The Artificial Intelligence Revolution is Here

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deborahweinswig@coresight.com
(646) 839-7017

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DEBORAH WEINSWIG
FOUNDER & CEO
@debweinswig

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EDWARD H.J. PARK
SVP, North America

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DR. HUI CHENG
Head of Robotics Research

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JOY TANG
CEO

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AGENDA
AI DEFINED
AI IN RETAIL
Customer Service
Optimization
Rationalized Inventory
Experiential Retail
CONCLUSIONS

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• Computers do only what they have been told to do by human
programmers – and only that
• AI is akin to giving the computer a human-like brain
• AI-powered devices can learn, make decisions and solve problems
WHAT IS ARTIFICIAL INTELLIGENCE (AI)?

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THE APPLICATIONS OF AI ARE ENDLESS
AIHuman intelligence
exhibited by machines.
Rule-based Reasoning
Machine Learning
Deep Learning
Natural Language Processing
Machine Vision
…and more
Autonomous Vehicles
Search Recommendation
Virtual Reality
Translation
Mapping and Geolocation
…and moreZ

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AI ACROSS A RANGE OF GEOGRAPHIES
Top countries in AI:
#1: CHINA
Followed by U.S.
Why?
• Investment
• Presence of large tech firms
such as Tencent and Alibaba
• Government policies
• Large population – plenty of
data – advanced digitalization
of the population
Source: International Data Corporation
JAPAN
62.4% CAGR
ASIA
(excl. Japan & China)
52.3% CAGR
CHINA
43.8% CAGR
Strongest Spending Growth Between 2017 and 2022
$24B $77.6B
Estimated
Global
Spending on
AI in 2018
↑ 93%
over 2017
Projected
Global
Spending on AI
in 2022
CAGR of
37.3% over
2017-2022
forecast period

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AI ACROSS A RANGE OF SECTORS
Source: PwC, Sizing The Prize Report
54%
39%
14%
41%
38%
44%
83%
59%
8%
8%
3%
Retail
Energy
Manufacturing
Banking
Near-term (0-3 yr) Mid-term (3-7 yr) Long-term (7+ yr)
AI Adoption Rates (%) by Industry
Over Next 7+ Years
Source: International Data Corporation
$3.4B $3.3B
$2B
$1.7B
Retail Banking Manufacturing Healthcare
2018 Top Spending in AI by Industry
Retail Banking Manufacturing Healthcare
Retail will
adopt AI
technology
the fastest
in the next
3 years.
2018 spending in AI
from retail sector
will exceed banking

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CORE FRAMEWORK
FOR AI IN RETAIL

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AI UNDERLIES ALL ASPECTS OF RETAIL ECOSYSTEM
Communication: Personalization, chatbots, voice
Optimization: Promotions, competition and dynamic pricing
Rationalized Inventory: Forecasting, planning allocation, and audits
Experiential Retail: Discover, engage, shop, pay

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AI IS HELPING RETAILERS IMPROVE THE CUSTOMER
EXPERIENCE WITHOUT ADDING STAFF:
• Chatbots are able to understand and respond to
customer requests.
• AI voice recognition can help retailers to surface
relevant content to each consumer.
• Data is analyzed to create a customer profile, and
can be compared to other, similar customers to predict
preferences, make recommendations, etc.
COMMUNICATION

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AI ENABLES PRECISION:
Pricing and promotions can be individually targeted
based on market conditions, sales, weather, and events.
Price decisions can be automated for each product, by
channel and store.
Optimal entry price points for newly launched products
can be determined.
AI-powered dynamic pricing to change prices rapidly in
response to competition and demand.
OPTIMIZATION

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RATIONALIZED INVENTORY
AI YIELDS SMARTER BUSINESS INSIGHTS:
• Identifies estimated and actual sales of products.
• Forecasts demand for items suited to each store and
displayed with other items that can be cross-promoted.
• Enables automatic replenishment from warehouses.
• Identifies products that are overstocked.
• Reduces markdowns and returns.
• Redeploys staff from the backroom to the floor, where
they can help customers.

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AI CREATES BETTER CONSUMER EXPERIENCES:
• Eliminates friction in the shopping process.
• Deepens engagement with customers.
• Closes the information gap between e-commerce and
physical stores.
• Mobile acts as a personal assistant guiding the shopper
through the shopping journey in-store.
EXPERIENTIAL RETAIL

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THE FUTURE ROLE OF AI IN RETAIL
Communication
Rationalized
Inventory
Experiential
Retail
The computer and human interface will
continue to blur, and the necessary
investment in human capital required for
customer service will be alleviated.
AI will make supply chains and product
lifecycles leaner and more efficient.
Redeployment of backroom staff to
customer-facing.
Online and offline channels will continue
to harmonize, and the consumer will be
able to easily access commerce channels
at any time and place.
Optimization
Personalized marketing, promotions, and
pricing will become the norm. The ops of
brick-and-mortar retail will begin to
behave more and more like online.

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G U E S S X A I
Re-thinking how we use AI to drive personalization and retail.

1C O N F I D E N T I A L
T H E G U E S S A I S T O R E
GUESS and Alibaba unveil an AI driven store in Hong Kong.

