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From sentient supercomputers taking over space missions in “2001: A Space Odyssey” to a robot helping solve a murder and save the day in “Big Hero 6,” artificial intelligence (AI) has been a main character in pop culture for over a century.
No longer just a scene from science-fiction, AI is a constantly evolving technology that simulates human intelligence using machines, allowing computers to complete tasks typically only humans can handle. Depending on which side of the technology spectrum you’re on, this short acronym can either strike fear or conjure excitement.
Regardless of your feelings on AI, it’s already here in the independent channel and has shown its usefulness in improving efficiencies within operations. And in these continually uncertain times, any gains in efficiencies that lead to a solid bottom line are welcome, no matter the size of your operation.
If you’re ready to dip your toes in the AI waters or just dive right in, Hardware Retailing shares the history of the technology and a breakdown of the basics of AI. Plus, see how AI is helping operations be more effective and read insights from retailers in the independent home improvement channel who are currently using AI in their operations.
The Birth of AI
In 1950, computer scientist Alan Turing published “Computing Machinery and Intelligence” asking the question: “Can machines think?” In 1956, John McCarthy first coined the term “artificial intelligence” at the first-ever AI conference at Dartmouth College. It would be almost 50 years before McCarthy would write his paper “What Is Artificial Intelligence?” in 2004 and create the often-cited definition of AI: the science and engineering of making intelligent machines.
Flash forward another 20 years, and AI is more than just a buzzword—it’s become an integral part of our lives. And many times, you don’t even realize you’re using it. All those junk emails that go to your spam folder—AI. When you type in the search bar and it autofills with suggestions—AI. You’re driving and Waze suggests a different route—AI. Ask Alexa or Siri or Google Home anything—AI.
AI has already infiltrated many parts of our lives, but to help your operations be better and more profitable, explore these nine operational areas where AI can improve efficiency, customer service and profitability.
1 | Loss Prevention
The independent retail channel is no stranger to the prevalence of retail theft. Fortunately, technology is allowing retailers to better protect their operations.
As the owner of Gow’s Home Hardware & Furniture in Bridgewater, Nova Scotia, Amanda Fancy looks for any tools that can save her time and energy so she can focus more on her operation.
“Honestly, if there’s something in my world that can make my life easier, I want to do that,” Fancy says. “The targets are always moving, so if technology like AI can help us stay ahead of the curve, I want to take advantage of it.”
strategy. The technology uses facial recognition AI to track suspicious behavior and identify previous offenders.
Fancy has implemented AI to help detect and deter theft in the store. The store is outfitted with security cameras from InVid Tech that include AI programs for facial recognition. The facial recognition program alerts herself and selected employees by email when it recognizes the face of a previous offender in the store or when a customer is exhibiting suspicious behavior. Fancy says she eventually wants to have those notifications come via text message so that they can act more immediately.
The program also tracks what areas of the store are busier during certain time periods, so Fancy can schedule employees accordingly, as well-trained and engaged employees are one of the best theft deterrents.
“Using AI for loss prevention has been huge for us because like many other independent retailers, theft has hit us hard,” Fancy says. “The AI we’re using is not necessarily cutting edge for the customer, but it definitely helps elevate our level of customer service.”
RESOURCES
Dive Into AI
If you’re ready to explore AI further, check out our database of AI vendors and the various ways they can help you at hardwareretailing.com/ai-vendors.
2 | Idea Generation
As retailers strive to continually provide an engaging customer experience, coming up with those ideas is the perfect job for AI.
In an effort to spend less time generating ideas for store events and marketing content, Jessica Bettencourt, president and CEO of Klem’s in Spencer, Massachusetts, uses ChatGPT to create taglines for advertising and write marketing and promotional copy. Her retail mastermind group has been learning about AI and testing the platform for a few years.
“ChatGPT even came in handy when a fellow retailer was trying to come up with a name for their new rewards program,” she says.
with ideas for store events. AI provided the idea for a recent
event for children that included a magic show and other fun activities for children of all ages.
Bettencourt asked ChatGPT for ideas when she wanted fresh concepts for children’s events to host in the store, using the prompt “fun kids’ event ideas to be held at a retail store.”
