Yesterday, I attended the Global Virtual MarTech Summit 2024. What I like about this summit is that the speakers, who are all very experienced, use retail marketing technology. Although these tend to be from the high end of town, they are relevant to SMB retailers regarding how modern businesses approach customer engagement and technology integration.

Balancing Technology and Personal Connection

It's ridiculous to do what some people do: buy an advanced computer to humanise their business.

Everyone agreed that although technology has advanced dramatically, it cannot yet replace the human element. Building personal connections with customers fosters trust and loyalty, essential for long-term success. Customers are more likely to return to businesses where they feel an individual bond.

Making Data Work for Your Business

Technology needs solid, integrated data. The speakers highlighted the problems with information being scattered over many different systems. A shop is better off with one integrated POS System to make technology work.

Listening to Your Customers

Everyone felt that you have to listen to your customers. They noted that most of what people say about your business doesn't come to or from you. They felt you needed Social media and Google search to fill this gap. It can provide a wealth of information about your customers' thoughts about your brands and products. Reading these conversations can offer valuable feedback and early warning signs. For instance, if you notice people on X(Twitter) saying, "I stopped buying XYZ because..." something is wrong.

Emerging Technologies for Marketing

There wasn't a clear consensus on the best marketing tools; everyone seemed to use something different. Of the free AI, Google Gemini was broadly the favourite. I was unsurprised about this, as our tests showed Google Gemini was narrowly the best for retail here.

We found that this platform combines search and performance advertising capabilities, offering businesses a powerful tool for more effectively reaching their target audiences.

Predictive Analysis for Future Insights

Predictive analysis is a hot technology in retail. Here, you use technology to help you see what is likely to happen so you can make plans.

Now, I would like to finish up on how you can use it as today, this is the buzzword. If you want to know where the action is in retail technology, I strongly urge you to work through it.

I used Google AI here to help a newsagent forecast trends and make informed strategic decisions. You'll need to create an account to use it.

Have a read of a sample conversation I made for a scenario of a newsagency in a small strip centre.

If you go through it, you will get the idea.

If I were continuing, I would do it by selecting a topic and asking questions on each topic, a sample of the continuing conversation might be:

Adapting the Business Model

Since retail-focused shops are replacing traditional news agencies, how can I embrace and develop revenue streams for gifts, toys, and stationery?

What kind of gifts should I look at to substantially grow my gift revenue?

Should I stock a few lines with more gifts in each, or should I have more lines with fewer gifts in each?

I am thinking of phone cases; what are some pitfalls here?

What extra products should I consider to add revenue to my business?

Customer Engagement and Service

How can the newsagency actively engage with greeting cards to boost sales?

Financial and Operational Efficiency

What can I do to cut costs to save money?

Location Specific

How will the presence of a Woolworths supermarket affect my business?

What opportunities exist with nearby offices and gyms?

etc. etc., I would be going for a few hours.

Getting Started with such predictive analysis

To begin integrating AI into your marketing strategy, follow these steps:

Define Clear Objectives

Identify what you want to achieve, such as more customers or profit. Do not worry; you will have plenty to think about.

Use your information

The more, the better.

Do it a few times

I always say it's not hard on your third attempt.

Conclusion and Next Steps

I hope you understand what people are looking for in technology. What is clear is that retail is evolving. With changing customer expectations, rising competition, and the need for efficiency, SMB retailers must adapt to thrive.

It is said that "Strong people can break, intelligent people can overthink, beauty in people fades, but adaptability will go forward."

Update: I wrote this article a few weeks ago and was asked about the other free AI model, GWEN, that was recently released. So, I decided to test this one, too, and add it to the list. It's an excellent AI model. Also, for the sake of completeness, I decided to add Microsoft Copilot. So here is the updated list.

No one has talked about artificial intelligence (AI), and now it seems people are talking about little else. We have been actively involved in AI for several years now.

