So which UK retailers are using these adaptive techniques in the most interesting and exciting ways – often in conjunction with other technologies – to improve their bottom line?
Say hello to 10 of the UK’s best machine-powered retailers…
“I honestly think AI is going to be completely transformative” says Paula Bobbett, chief digital officer at Boots.
“When you think about the advent of the internet, and how that has changed our lives, AI is the next step along. There are so many things I can see where it makes life so much easier for the people who work in the teams,” she says, adding that AI is commonly removing manual tasks from colleagues “to allow them to do more value-added tasks.”
A prime example is in Boots’ warehousing, which Bobbett has said is one of the most advanced systems in Europe. Small robots buzz around the Burton-on-Trent warehouse, able to avoid humans walking in their path, and removing the need for pickers to do so much carrying. As a result of the use of the 150 robots – called ‘co-bots’, although some have human names – accidents at the warehouse have been significantly reduced.
Boots is currently testing a robotic arm, designed by Austrian firm Knapp, which can pick products fast and carefully, using AI to learn from its experience.
Further examples of AI use at Boots abound, demonstrating a mix-and-match trend of adaptive, traditional and generative AI technologies combining to achieve more impressive results.
Boots’ online search function now uses adaptive AI to personalise the shopping experience. If a customer searches for lipstick, the engine uses up-to-date data to make sure the results are as relevant as possible, that the products are in stock, and recommending shades popular with other customers and therefore more likely to be on-trend.
In forecasting, up-to-date information about the weather feeds into predicted sales. Data for what then sells well is also constantly updated via machine learning.
Over in generative AI, the retailer is trialling a ChatGPT-based chatbot that can answer customers’ conversational questions. It might, for example, respond to a question like “How do I develop a skincare routine?” by recommending appropriate products. Similar technology is also being trialled for internal communications, such as answering HR or procedural questions that employees would otherwise spend time searching for. And, in marketing, the company is using AI to optimise ad placements. It even used virtual production and AI to create some of the images for its 2023 Christmas advertising campaign.
Bobbett says this is a particularly useful service at a time when people are seeking verifiable information online, where they might once have relied on frontline health services.
For B&Q, AI and machine learning are playing an “important role” in its tech strategy according to Lynn Beattie, the retailer’s tech and product director.
Beattie says that AI is making it easier for its customers to shop through better, and more focused, targeting. With 1.2 million products now available via the B&Q marketplace, this is a key advancement to helping consumers find the products they need.
“By using AI, we can connect data across multi-channel touch points throughout a customer’s journey and respond to their behaviours with personalised communications and offers in real-time, such as through direct marketing, emails and coupons at till. We retain and engage customers, driving loyalty and more sales through more frequent visits and increased spend.”
Elsewhere, AI-powered pricing is a focus for the broader Kingfisher parent company and Beattie notes that AI has been helping “effectively manage markdown clearance pricing” and “forecast demand to inform supply management and manage availability”. This has freed up staff to have more time to interpret and act on data as opposed to working on administrative tasks.
Retail media is another area of focus with AI being used to develop B&Q’s offers so that its adverts are displayed and personalised to the customer.
The group has also developed Athena, an in-house AI orchestration framework, that helps it “integrate multiple AI technologies, allowing [the business] to quickly adopt new AI tools as they are developed”. This includes a Kingfisher Group-developed recommendation engine, implemented in 2023, which Beattie reveals has driven a higher click-through and add-to-basket rate, as well as much faster response times.
For B&Q, AI is by no means a fad. “We’ll keep learning through trialling AI so that we can enhance the processes we have and implement new ones,” says Beattie. B&Q is part of an Early Access Program with Microsoft enabling the retailer to trial different ways of working to understand where the business can best leverage generative AI for productivity.
Men’s clothing brand Charles Tyrwhitt generates over 80% of its sales online, so optimising its digital advertising spend and making sure customers find the right product line is a key goal.
Charles Tyrwhitt uses our adaptive AI to analyse market data in real time. Working with our AI-driven retail inventory and intelligence solution, retailers can cross-reference market data with other up-to-date data, such as inventory, to make sure the right products are being targeted to the right people in the most efficient way.
“With so many product lines, it was impossible for us to manage, and at the same time get the valuable insights we needed to unlock potential and find hidden opportunities to improve,” says Joe Bloomfield, global head of digital marketing at Charles Tyrwhitt.
Since working with us, the business has reduced the cost of acquiring new customers in the UK and US, increased the amount of daily spend for each customer via Google shopping, and boosted the visibility of product lines that were doing less well than others.