Looking toward the future, Bettencourt plans on using AI for additional marketing tasks, creating blog posts and similar marketing content and writing product descriptions for e-commerce.
One of the biggest benefits of utilizing AI for idea generation is being able to spend less time brainstorming and more time implementing, Bettencourt says.
“You still have to edit and make sure that whatever AI comes up with has your voice, but it can be an invaluable tool,” she says. “I have seen some of my fellow retailers use it to write copy for an event in a certain voice, such as ‘I am having an event for May the 4th and want a post about hardware written like Darth Vader.’ The possibilities are really endless.”
For Fancy at Gow’s Home Hardware & Furniture, she uses AI to expand on her ideas. From planning events to developing additional content for social media and ad copy to updating the employee handbook and preparing team-building exercises for staff meetings, Fancy taps into AI to get a fresh perspective and to brainstorm ideas. She also uses ChatGPT to help her fill out ideas from outlines she creates, which saves her precious time.
“AI is helpful for us because you can get into the mindset where you stick with what has always been done year after year,” she says. “If you’re looking to grow, you need to put a fresh spin on content. AI does that for us, getting us to think a little bit differently.”
As she looks to what the future holds for AI in her operation, Fancy wants to use it to improve the overall operation and ultimately, customer experience. She will be looking to see how AI can be used to help customers shop in the store’s furniture and appliance department and use it for social media content planning to stay on top of the latest and greatest trends in social.
“The point is to streamline human tasks, not to replace a human with AI,” Fancy says. “I think if we can automate some of the repetitive tasks, it gives us an opportunity to focus on those areas we never get a chance to focus on. So ultimately, it makes us stronger as a business, and from an efficiency standpoint, the sky’s the limit.”
INDUSTRY INSIGHTS
Keeping Up With AI
Learn how major big-box retailers are using artificial intelligence to serve
customers at hardwareretailing.com/big-boxes-ai.
3 | Customer Service
Customer service is the cornerstone of most independent home improvement operations but can also be a huge time suck on owners and managers—enter AI. In Capterra’s 2023 CX Investments Survey, 65% of companies surveyed use AI for customer service, and of those, 69% use machine learning, 65% use smart assistants and 64% use chatbots.
Bradley Carson, owner of J-Town Hardware in Jeffersontown, Kentucky, has been using AI to send messages to customers on the store’s social media sites, saving hours of time each week responding to messages.
These automatic messages are generic in nature, thanking customers for reaching out, but provide a quick touchpoint between the store and customer. They have also been using AI to create social media content and manage posting content.
“Because this is new technology to the industry and to us, there is always a learning curve,” Carson says. “We are still trying to overcome our own paranoia, so we are moving slowly. As we get deeper into the uses for AI, we hope to use it for ordering and for answering customer questions online.”
About a year ago, Brent Burrows, vice president, retail and sales for CBS Bahamas, which has two locations in Nassau, says the company added an AI-powered chatbot to the website to replace the human-led chat service they had been using.
While it was helpful, the human-led chat service didn’t meet all of the company’s needs and lacked consistency between agents and providing new and updated information. Burrows says leadership decided to partner with a developer to create an AI-powered chat solution that is specific to the company’s needs in terms of retail and customer support.
“We were paying about $5,000 a month to contract a chat service out of the UK to provide around-the clock support on our website,” Burrows says. “When ChatGPT started taking off, we realized there was probably a better and more cost-effective way to accomplish the same.”
Not only has the new chatbot solution benefited CBS Bahamas customers and boosted overall customer service, Burrows is re-selling the solution to other businesses under the name StarfishChat.ai.
“For small and medium-size building material businesses looking to compete with larger counterparts, StarfishChat.ai offers an unparalleled advantage,” Burrows says. “It empowers you to provide continual customer support, drive sales and enhance customer satisfaction, all while managing resources effectively and being super simple to set up and maintain.”
4 | Advertising
Thanks to AI programs like ChatGPT, owners and managers with little to no experience in advertising can create effective campaigns in a short amount of time. Geoff Saunders, manager of Cascade Home Center in Dallas, Oregon, has been in the independent home improvement industry since 1997, so he knows a thing or two about advertising in this channel.
