Shoptalk Debrief 2024: The Evolution of Retail and AI Innovation

The themes centered on how to use AI effectively and the shift to sustainable business models in retail, and through concrete global examples it was shared how AI is transforming the modern retail industry. Many insightful topics were presented, including new initiatives for building a company brand and optimizing the customer journey.

Part 1: Shoptalk Report ~The Latest Trends in Overseas Retail~

The recently held Shoptalk 2024 is an event where CMOs and CDOs from various companies speak from an on-the-ground perspective about five themes looking toward the future of retail, such as generative AI, the brand power held by manufacturers and retailers, and the next-generation customer journey.

Under the premise that the conventional funnel-type marketing model has been disrupted, sessions continued on concrete measures as retail also needs to shift to more sustainable business models, including communities and loyalty programs.

・Retail business transformation through AI

In today’s world, where many vendors are adopting AI, the focus was not on whether to introduce AI, but on how to use it specifically. For example, Walmart has implemented a search function using generative AI, improving the shopping experience by responding immediately not to branded searches but to inquiries about the customer’s problems and desires, or so-called “jobs.” In addition, when using AI, the company brings in experts and lawyers, sets principles for AI use, and moves flexibly at a pace ahead of legal frameworks.

These kinds of technologies are key to identifying the reasons for purchase, from customer “wants” to “jobs,” and to deepening customer understanding even further. However, because issues such as security, reliability, intellectual property, and accountability remain for generative AI, many companies are first rolling it out for employees.

・Leveraging brand power

As a strategy to strengthen brand power, a case was introduced in which Barbie transformed from a toy manufacturer into an entertainment company.

The Barbie film was a huge success in the United States, and products were purchased across multiple generations, successfully turning fans into a passionate audience. This was presented as a classic example of storytelling-driven marketing, and it was suggested that the era has arrived in which brands seek customer touchpoints across every channel, both online and offline, with plans underway for theme parks and expansion on Netflix.

・Building a seamless customer journey

To make the customer experience seamless, companies need to provide a consistent loyalty program throughout the entire customer journey.

For example, methods are being explored to meet customer expectations by making full use of technology, such as location-based push notifications and shopping cart sharing with friends.

・Creating a unified retail experience

Using Walmart as a reference, many companies are beginning to focus not only on customer experience but also on employee experience.

The Me@Walmart app not only improves employee productivity, but is also available for the general public to download and is used in the hiring process. Through the app, it plays a role in consistently communicating the company’s mission and values and raising employee engagement.

In addition, a specialty pesticide retailer noticed that there were many cases in which customers bought pesticides that were too strong and ended up damaging the land, and it is shifting from product provision to solution provision by using AI to recommend the optimal pesticide based on land information from the customer’s location data and the local weather.

・Navigating changing industry relationships

Consumers’ attitudes toward companies are constantly changing. To respond to this change, services are needed that simplify subscription management and act like an agent capable of managing multiple tasks all at once.

As a result, consumers can use a variety of services in a centralized way, and it was noted that personalization and technological progress will advance even further.

Also, shopping touchpoints now exist everywhere, and the shift is moving from the traditional omnichannel approach to a more integrated “unified commerce.”
Within this, affiliate marketing through collaborations with influencers and creators, which is attracting renewed attention, is expanding.

For retail media, Amazon is shifting from simply appearing high in search results to an approach that provides discovery at each touchpoint in the customer journey, rather than just advertising to drive conversions.

From this, retail media aims to send a unified message across the entire customer journey and achieve more effective customer engagement.

In this way, the Shoptalk report session became a valuable opportunity to show how AI technology and digital strategy are transforming the retail industry as a whole.

Part 2: The Future of Retail Evolving with Generative AI

In the second part of the Shoptalk report session, focusing on the potential that the evolution of generative AI brings to the retail industry, Professor Yutaka Matsuo, Department Chair/Professor, Department of Technology Management for Innovation, Graduate School of Engineering, The University of Tokyo, and Hagiwara, Representative Director of Lazuli Inc., discussed the progress and application of AI technology in Japan.

Matsuo noted that although Japan was behind at the start in the field of generative AI, it has shown swift and appropriate responses in its adoption, including collaboration with OpenAI.

Last year, Japan purchased a large number of GPUs, and the Ministry of Economy, Trade and Industry is also supporting this move. With this kind of government backing and proactive corporate investment, the commercial use of generative AI is accelerating.

In addition, the development of employee-facing search tools using GPT is progressing, and the spread of next-generation technology use among companies is also seen as a positive trend.

As examples of AI applications in the retail industry, Hagiwara introduced cases of AI-powered customer service and inquiry handling, especially in the United States.

These technologies improve the quality of customer service and lead to the provision of a more personalized shopping experience. They also empower employees, allowing human effort to be used for meaningful work and solving fundamental problems.

He also said that while the United States and China are currently leading the world in generative AI, applications are the key for Japan to compete globally in this field, and that through trial and error in how AI is used, it may be possible to discover opportunities to create major change.

He also said that there are still many opportunities in the Southeast Asian market. In Singapore’s AI strategy, they envision creating a Southeast Asia LLM and advancing a Singapore-led project that connects neighboring countries. Through this project, progress into Southeast Asia is expected as Japanese companies collaborate technologically with Singapore.

The final part of the session also focused on the importance of product data. Many companies are already using AI to generate product descriptions and more, and as a result, both operational efficiency and the customer experience are being improved. On the other hand, the integration and deduplication of product data remain fundamental issues to be solved, and it was said that combining generative AI with well-organized data will dramatically increase the value of that data.

Finally, Matsuo expressed his expectations for Lazuli.

It was said that by widely adopting Lazuli’s technology, it will contribute to organizing and expanding product information and help improve the customer experience. Beyond product information, there are expectations that inefficiencies in a variety of fields, such as data integration in municipal and other administrative systems, will be resolved in the future by leveraging Lazuli’s technology.

Summary

At this event, we had participants in Shoptalk introduce generative AI and brand strategies from companies making advanced efforts, deepening concrete and practical insights for shaping the future of the retail industry.

In Matsuo’s session afterward, he proposed how Japanese companies should use generative AI based on trends in other countries and how they can expand further business opportunities.

In the final session, Lazuli’s technology was discussed, along with its potential and expectations for the future.

Even during the networking time afterward, many opinions were exchanged, and from the smiles of everyone who attended, we are proud to say it became a highly satisfying and meaningful event.

We will continue to share useful information to everyone both domestically and internationally. For those who could not join this time, the entire Lazuli team is looking forward to seeing you at the next event.

Finally, we would like to sincerely thank the companies that sponsored this Shoptalk report session.

Special thanks to
Kokyaku Jikan Co., Ltd.: https://www.kokyaku.co.jp/
Yappli Inc.: https://yappli.co.jp/
BrainPad Inc.: https://www.brainpad.co.jp/
UNCOVER TRUTH Inc.: https://www.uncovertruth.co.jp/