EMBRACING THE MACHINES: AI s Collision With Commerce Craig Elston Global Chief Strategy Officer

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1 EMBRACING THE MACHINES: AI s Collision With Commerce Craig Elston Global Chief Strategy Officer 1 In 2017, By The Numbers - U.S. CNBC Over 15M Alexa-Powered Devices Sold Over 5M Google Home Units Sold #1 item on Prime Day: Echo Dot CBS Money MIT Technology Review Source: CRIP, CNN Money, Fortune World s Fair Elektro the Robot Walk by voice command Speak 700 Words And more! 3

2 1940 World s Fair Elektro the Robot AND Sparko the Dog 4 Artificial Intelligence is a progression and we ve reached the tipping point in its evolution 5 AI is still a mystery in many ways especially when it comes to how it influences shopping behavior 135 1,000 10,000 15,000 Alexa Skills Q Q Q Q Business Insider 6

3 How do shoppers define AI today? LEARNING OBJECTIVES What is the potential for using AI to shop? How do shoppers want to use AI in the future? What retailers are winning in making AI mainstream? How do socioeconomics influence AI adoption? And, ultimately, where will shoppers draw the line when it comes to using AI? 7 U.S. RESEARCH APPROACH PHASE 1 Secondary Deep Dive PHASE 2 Expert Interviews 3 Industry perspectives PHASE 3 Qualitative Research 15 in-homes, 2 markets PHASE 4 Quantitative Research 3,665 respondents across the U.S. 8 Four part white paper series: Part 1: AI Today WHITEPAPERS Part 1: AI Today Part 2: AI Tomorrow Part 3: AI and Retailers Part 4: AI and Socio-Economic Impact Part 2: AI Tomorrow Part 3: AI and Retailers Part 4: AI and Socio-Economic Impact 9

4 PERCEPTION & ADOPTION TODAY 10 People are curious and a tad cautious about AI How Does AI Make You Feel (Top Three Emotions) Millennial Gen X Boomer 10 75% 5 25% Curious Cautious Uncertain Optimistic Excited Q: Which of the following words best describe how you feel about using Artificial Intelligence to help you shop today? N=3615 Fearful 11 People describe AI on a spectrum that ranges from aliens to almost human When I think of artificial intelligence, I think of aliens or something like that. Dasharra R, 24 I'm thinking robots...there's been movies out on the subject...commander Data on Star Trek, was an artificial intelligence. Bruce S, 68 I think of the more advanced artificial intelligence as the complexities of what a human brain can do, put into a piece of electronics. Mary F, 42 A program that could predict what you want, or have human-like qualities that you can interact with, that there can be a dialogue with. Troy P, 32 12

5 When asked, respondents were unclear about when they are using AI, and when they are not. 13 People actively use mainstream AI especially Millennials What Devices Do You Currently Use? 6 Millennial Gen X Boomer 45% 3 15% Chatbot Intelligent Assistant Smart Home Device Q: Do you use, or are you open to using, any of the following? N= Amazon shoppers are more ahead of the curve What Devices Do You Currently Use? 6 Amazon Walmart Target Grocery 45% 3 15% Chatbot Intelligent Assistant Smart Home Device Q: Do you use, or are you open to using, any of the following? N=

6 And the interest to adopt is high Percent of non-users that are open to owning or using these AI technologies 85% 9 9 Chatbot Intelligent Assistant Smart Home Device Q: Do you use, or are you open to using, any of the following? N= Those actively using AI today are generally just scratching the surface 54% used a voice-activated personal device at least once a week Q. Do you frequently (i.e. at least once a week) use any of the following Personal Assistant devices? N = 3, Minimal risk with many simple AI tasks Netflix is probably a good example where I don t necessarily care where those recommendations come from, but if it makes my life easier in terms of finding content, it is something that I appreciate and I am willing to participate in. Jeff, 59 years old 18

7 Asking for help with simple tasks 68% 56% 52% of those who use it weekly ask it to play music of those who use it weekly ask it to add an item to a shopping list of those who use it weekly ask it to suggest an item Q. What tasks have you asked or would be open to asking a device like an Alexa or Google Home to do for you? N = 3, AI is a helpful assistant with the potential to be more 57% Personal Assistant 23% Foodie/Personal Chef Q: If AI were a person, what role does it play for you today? N= % Concierge 23% Friend/Family 25% Coach 18% Personal Stylist 11% Other 20 SHOPPER ATTITUDES 21

