Episode 203 — Retail in the Age of Amazon and Machine Learning
On this episode of the Business and Society podcast, three professors from the Ross School of Business discuss the state of retail from a technological, industry, and trending strategy perspective. With the recent technological boom in retail via machine learning, the panel explores how retail has changed in the world of Amazon.
For a majority of the podcast, guests Jun Li, associate professor of technology and operations and Michael R. and Mary Kay Hallman Fellow; Lennart Baardman, assistant professor of technology and operations; and Joline Uichanco, associate professor of technology and operations, focused on how technology such as machine learning has impacted an ever-adapting industry.
"An overall impression that I get is for sure more and more retailers are using more analytics," said Li. "This not only includes the big ones like Amazon or Walmart, this even includes the much smaller retailers. In the past, they probably focused more on everyday operations, but now they are focused more on technology. So definitely increasing use of machine learning in their everyday decisions.”
Machine learning is just one of the strategies traditional brick-and-mortar retailers are implementing to catch up with Amazon. Outside of new technology, much of the retail industry is attempting to model Amazon’s business strategies, such as fulfillment centers, onto their existing business models to compete. Uichanco explores creative strategies retailers are using to catch up to ever-changing customer expectations.
“Back in 2013, it was pretty much a catch-up game. Amazon was setting the standards for what customers who are buying online should expect. They have the Amazon Prime. You buy something from Amazon, and you get it the next day or sometimes even the same day, which is amazing. So a lot of these traditional brick-and-mortar retailers they're looking at this, and they're like, ‘what can we do?’ Amazon has these giant fulfillment centers, and they have so many of them,” said Uichanco. “What these traditional brick-and-mortar retailers have done, they basically said, ‘Hey, let's utilize our stores. Let's use them as mini fulfillment centers.’”
Beyond implementing new technology and modeling Amazon’s business strategies, retailers are updating their previous strategies to the modern age. One such strategy going through an update is assortment and deals. As Baardman explores in the episode, Amazon has taken much of the market share from these traditional brick-and-mortar retailers; deals and assortment are an advantage they can leverage in the marketplace. Using artificial intelligence and machine learning, retailers are increasing the personalization of deals and assortment to drive customer ease and loyalty.
“In my discussions with retailers, they're really trying to move to a more personalized approach. So they're really trying to figure out, ‘Okay, what does this customer want? What is their personalized taste?’ So when I go to Meijer to do my grocery shopping, I buy certain items, and then a few weeks later, I get this coupon booklet that has exactly the items that I have been buying. They want me to buy that again. And so they basically try to get me to do that that way,” said Baardman. “I really think that retailers are gonna try and personalize more and more and more and try to figure out the data that they have about their particular customer. How can we best use it to leverage that? And so it's not a loyalty program anymore because we want you to get points and buy items with us. It's to get data about you and then have better deals for you that make you want to buy with us instead.”
To close the conversation, the panel explores how they are addressing the modern state of retail with the next generation of business leaders. A particularly hopeful outlook on the future is that retail will become a viable technology industry that has consistently had more representation of women in leadership roles compared to the traditional tech industry.
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About the participants
Hosts and Producers: Jeff Karoub and JT Godfrey
Guests: Jun Li, Lennart Baardman, and Joline Uichanco
Audio Engineer: Jonah Brockman
