, the playing field has changed dramatically in the last year and success going forward depends on adopting the new AI technologies. There is a fairly well-worn path to success for change management that provides a great blueprint for success. But retailers have to look further, to the B&M retailers who have successfully adopted AI, and see how they overcame the very unique challenges B&M retailers face, challenges that are in addition to those faced by conventional change management.

What Needs to be Emphasized in the Change Management Process for Successful AI Implementation

To that end, two key things need to be particularly emphasized in any change management plan focused on adopting AI into the merchant planning process:

Clear Understanding of AI and Its Impact

AI is, for most senior merchants, an entirely new category of solution and a technology wrought with misconceptions. For instance, AI does not take over the whole function, but rather it will evolve it to be more effective, precise, and seamless, replacing only the most manual and mundane of tasks. It is vital that everyone in the organization, from the CEO down, understands how AI actually works, the role it will play, and the positive impact it will have.

The importance of everyone having this clarity can not be overemphasized. It is achievable through a comprehensive internal PR and learning program, carefully crafted and completed well before AI is ever in the building. According to one regional grocer who successfully implemented AI for their promotion planning, “senior executives all the way down to frontline employees were all involved from the very beginning. We made sure that we dispelled all of the misinterpretations, fear and clearly communicated the business advantages of adopting AI and the very positive effect it would have on all of us.”

A Clear Plan for the Changing Roles

In retail there will always be a need for human experience, human judgment, and the wisdom of people. AI adoption will nevertheless create new roles and the requirement for new skill sets, but the shift is for the benefit of both staff members and the long-term viability of the business. The right AI technology simplifies the mountains of data and complexity. It provides near time “what if” scenarios along with very precise forecasts as it considers thousands of variables and millions of scenarios per second, something people simply cannot come close to replicating.

The employees that fulfill these roles today, the analysts and spreadsheet operators, are the ones that will be impacted the most and will need a clear roadmap for the future. Its important to note that these are the jobs that are rapidly becoming less and less coveted by today’s labour market. The best and brightest currently in these positions will have the benefit of being freed through automation to take on better roles focused on the challenges of the coming decade. They will be at the forefront of what is a rapidly changing and unpredictable retail market.

However daunting the transformation to AI is for B&M, it will be a matter of survival in the not too distant future. Those not on the leading edge can benefit greatly from the change management lessons learned so far, as exemplified by a major US grocery chain who begun the journey early last year: “It (AI) was a step we felt we had to take to survive and compete in the long run, it has been more challenging and more growing pains on the people side than we imagined but the fruits are coming to bare now.”