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M A G I C M I R R O R S
Customer shows product; sensors on digital screen detect

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IN
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A I P A I R I N G S
Product recommendations; AI driven outfitting

- S E G M E N T E D M A R K E T I N G I S D R I V I N G N E W C U S T O M E R S A N D I N C R E M E N TA L S A L E S -
C O N F I D E N T I A L
V E R S A T I O N A L C O M M E R C E
D Y N A M I C O U T F I T T I N G
Fitting room digital screen can change mood, background, plus a 360 view

D E L I V E R E D T O Y O U R H O M E
C H E C K O U T W I T H

A I W I L L B O O S T R E TA I L S A L E S
6 0 % B Y T H E Y E A R 2 0 3 5
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T H E F U T U R E O F A R T I F I C I A L I N T E L L I G E N C E I N R E T A I L , B U S I N E S S I N S I D E R , 8 / 2 0 1 8

//CURRENT INTEGRATIONS AND SUCCESS
G U E S S X D I G I T A L A I

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CONVERSATIONAL AI
AI service provides conversational, structured answers
•Business Data structured in a way that can be
picked up by AI services driving an increase in
global brand discoverability
•Natural language processing enables simple
customer interaction
•“Alexa, where’s my nearest GUESS store?”
•“Call my nearest GUESS store”

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CONVERSATIONAL AI
Natural Language Processing (NLP) allows personalized conversation with consumers at scale
•Deliver interactive digital receipts, engage in
post-purchase conversation through Messaging
Apps.
•Handles inquiries about purchase,
•Provides customer service support,
•Facilitates returns,
•Enables access to GUESS programs

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AI DRIVEN PERSONALIZATION
•Interactive search results refine visually,
keystroke by keystroke
•Real time search controls respond to trends
•Personalized ‘findability’ layers cognitive
science atop search
•Revenue attributed to GUESS AI driven
search; +20% to non-scientific search
experience
Recommendations at the intersection of collected data - User behavior, purchase history, declared preferences, CRM + product data

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SMART MERCHANDISING & SEARCH
Merchandisers become more efficient; focus on strategic thinking
•Personalization in both content and product grids
allows Merchandisers and Marketers to take on a
larger role in “experience” creation.
•AI driven merchandising enables a more dynamic
customer-centric experience
•On the fly adjusting weights of algorithms in
product assortments ensures top relevancy

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•Intelligently, automatically determine the
most relevant changes in product demand
around each store
•On the fly regression analysis of views and
purchase near each store
•Leverage multiple data sets from store
location, local signals like weather, trends to
deliver a unique experience
HYPER-LOCALIZATION
Dynamic determination of customer location

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•Technology has made everyone a
storyteller; we use AI to choose which
stories to feature
•Automatic AI tagging increases shop-
ability
•Computer vision to characterize photo
attributes automatically
•Optimize content for specific customer
segments through Machine Learning
SOCIAL LISTENING and AI OPTIMIZATION
Use machine learning, visual search and NLP to serve optimal User Generated Content

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AI POWERED SMART STORE
Virtual runway concept store; smart checkout
VISUAL SEARCH + COMPUTER VISION
Intelligent recommendations based on image recognition
INTELLIGENT PERSONALIZATION
Orchestration of cross-channel personalized experiences;
local & historical data drive great insights
AI SHOPPING BOTS
Styling recommendations, predictive customer care
PREDICTIVE INVENTORY PLANNING
Nuanced insights into product to optimize assortment and
inventory levels
LOGISTICS & DELIVERY
Transit optimization, supply chain insights + last mile
improvements
GUESS AI FUTURE ROADMAP

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G U E S S X A I
Re-thinking how we use AI to drive personalization & retail

90%
• What is AI?
AI = Machine Learning +
Deep Learning
• Inside AI:
Computer Vision
Natural Language Processing
• The 2016 Breakthrough in
Computer Vision:
Detection
• The Next Breakthrough
For Video Commerce:
5G

General Products eCommerce
AI Recommendation
Social Media
Fashion Retailers
Search
Platforms
Very Segmented eCommerce platforms
High End
Low End
The US Consumer Problem

PROBLEM
Publishers: Limited Advertising Spots
76% of people skip or block ads
1.4% Low conversion rates
Retailers: -$40 per new user
SOLUTION
viewers are treated like digital trash cans exciting content-related product discovery
The Video Advertising Problem & Opportunity
Publishers: UNLIMATED Advertising Spots
User Initiated Video Engagement
3.6%~7% conversion rates
Retailers: +25% ~ +60% revenue gain per new user

Shop Any Video Or Photo
Keep watching visually related content…
Mobile Experience

PROBLEM 1:
–
Expensive Traffic! Cost of acquiring one
new user now > $40 USD
SOLUTION 2: Faster Discovery, Complete the look
We found 32 visually similar results
PROBLEM 2: Poor Shopping Experience
SOLUTION 1:
Only pay 10%-30% when new user
bought something.
the eCommerce problem & solution

Some Computer Vision Retail Features
Add visually similar to
recommendation algorithms
and increase the conversion by
2X
1. “Visually Similar”
Recommendation
2. “How to Wear it”
“Complete the Look”
3. “Camera Search”
influencers photos and increase the
conversion by +20%
Only shows items “In Stock”
10% of shoppers on Alibaba uses
this feature, conversion rate = 7.9%

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AI
DEEPER
DISCUSSION

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2018 — BUZZWORTHY
Debuted this past November by
China’s Xinhua News Agency
1ST AI NEWS ANCHOR
Source: NPR; Marketeer; PwC
AI
90% ACCURACY
In predicting patients’ death
within a year

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2019 — NEED TO KNOW
More Consumers Will Expect
“Smart Retail” Interactions
Retailers’ Go-To Technology
Will Strip Friction from
Brick-and-Mortar Retail
Western Retailers Will Adapt “New
Retail” and “Boundaryless Retail”
from the East
AI

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2025…
AI
Record a Top 100
Billboard Song
Create a Work Of Art
Worth >$100,000
Write a Hit TV Series

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THE FUTURE OF RETAIL
GREAT LOGISTICS
SHOPPING FORMATS
MARKETING & FUN
AI-POWERED

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Deborah Weinswig
THANK YOU

The Artificial Intelligence Revolution is Here

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