Although retail and high-tech companies may appear on the surface to have little in common, they are increasingly forming partnerships in order to provide each other with needed expertise and market access. These collaborations are necessary because no single entity from either sector has the comprehensive knowledge or expertise to integrate retail and tech platforms.
Thus, retailers are increasingly turning to tech companies for solutions that use artificial intelligence (AI), machine learning and the Internet of Things (IoT) to improve operational efficiency and the customer experience and to offer consumers more shopping channels. At the same time, many tech firms are seeking to partner with retailers in order to expand beyond the traditional tech space into other vertical markets to fuel growth as product categories such as mobile phones mature.
The growing number of major partnerships also appears to be a response to the increasing threat from Amazon, whose e-commerce and technology platforms are creating serious competition for both retailers and tech companies. Two significant retail-tech partnerships were recently announced, one between Walmart and Microsoft and one between French retailer Carrefour and Google.
Walmart and Microsoft announced their strategic partnership in early June. The goal is to accelerate Walmart’s digital transformation, enabling the retailer to embrace cloud computing, AI and IoT technologies as well as enhance its retail operations. Walmart is undertaking a series of cloud innovation projects that leverage machine learning, AI and data solutions for customer-facing services and internal business applications. The company also plans to use these technologies to enhance the customer experience by providing convenient ways to shop. Walmart will use Microsoft’s Azure platform to provide cloud-powered checkout on its e-commerce sites. It will also build a global IoT platform to connect heating, ventilation, and air conditioning and refrigeration units in order to reduce energy consumption. The company plans to use machine learning to route its supply chain trucks more efficiently and to use Microsoft apps to enable its associates to be more productive.
Also in June, Carrefour announced a strategic partnership with Google. The collaboration is designed to help Carrefour digitally transform its operations by introducing technologies such as AI, cloud computing, the IoT and new shopping interfaces. The partnership aims to open three new shopping channels for French consumers, the first through the AI-powered Google Assistant device, the second via Google Home smart-home technology and the third through the Google Shopping e-commerce platform. The companies expect to offer these three channels to shoppers in France in 2019. In addition, Carrefour plans to implement Google Cloud, the tech company’s cloud suite, and G Suite, its business productivity platform, in order to increase collaboration and enhance productivity. Carrefour also announced that it plans to open an innovation lab this summer in Paris, where the two companies will develop new ways to improve the customer experience.
Through these retail-tech partnerships, the retailers are also looking to reduce costs and increase productivity. In a recent survey conducted by the Consumer Technology Association, the top three expected benefits from the application of AI are cost savings, increased productivity and increased revenue. The Carrefour-Google partnership will enable Carrefour to offer shoppers new and more convenient ways to shop, which should boost conversion and encourage customer loyalty. The system will offer Carrefour customers the same ability to order groceries via intelligent assistant that Amazon Prime customers already possess via Alexa.
These two partnerships are likely just the beginning. In another notable collaboration, French retail giants Auchan, Casino and Schiever recently announced an alliance with German retailer Metro, with the goal of launching a purchasing platform called Horizon that will help the retailers coordinate purchasing in France and internationally. We expect to see more retailers and tech companies pair up in the future in order to compete with Amazon.
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