In retail, AI promises to boost sales and reduce operational costs in the POS system. Like everyone else in business, those leveraging AI will stay competitive in a rapidly evolving market. 

Comparison of AI Models

A good leaderboard of what AI models is available here.

But these are not measured on what our clients now use and the problems they encounter. So, to understand the current landscape of AI needs in retail, we compared several leading widely available AI models:

1) DeepSeek

2) Gemini

3) ChatGPT

4) Claude

5) Meta AI Facebook

6) Grok 2

7) GWEN

8) Microsoft Copilot

We tested these models on real-world scenarios that retailers encounter, such as product descriptions, inventory management, customer service, and sales forecasting. We then combined the answers, amended them by hand and came up with answers that we scored 40. We then compared each AI's answer to this score of 40. All of this took us a lot of work.

Our test results showed that Gemini (Google) was the top performer, scoring 39 out of 40. It also offered a comprehensive package with many additional benefits, making it an attractive choice for businesses seeking a robust AI-powered POS system.

Claude excelled in writing capabilities, scoring 37, which makes it most suitable for tasks requiring explicit and engaging content.

ChatGPT and Grok 2 scored 36, demonstrating their ability to handle various tasks effectively. What we liked about Grok 2's answers is that they contained advanced information on items the other AIs did not have. If, for example, a new game came out and you wanted to see what people thought about it, Grok 2 gave the best response. I cannot wait to see Grok 3, which is overdue now.

DeepSeek scored 35 despite being significantly cheaper. It offers impressive performance at a fraction of the cost of other models, making it ideal for businesses requiring API access.

GWEN scored 34, which is a bit lower than Deepseek's, but like Deepseek, it is free. We weren't that impressed with what the AI model could achieve compared to the other models mentioned; it also lacks an API, which could lead to issues in usage.

Microsoft Copilot scored 32, but like Deepseek, it is free and integrates well into Microsoft products that many of my clients use. Again, we weren't impressed with what the AI model could achieve, but if you use Microsoft products, it fits well into the suite. 

However, Meta AI (Facebook) struggled, scoring only 30, but was still included in the assessment due to its potential in specific use cases. Overall, I would not recommend it as your primary AI.

Recommendations

Gemini is likely the best choice if cost is not a concern due to its superior performance and additional features. Google's support and integration capabilities make it an excellent solution for businesses seeking a comprehensive AI-powered system.

However, DeepSeek presents a compelling option for those prioritising cost-effectiveness. At only 2% of the cost of ChatGPT, it delivers nearly comparable results, making it an attractive choice for businesses requiring API access.

Grok 2 is particularly noteworthy, especially with its upcoming update. Its integration with X (Twitter) offers access to a vast source of real-time data, which can be invaluable for businesses that must stay informed about the latest trends and news.

AI in POS Systems: Promises

English and spelling

Not everyone is good at English with AI lousy spelling, and people with bad grammar can communicate in writing better. It also allows them to communicate better with non-English speakers.

Marketing material

AI can be successfully used to write marketing material. A client wanted to create fancy names for their lotto syndicate, so they used AI to help them.

Real-time Predictive Analytics

AI analyses sales data and market trends to forecast demand, helping businesses optimise and prepare for busy seasons. For example, a retailer can use AI to predict a surge in demand. As trends overseas tend to come first before they hit us, they can tell us where the market is going.

Personalised Marketing

AI could provide tailored recommendations and promotions based on customer purchase history and preferences, fostering loyalty and boosting sales.

Dynamic Pricing Optimisation

We like that it can better set prices in real time based on demand. Companies dealing with marketing events often have goods that sell well in that season, but the demand for the product collapses as soon as it's over. We are hoping AI can help us with this, too.

Implementation Challenges

Implementing AI in POS systems can present challenges. The answers are often not as good as they look. They are often wrong, and it's hard to argue with it because they look so right.

