Retailers Increasingly Turn To AI For Security And Efficiency

grocery produce

Artificial intelligence (AI) is moving from cool concept toward everyday consumer reality, and signs of that innovation are increasingly appearing in the retail space.

Take the issue of retail security as one example.

As the new PYMNTS Merchant Fraud Decisioning Playbook shows, fraudsters are starting off the new decade armed with the stolen data and credentials of millions of global consumers, and they are already putting that data to use. Today’s fraudsters are practiced and well-equipped, making proper data and consumer identification a must to maintain a successful business in any industry.

Firms must know how to divide fraudsters from their legitimate business suppliers, vendors and end customers. To do so, however, these companies will need to make some adjustments to their fraud protection strategies. Implementing a layered anti-fraud approach that utilizes several technologies could help protect against bad actors looking for vulnerabilities.

Retail Trust and AI

Trust is an essential factor for business interactions of any sort, but this is especially true now that most of these interactions happen online. Participants in the sharing economy must be sure they are buying or selling goods to another trusted party, and it is the job of the platforms that enable these connections to make that the case. That is why RV sharing platform RVshare is utilizing artificial intelligence (AI) and machine learning to protect both RV renters and owners, said company CEO Jon Gray in a recent interview with PYMNTS.

As that happens, retail operators — including some of the biggest and most famous — are turning to AI and putting more faith in the technology to help secure the future.

For instance, Apple shelled out $200 million for an artificial intelligence startup that works to make smart devices smarter, beating out bids by Microsoft, Amazon and Intel to buy AI firm Xnor, according to recent reports. Based in Seattle and two years old, Xnor develops low-power edge-based AI. Its machine learning technologies run directly on so-called edge devices instead of tapping the cloud, powering smartphones, IoT appliances, cameras, drones and more.

The on-device, edge-based approach is faster and more secure and gives users complete control over their personal data, according to a source familiar with Xnor’s technology. Reducing network demands, the technology works even if cloud connection is lost.

Grocery AI

Even grocery and food sales are getting a dose of AI power.

Fresh foods present a particular problem for grocers when it comes to keeping their shelves stocked. Fresh foods don’t come with expiration dates stamped on, and tend to vary in terms of seasonal availability and quality. In addition, consumer preferences are highly variable when it comes to such products, which have a relatively short shelf life. As a result, of the 8 million tons of food retailers throw away each year, the vast majority are fresh foods that spoiled before they could be sold.

That’s a lot of landfill space, a lot of wasted resources and a massive economic loss for grocery retailers — totaling roughly $18 billion per year. And it is an area where nearly all grocery retailers could stand to improve: When graded in 2018 by the Center for Biological Diversity, no major retailer got an A for their efforts in managing food waste. Walmart got the highest score with a B, while the vast majority of well-known grocery chains got Cs and Ds.

Such uncertainty is bad for the bottom line of any grocer — but especially smaller ones with thin margins. Throwing out a full 8 percent of the produce a grocer buys per year — the current industry average — takes a big bite out of grocery chains’ bottom lines.

That is what moved Illinois-based grocery chain Fresh Thyme to adopt technology by Afresh for its 75 retail locations throughout the Midwest in late 2019. Freshness of produce, Fresh Thyme CEO Chris Sherrell noted in a statement, is the central value proposition for small chains, so the firm is critically interested in investing in supply chain technology that allows it to better deliver on that offering.

Ramesh Reddy, Fresh Thyme’s chief information officer, said the Afresh technology delivers on two fronts: keeping the consumer experience level high while reducing bottom-line costs for the chain.

“Fresh Thyme is aggressively adopting emerging technologies like Afresh’s AI solutions to drive our digital transformation with a focus on providing unparalleled experiences for our customers,” Reddy said. “We believe in exceeding the expectations of our guests by providing exceptionally fresh food at a great value while doing our part to reduce food waste.”

Even with all these developments, we remain in the infancy of AI and retail. More experimentation and development is needed to figure out what really works best, and at what cost. But the AI retail trends are starting to take shape.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.