Our co-founder and CPO Drew Smith explains: “Our adaptive AI technology significantly improved Charles Tyrwhitt’s performance by uncovering opportunities within a larger range of inventory. By addressing three key questions we identified overlooked inventory and product pages: What is the probability of sales from a given action? What would be the cost? And what would be the efficiency? We also evaluated the types of customers buying certain products to discover new customer preferences and drive Google to focus on high-potential inventory. This resulted in a 60% sales increase in the US and 40% in the UK while reducing the cost per acquisition by 74%.”
Charles Tyrwhitt can now keep up to date with how things are going via a live dashboard; its easy-interactivity is a feature increasingly prized by companies. The AI “keeps learning about our product and business performance over time, so it continues to optimise our performance, while giving us control over what targets and thresholds to set for success,” Bloomfield says.
John Lewis has been through some challenging times recently, but its full-year results to January 27, 2024, tell the story of a retailer returning to profitability.
As part of its turnaround plan, headed by new executive director Peter Ruis alongside chief executive Nish Kankiwala, the business is prioritising investment into its technology stack, including AI.
The brand plans to spend £542m on modernising technology, refreshing shops and simplifying the way they work – an investment increase of 70% over the previous year. In its results, the retailer said it was focusing on improving the customer experience, including creating a better online experience through easier navigation and more personalisation.
That would follow a successful trend for John Lewis, which in July 2023 announced it was partnering with AI-powered imaging company Zyler to allow customers to virtually try on its range of UK rental outfits. Three months later, its rental arm had seen a 30% jump in sales. The platform asks that users upload their clothing size and a photograph, and then uses AI to create and virtually clothe an avatar.
The results exceeded expectations: “It has been so exciting to offer styling support in a digital environment using the Zyler technology, and the impressive results we’ve seen from the first few months shows it’s resonating with our customers too,” says Danielle Gagola, innovation lead at John Lewis.
Retail Week’s Lisa Byfield-Green noted that the service has made a big impression on her as a customer, where she found herself trying on most of the rental collection simply because the AI technology was so enjoyable to use.
John Lewis has also shown it is willing to invest in cloud technology, announcing a £100m deal with Google Cloud to help boost its AI capabilities, in August 2023. In March 2024, it made a further significant move into robotics, signing a deal to use Locus Robotics robots at its Milton Keynes warehouse.
Much like Boots’s co-bots, Locus describes these as “AI-driven, intelligent autonomous mobile robots (AMRs) that operate collaboratively with human partners to dramatically improve product movement and productivity.” The robots remove the need for workers to push heavy trolleys or lift boxes.
M&S is partnering with AI providers in several different ways to enhance everything from store logistics to supply chain efficiency.
In a partnership with US-based Symphony AI, announced in September 2023, M&S is using AI to compare what is on the shelves in a store to ‘planograms’ – store-specific diagrams showing where every item should sit on a shelf – helping workers to best place inventory to maximise sales.
Employees use handheld devices to scan shelves, finding out what needs to be moved or replenished. This shelf-edge technology, which combines data from cameras affixed to shelves with information about what sells best in certain positions, plus data showing what is in stock in the warehouse, is just one of the adaptive AI technologies that retailers are becoming most excited by, according to Richard Lim at Retail Economics.
A second area of investment has been in supply chain management. In April 2021, M&S partnered with Finnish AI firm Relex, which uses both internal data, such as how much of a particular foodstuff – say, avocado – was sold in store, and combines it with external data, such as weather reports, that might give clues as to when avocado shortages might occur.
The idea is that the tool can produce better and faster forecasts than a traditional process of analysis, helping M&S predict what it might need to re-stock, where and when. This, in turn, should lead to greater efficiency and less waste.
In its half-year results last September, M&S announced that new food forecasting, ordering and stock allocation systems had been rolled out across roughly 60% of categories. Though it did not specify that the systems were AI-based, this is a particularly fast-growing use case application for the technology.
Speaking at the time, Rob Barnes, then M&S chief technology officer, said the brand was “investing in technology that will create greater efficiencies and a more connected in-store experience for our customers.” Its capital expenditure on IT and online platform M&S.com to the year ended April 2023 was over £109m.
M&S has also committed to helping its staff gain the skills to best work with these incoming AI technologies. The retailer has said that it wants to “raise the bench strength at M&S through a relentless focus on talent and to make M&S an exceptional place to pursue retail and technology careers,” with AI a focal point. To that end, in September 2023, it announced what it said was the first academy for data science and AI in retail, training a first wave of 10 colleagues in machine learning and other AI skills.
Over the last five years, Next has more than doubled its spend on technology from £97m in 2019/20 to £203m in 2023/24, and has almost doubled the number of tech professionals it employs, scaling from 1,000 to 1,900.