The future

It is unclear where the AI market is going. Will consumers want a low-budget or medium-budget, or are they prepared to pay for an expensive system? One company told me they spend $200/month on ChatGPT, which is $2,400 annually. Will the consumer bear that?

The other issue is whether a business needs a car or a truck in AI. In the context of retail POS systems, AI is not just about speed or luxury; it's about finding a solution that can handle the workload efficiently. Businesses need a reliable truck rather than a sports car to carry a heavy load rather than speed.

I am sure there are privacy issues, too. Some AIs are specially built with that in mind. But this all would involve a deeper discussion of data privacy, security, and compliance (such as GDPR or Australian privacy laws) beyond the scope of this post. 

Some industry research shows that over 70% of retailers plan to adopt AI within the next two years. I would not be surprised if it will be closer to 100% in one year, as AI can enhance competitiveness and drive growth.

FAQ: Frequently asked questions

Q: What is the role of AI in POS systems?

A: AI in POS systems promotes boosting operational efficiency.

Q: Which AI models were compared in our tests?

A: The models tested included DeepSeek, Gemini, ChatGPT, Claude, Meta AI (Facebook), and Grok 2. These were evaluated in real-world scenarios such as product descriptions, inventory management, customer service, and sales forecasting.

Q: What were the results of the AI model comparison?

A: Gemini (Google) scored the highest at 39 out of 40, offering a comprehensive package with additional benefits. Claude excelled in writing capabilities, scoring 37. ChatGPT and Grok 2 scored 36, while DeepSeek scored 35 despite being significantly cheaper. Meta AI (Facebook) scored 30.

Q: Which AI model is recommended for businesses with no budget constraints?

A: Gemini is likely the best choice due to its superior performance and additional features. Google's support and integration capabilities make it an excellent solution for comprehensive AI-powered systems.

Q: What about cost-effective options?

A: DeepSeek is a compelling choice for businesses prioritising cost-effectiveness. It offers impressive performance at a fraction of the cost of other models, making it ideal for those requiring API access.

Q: How does AI improve communication in retail?

A: AI helps individuals with limited English proficiency communicate more effectively in writing. It also facilitates better communication with non-English speakers.

Q: Can AI assist with marketing tasks?

A: AI can be used to write marketing material, such as creating product names or promotions. It can also help generate engaging content.

Q: What are the benefits of AI in predictive analytics and personalised marketing?

A: AI analyses sales data and market trends to predict demand, assisting businesses in preparing for peak seasons. It also offers personalised recommendations and promotions based on customers' purchasing history, enhancing loyalty and driving sales.

Q: What challenges are associated with implementing AI in POS systems?

A: Utilising AI can present challenges, such as ensuring the accuracy of AI-generated responses and integrating AI with existing systems. Additionally, although AI responses may seem correct, they can still contain errors.

Q: What does the future hold for AI in retail?

A: The future of AI in retail appears promising, as over 70% of retailers plan to adopt AI within the next two years.

Q: How does the analogy of a "truck" apply to AI in POS systems?

A: In retail POS systems, AI is not just about speed or luxury; it's about finding a solution that can handle the workload efficiently. Businesses need a reliable "truck" rather than a sports car to carry a heavy load effectively.

Q: Are there privacy concerns with AI in POS systems?

A: Yes, very much so. Some AI systems are claimed to be designed with privacy in mind. It remains an essential consideration for businesses implementing AI solutions.

Q: Is a POS system AI?

A: A POS system itself isn’t AI but can be integrated with AI to enhance its capabilities.

Update: The federal and SA governments have blocked access to DeepSeek over its network and directed public servants to stop using and remove it from devices. More details are available here. There are security concerns over the product. 
 

It is estimated that in five years, AI will drive 55% of Australian consumer spending by 2030. This projection shows how AI will revolutionise retail in our country. As a retail and point-of-sale (POS) systems expert, it is essential to explore this transformation together and its implications for small brick-and-mortar Australian retailers.