8 1/3 of shoppers are open to letting AI make purchase decisions for them today 22 Enjoyment in shopping can deter usage of AI Everday Household Items Enjoy Shopping Likely to Allow AI to Make Purchase Decisions Perishable Groceries Hosuehold Tech Clothing Entertainment Travel Dining Q: How would you describe shopping for these categories on a scale of 1 to 5 with 1 meaning it's a chore and 5 meaning it s something I 23 enjoy shopping? How likely would you be to let Artificial Intelligence make decisions and purchases for you in these categories? N=3615 Amazon shoppers are ready to delegate to AI Likely to Allow AI to Make Purchase Decisions 6 Amazon Walmart Target Grocery 45% 3 15% Everyday Household Items Dining Entertainment Household Tech Travel Clothing Perishable Groceries Q: How likely would you be to let Artificial Intelligence make decisions and purchases for you in these categories? N=

9 Expose you to new things or limit what you experience? Shoppers aren t sure. 31% 37% Worried that AI will narrow their options Think AI will expand their shopping exploration and help them see new things they would not have considered Q12. What are your thoughts on AI's ability to bring you items to choose from and ultimately buy? N = Convenience is great, but saving money matters most 78% 74% 55% 42% Say saving money is the key benefit Want AI to find them the best deals Say saving time is the key benefit to AI Want AI to answer questions when asked Q8. What are two things you would like AI to do for you when it comes to shopping today? N = Shoppers have concerns about privacy and cost 71% Are concerned with protecting their personal information 55% Are concerned with how much AI will cost Q11 A/B. If Artificial Intelligence were a person, what role does it play for you today? / If Artificial Intelligence were a person, what role would you like it to play in 5 years? Q6/39. What is one word you would use to describe what Artificial Intelligence that helps you shop is? / What is one word you would use to describe what Artificial Intelligence that helps you shop is? 27

10 THE EDGE How far will shoppers let AI go? 28 Shoppers are optimistic for the future of AI How Does AI Make You Feel (Top Three Emotions) Today In 5 Years Curious Cautious Uncertain Optimistic Excited Q: Which of the following words best describe how you feel about using Artificial Intelligence to help you shop today? N=3615 Fearful 29 Expect AI in the future to be driven by voice and Amazon Who Will Make AI Mainstream? 83% 69% will EXPECT to interact with AI via voice command will PREFER to interact with AI via voice command 30

11 For AI to take on a more personal role in their lives What Role Does AI Play in Your Life? 8 Today In 5 Years Personal Assistant Concierge Coach Foodie/Personal Chef Friend/Family Personal Stylist Other Q: If AI were a person, what role does it play for you today and in 5 years? N= Personal connection to AI I think it would be fun if it weren't necessarily named, so you could name it whatever you wanted because especially now we have friends who also have [an Alexa], but this is MY Alexa. Not everybody has their lights set up the way that we do. She knows how to run this house, not yours. Tyne, Comfort in AI reminding and helping with shopping AI that is proactive or automatic is too far for most shoppers 33

12 Grocery shoppers want help from AI 8 Percent of Shoppers that Would Let AI do the Following for their Everyday Household and Grocery Shopping Needs in 5 Years AI AS AN INPUT AI AS DECISION MAKER Find the best Remind me when deals on things household items I regularly buy are low Help make shopping lists Make Stop me from Stop me from Automatically suggestions for ordering something ordering something buy staples what to buy to stay in budget for health/lifestyle I usually buy reasons Automatically buy perishable groceries Proactively order items I have not purchased but might like Q: Imagine the role, if any, you d like AI to have in your everyday household and grocery shopping in the next 5 years. Which of the following tasks could you see yourself letting AI do? N= Shoppers want AI to have an off-button. You're basically going to get into engaging a system in the computer and arguing with it, and you're going to win. Then you're going to say, F.U., I don t want to use you anymore. Ronald D, 36 Q11 A/B. If Artificial Intelligence were a person, what role does it play for you today? / If Artificial Intelligence were a person, what role would you like it to play in 5 years? 35 Where AI could fall short when it comes to shopping AI will help in the acquisition and distribution of things. Where it s going to fall short is when I don t know what I want or know how to articulate what I know. Bob Moesta, President and CEO of the Re-Wired Group 36

13 THREE THINGS 1 It s progressive/adaptive 2 Humans are a constant 3 It s another input 37 Find out more: artificialintelligence Sign up for Whitepapers: Reach me at: celston@integer.com 38

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