In fact, in its March 2024 results, the retailer said that it now employs more people developing technology than in its product teams. While not all its technology development is AI-focused, the retailer is certainly experimenting with the technology and implementing it across a range of business areas. For example, Next is using AI in forecasting, gathering sales data, and using machine learning to identify what it needs to re-stock, when and where.
Speaking in March 2023, Next chief executive Simon Wolfson was bullish on the broad uses of both adaptive and generative AI, with the latter being used to write to customers. “We write thousands of emails to our consumers answering queries,” he said. “AI is the perfect tool for improving the content of those letters to make sure that what we’re writing is good, clear, understandable English and pointing the operator in the direction of the right solution.”
Next has expanded its technology-based offering hugely since the pandemic in 2020, striking deals with other retailers whose goods it then sells through its online platform, as well as buying other brands. These acquisitions and clients include Cath Kidson, JoJo Maman Bébé, and Reiss, all of which are brought together under Next’s Total Platform, where customers can access and order these third-party brands in a single place, while the brands benefit from Next’s warehousing and logistics capabilities.
The company forecasts that Total Platform will add £77m to the group’s profits in the year ahead. The likelihood is that some of the investment the group is pouring into it will go on AI technology, with Wolfson stating that AI is “a really incredibly valuable way of spotting patterns and working out solutions to problems that we face every day”.
Wolfson said in the company’s latest full-year results that “developing applications in-house has been key to our success over the past 30 years” with the big job of modernising legacy systems and the potential to keep incorporating new ones – such as AI – still ongoing.
THG has told Retail Week that AI is its number one investment priority, and in an interview for this report, chief information officer Jo Drake was happy to go into plenty of detail about where it is being used.
“Using AI at THG has yielded numerous benefits, enhancing both our revenue and operational efficiencies,” Drake says. The company uses a range of generative AI tools alongside, and often interacting with, machine learning and other adaptive models. “Recommendations generated by AI contribute significantly to THG’s overall site revenue, highlighting their significant impact on driving sales and enhancing the customer shopping experience.”
One example of this is the Outfit Builder currently available on THG flagship brand site Coggles. The tool uses AI to recommend “curated outfit suggestions” which, Drake adds, both improves the shopping experience and fosters deeper engagement with the brand.
THG has been using AI since 2016, embedded in a whole range of processes. Natural language processing is enhancing search, so that customers can interact with the product more conversationally – for example, a user typing the word ‘sunburn’ would be recommended sun creams.
The brand also uses adaptative AI to gather and process data about its customers, creating richer profiles. These might include information on journeys, add-to-basket activity and purchases, as well as predicting a customer’s ‘lifetime value’ based on their behaviour.
THG uses AI to smooth its business processes. Drake says these range from using machine translation to translate copy about products into other languages using the brand’s house style, to fraud detection, anomaly detection and profanity detection in comments, which it has working in over 78 languages.
One of the most interesting use cases for adaptive AI is in THG’s influencer revenue forecasting. “Influencer marketing has become an increasingly important strategy for brands and businesses in recent years,” Drake says. “However, selecting the right influencer to work with can be a very time-consuming [and] subjective process.” By using AI to predict the revenue an influencer can be expected to generate, campaign managers are able to make informed decisions, leading to better return on investment.
Drake also adds that while AI is leading to huge enrichment for the group, it needs human refinement to ground it in quality, authenticity and brand ‘voice’. “By customising these models to suit brand needs, we can deliver experiences that not only meet but exceed customer expectations,” she says.
“We’re using AI across different parts of our business to enhance the customer experience,” says Paul Hornby, digital customer experience director at The Very Group. He told Retail Week that the biggest AI areas for the group are in stock forecasting and customer search.
“Partnering with Amazon Web Services, we use AI for time series modelling and seasonality profiling, allowing us to better forecast stock levels and improve customer availability.” This capability was of key importance during the company’s peak trading period around Black Friday and Christmas 2023, Hornby says.
He adds that the group is using an AI system designed by US-based Constructor to make search results more personalised and relevant. Hornby noted that the AI’s ability to adapt was key to its success: “Constructor’s AI-powered system learns intent and boosts the more relevant products to the top of the results,” he says.
“Multiplying this across all search, browse, and recommendation areas means that AI can constantly re-merchandise all our product areas, making it easier for our customers to find the products they love, regardless of how big our range gets.” The capability went live in 2023 and The Very Group’s results state it hopes to see increased conversion and more sales, though it does not provide any numbers.