So, we will create a new section in this blog, "AI Musings," to explore artificial intelligence's musing on modern retailing. This space will blend AI-generated insights (approximately 80%) with my thoughts (20%) to delve into the most significant technological revolution in retail today.

The State of Modern Retail in Australia

AI dominates discussions at every retail conference today, signalling its emergence as the new frontier in retail technology.

Adopting AI in retail is not just a prospect; it's happening now. Many retailers already implement AI solutions to enhance customer experiences, optimise inventory management, and streamline operations. For example, our clients have been using AI for years in stock control, but no one is talking about it, and we need to.

I heard about chatbots handling customer queries in a retail firm a few days ago. It was expensive, but as AI becomes more accessible and affordable for businesses of all sizes, we will soon see it in almost all stores.

How AI is Transforming Australian Retail

Personalised Customer Experiences

AI will revolutionise how retailers understand and cater to individual customer preferences, offering a more personalised shopping experience. And it will not take long. If such a system is live in 10,000 shops in one month, that AI will have 800+ years of experience at the end of the month.

Smart Inventory Management

AI is already in our POS system and crucial in predicting demand and optimising stock levels, helping retailers reduce waste and improve efficiency. It has proven vital for retailers who often struggle with inventory management. AI-powered systems can analyse every stock item in the shop with its historical sales data, seasonal trends, and even external factors, like weather.

AI-Powered Customer Service

Chatbots and virtual assistants are improving customer support across online platforms. Currently, 47% of consumers feel comfortable using AI for product selection, while 75% remain cautious about AI handling high-value purchases.

Enhancing In-Store Experiences

AI is set to transform the in-store experience. Retailers use emotional recognition tools to detect customer frustration and seamlessly transfer to human support. This blend of AI and human interaction could be a game-changer for small retailers looking to provide personalised service while optimising staff resources.

Practical Considerations

Cost vs ROI for Retailers

Implementing AI solutions today requires a significant investment, but this is rapidly changing. DeepSeek-R1 is roughly comparable to ChatGPT GPT-4 Turbo, and it is $2.19/128k token, while ChatGPT is $30/128k token, a cost savings of about 93%.

Future Trends in Australian Retail with AI

Looking ahead, the future of AI in retail is bright. By 2030, AI is expected to create 200,000 jobs and $115 billion in economic value, which presents enormous opportunities for retailers of all sizes. That is almost 10% of the Australian economy now.

Voice Commerce

The growth of smart speakers and voice-activated shopping is expected to continue, offering new ways for customers to interact with retailers. I know some clients who now use them in the shop as a translator, and I do, too here. It has helped.

Conclusion

AI is undeniably reshaping the landscape of Australian retail. It is now transforming shopping experiences, retail operations, and customer engagement strategies. We intend to explore this topic here. I encourage our readers to share their thoughts on how they see AI shaping their shopping experiences or what trends they're most excited about.

Let's see how it goes forward together.

I hope you enjoy the new section, "AI Musings."

The Australian retail landscape is in flux; we all know that what is essential with these studies is not just what they say but also what others, for example, banks that control the finances and prospective buyers and their accountants, are being told. These people control the inflow of money.

What we do know is that retailers face obstacles.

- We have a rising cost of living

- We have significant supply chain challenges

- Shifting consumer preferences

As everywhere, only those who are willing to adapt and evolve do well.

Let's dissect some critical insights from Roy Morgan's recent retail address and a lively discussion between retail experts Laura Deasi and Paul Zara, CEO of the Australian Retailers Association.

Key Takeaways from the Roy Morgan Address

• Population growth is vital: Australia's growing population has been a lifeline, somewhat shielding us from a full-blown recession. These people have been a big help to retailers.
• The cost-of-living bites: Rising costs disproportionately affect young families with children. However, some sectors and demographics still have spending power. The traditional pattern in such circumstances is that men's products go down, followed by kids' and women's products.
• Changing spending patterns: Consumers are reducing spending in some categories but increasing in others. There's a surge of interest in bargain hunting and sustainable options.

