, , ,

Alexa and Siri don’t care about brands. But brands care a lot about Siri and Alexa, suggesting some shifting power relations and structures in retail markets as a result of the expanding presence of artificial intelligence (AI) agents in consumers’ homes.

When consumers yell across the room, “Alexa, buy paper towels from Amazon!” or command Siri to add orange juice to the shopping list maintained on their phones, rarely do they specify a brand name, and none of the AI tools have any real preference. In using these tools, shoppers similarly might become more agnostic with regard to brands, especially for convenience products or consumer packaged goods. If they are no longer exposed to conventional marketing tactics, such as in-store signage or endcap features, the very meaning of brands might start dissipating.

For these brands, that’s a big concern. Finding ways to establish a brand image and commitment from customers, such that they will specify which brand of paper towels the AI assistant should order, represent novel challenges and require new tactics. In many cases, price and convenience appear to be the primary factors driving AI-enabled shoppers’ choices. The product that they can get delivered the fastest and with the least cost is likely the one they select.

For consumer packaged goods brands, the solution might be to copy the example of some lifestyle brands, such as Coach or Nike, which have found ways to work around conventional retailers to connect directly with customers. By establishing their own stores and shopping channels, these brands have ensured their popularity with customers who seek out Coach-branded handbags, rather than just any purse, or swoosh-emblazoned workout gear instead of just any sweats. But it might be more challenging for manufacturers of commodity products to prompt such brand loyalty, simply due to the nature of their offerings. The model offered by these lifestyle brands thus might be informative, but it cannot be the only solution. Instead, consumer product goods are going to have to find a new way to gain direct access to consumers, or else convince Alexa and Siri to become brand ambassadors.

Discussion Question:

  1. How will AI shopping assistants affect the consumer decision process?

 Source: Lee Peterson, Retail Wire, August 1, 2017