Investing in AI is a key part of The Very Group’s strategy, as chair Dirk van den Berghe made clear in the company’s latest results statement for the period 2022-2023. With AI and machine learning, he said, “We are finding new and exciting ways to further our understanding of who is shopping with us and how. The challenge now is to use this learning to better inform how we serve our customers, through stock and inventory management to marketing, to how we extend our ways to pay.”
Hornby has also made it clear that taking the group’s employees and managers along on the AI journey is paramount. The technology improvements come alongside “investing in up-skilling our people with new learning and relevant tools,” he says.
Our CPO and Co-Founder Drew Smith says: “Search engine platforms, social media, and marketplace platforms are increasingly using AI to govern paid media performance. For paid media experts, this shift presents challenges as the required skill set is now vastly different and more laborious. Allowing AI to handle the monotonous tasks of data computation and performance assessments frees up paid media managers to focus on strategy. This includes evaluating the market, understanding their organisation’s position and developing effective strategies. This synergy between AI and human expertise ensures more efficient and impactful paid media campaigns.”
While it often flies under the radar, eyewear retailer Specsavers has been quietly experimenting with AI in a couple of different areas of its business for more than six years, including in marketing and business efficiency.
The business was ahead of the curve back in June 2018 when it released Frame Styler, which uses AI technology to allow iPad users to try on glasses virtually.
In October 2022, Specsavers partnered with Ekimetrics for a three-year project to use data to better drive its marketing across a range of channels, including television and the optician’s “growing digital activity”. The project aims to bring all of Specsavers’ marketing data into one central place where it is constantly updated and allows colleagues to query it easily using analytics tools. The tech enables marketing managers to plan and forecast spend and expected return on investment.
“The ability to refresh models more frequently and responsively will help us establish a stronger marketing effectiveness culture,” Iain Stanfield, senior insight manager at Specsavers, said at the time. “Marketing contributes significantly to the Specsavers brand position and sales growth. We strongly believe that a data driven approach will help us go beyond our current trajectory of organic growth by anticipating changes in market conditions and consumer behaviour.”
Since June 2020, the retailer has been using AI to optimise its advertising strategy, targeting ads at geographical locations where appointments are available. The brand has partnered with media agency MG OMD on a paid search campaign with the aim of encouraging customers to book eyecare appointments.
The campaign’s ‘keyword bidding’ – where budget is allocated to individual words in a Google Ads campaign – is based on which of Specsavers’ more than 900 stores have more available appointments, with data constantly updated in the cloud-based system. The results in 2020 pointed to a 34% increase in store appointments – and a 23% decrease in cost per acquisition of customers – highlighting the ROI from using AI. Specsavers told Retail Week in April 2024, “We are still running it now, albeit a more advanced version.”
Ocado is at the front of the pack when it comes to AI adoption in UK retail. Its February 2019 tie-up with M&S effectively split the business in two, with Ocado Solutions focusing entirely on the technology innovation to be used across the group.
In June 2022, Ocado raised £575m through share placements to help expand its technology offering, in large part via Ocado Solutions and its 13 international partners, which include retailers in Sweden, Canada and Catalonia.
Ocado has been particularly future-focused when it comes to AI and robotics. In November 2020, it acquired two robotics firms: Kindred Systems, which specialises in designing piece-picking robots, and Haddington Dynamics, which makes highly dexterous robotic arms. In April 2021, Ocado Technology announced a partnership with Oxbotica, makers of autonomous vehicle software, investing £10m in a project to design vehicles for use in the online grocery space.
These partnerships and acquisitions mean Ocado has been able to create a system it calls ‘Re:Imagined’, in which Series 600 bots pick products from a grid in its ‘hive’ warehouses, assembling orders quickly. Robot pickers use machine vision, deep reinforcement learning and sensing capabilities to “pick tens of thousands of products of varying shapes, sizes and weight […] and pack them densely in bags with human accuracy and precision,” it said in a 2022 presentation.
In its latest results statement, released in February 2024, Ocado said that it continues to focus on the development of its Swift Router technology. This is a sophisticated AI-driven system that allows customers “to shop until the last minute, simultaneously with picking and loading the van moments before dispatch.”
To this end, Ocado will use ‘AI copilots’ to balance forecasts for customer demand with shift plans, suggesting exactly what warehouses do and when. Because the technology can be rolled out to all Ocado Solutions partners in Europe, the Americas, and Asia Pacific, there is huge potential for expansion and enhanced efficiency; it has the “potential to more than double the addressable market in some countries”. Significantly, revenue for the Technology Solutions arm of Ocado has surged 44% year on year, up from £291m in 2022 to £420m in 2023.