The Rise of Online Giants

• Amazon's Dominance: Amazon is rapidly expanding its customer base and is now one of Australia's top five non-food retailers. Their vast stock and focus on fast delivery pose a significant challenge to brick-and-mortar retailers.
• Ultra-Cheap Challengers: Shein and Temu have entered the scene with rock-bottom prices. However, concerns about quality and ethics may turn some consumers away in the long run.

What Does This Mean for Aussie Retailers?

Paul Zara and Laura Deasi offered valuable advice and considerations:

• Value is the New Currency: Price matters more than ever, but it's not just about the cheapest deal. Emphasise quality, durability, and your product's long-term benefits.
• The Ethics Factor: Consumers are increasingly conscious of your company's ethics. My advice still applies: Do not fall into this trap as whatever you do many will not like it.
• Online presence: I do not know how or why anyone would want to escape without an online presence.  Offer something and have "click-and-collect" options. A modern and robust online presence is essential for meeting the expectations of today's shoppers.
• Tech to the Rescue: Your point-of-sale (POS) system can be your best ally.
  • Streamline operations: Automate tasks to reduce overhead and free up time for customer service.
  • Personalise experiences: Use our CRM features to provide recommendations and targeted promotions.
  • Data-driven decisions: Track sales patterns and inventory levels to optimize your offerings and minimise waste.

Your Competitive Edge: The Human Element

Retail has always been a people-powered industry. While tech upgrades are vital, the exceptional in-store experience remains a decisive advantage for brick-and-mortar stores:

• Become an expert: Offer valuable product knowledge and tailored recommendations that online giants can't replicate. Coles has even little things like greeting cards, but I will not get any advice there on the sort of card I need.
• Build relationships: Friendly, personalised service creates loyal customers who become your advocates.
• Community connections: As Paul Zara emphasizes, physical stores are the heart of local communities. Support community causes to show that your values extend beyond sales.

The Future of Retail – Adapt and Thrive

The retail landscape is constantly evolving. Businesses with the foresight to adapt have a chance to excel:

• Embrace innovation: New technologies can transform your operations.
• Test and learn: Experiment with new products, displays, and promotions. If they work, double down. If they fail, be ruthless and get rid of them. Do not reinforce a defeat.
• Partnerships matter: Collaborate with as many people as you can.

To do well in 2024, we need to focus. 

Share your thoughts in the comments below!

I went to the Small Business Week Conference and talks last week.

Maybe something to keep in mind for the elections tomorrow.

This is what the retail experts thought about the next six months in bullet form:

- Overall Retail outlook is healthy and looking good. Don't count on the growth we have seen in the last twelve (12) months which was up by 9%. Much in the short-term they expect will be fueled by the existing high household saving. What happens when that saving runs out is unclear.

- There is a wide range here in the retail outlook across sectors, e.g. some sectors like travel are down, others like second-hand goods are up.

- Shops in the CBD are expected to have continuing problems.

- Staff hiring is expected to be difficult, they suggest looking at mature staff.

- Supply challenges to continue throughout 2022. I know this is hurting my clients now.

- Inflation is up, and goods now take six (6) months from the factory to get to the public. Much of the price rise is on the way as costs suppressed over COVID are now coming.

- Studies have shown that most people prefer to buy products that they can taste, smell and touch. They suggest applying this if possible, e.g. have music in the shop. This is where they see the big plus shops have over the internet. Today 80% of households spent something online last year, yet 85% of goods were brought in shops.

- They thought it was important to realise that most of Generation Z is now in the workforce and a significant chunk of the consumer market.

- Public today is less loyal than before. In a survey, 86% put stock availability over loyalty. If you do not have it, they will go elsewhere.

These are the problems that they see we face.