Saunders has also seen how inexperience can cripple a new manager and has been experimenting with AI to create advertising campaigns that managers of any experience level can use in their store.
“Even if I knew absolutely nothing about advertising, I could put an inquiry into ChatGPT and in three seconds, it can produce a pretty robust plan, including key areas to highlight,” Saunders says.
In his experimentation, Saunders entered into ChatGPT: “What kinds of projects and products should be highlighted in an advertisement for a hardware store for the months of July and August?” The program then provided a full advertising plan with key areas to highlight, specific products under each key area to promote and the home improvement project homeowners are most likely to complete during those months, plus the products to advertise for those projects. It also outlined promotional offers and services a retailer could offer.
“While it won’t replace employees, AI can be a helpful tool for newer managers who don’t have the time or experience to create full advertising plans,” Saunders says.
5 | Content Creation
Independent retailers often wear many hats as a small business owner, and with all the areas of the operations demanding their attention, content creation often gets put on the back burner. From social media posts to product descriptions, creating content for your operation can be a full-time job.
According to a survey by Constant Contact and Ascend2, 73% of small businesses lack confidence in their marketing strategies. Over half of the survey respondents indicated that the most time-consuming marketing task for them and their business is creating content.
Going hand-in-hand with content creation, marketing is another task that many small business owners don’t have time or brain power to dedicate to. Brian Young, small business consultant with Laoch Consulting, encourages his clients to utilize AI for marketing tasks, specifically ChatGPT.
However, he cautions that using AI for marketing shouldn’t be “set it and forget it.”
“Oftentimes marketing content created by AI is stale and comes across as automatic and robotic,” Young says. “It often misses the mark on the personal, genuine and human aspects retailers want to convey.”
When businesses use AI for marketing content, Young says it can be misused or relied on too heavily. Rather than considering AI a source for instant answers and then automatically copying and pasting what ChatGPT puts out as marketing content, retailers should dig a little deeper and consider their audience, tone and goal.
“Retailers should use AI as a diving board and a jumping off point to get them into the marketing waters,” Young says. “We want AI to make marketing easier, quicker and more effective and to provide human grade content, but we need to think of AI as more of a glorified brainstorming and idea generator rather than a replacement for a marketing employee. This strategy will still cut your content creation time in half.”
To get the most out of using AI for marketing, Young says it’s crucial to tell AI what your goal is, who you are targeting, how long you want the response to be, where you are using this content and what you’d like the content to be about. If you want AI’s response to be conversational, comical, whimsical, authoritative or empathetic, you have to be specific.
Young says users need to have a conversation with AI, not just ask a question and accept the answer without asking follow-up questions to clarify and correct it.
“Do not accept everything that AI says, and don’t share the content if you don’t agree with it or it just isn’t you,” Young says. “It’ll ruin your reputation and authority when you want to build it up.”
OPERATIONS
Digital Safeguards
Learn strategies for protecting your online assets at
hardwareretailing.com/cybersecurity-strategy.
6 | Solve Problems
Whether you’re a writer or web developer or any other type of creator, sometimes you just hit a roadblock that AI can help you break through.
Nick Weiner, senior marketing coordinator for Lancaster, says the marketing team has turned to AI to help solve problems, everything from software issues to writer’s block to code writing failures. The team uses generative AI programs to create images and videos when they don’t have the time or resources to create them in a studio. While AI has been helpful in certain situations, it has its limitations, Weiner says.
“AI can really only help you as much as you can help yourself. You have to ask the right types of questions and phrase it in a particular manner for AI to understand,” he says. “There are still a lot of limitations on the various available software. I’m interested to see where it takes us, but I don’t see it replacing anyone’s job anytime soon.”
7 | Cybersecurity
As the vice president of membership and marketing at the Retail & Hospitality Information Sharing and Analysis Center (RH-ISAC), Luke Vander Linden works closely with retailers and other business owners, helping them put loss prevention processes and programs in place to protect their operations against loss.
Vander Linden has seen AI being utilized in the retail sector for both loss prevention and cybersecurity in several innovative ways.
“In particular, as loss prevention becomes more reliant on technology, we’re seeing increased capabilities and also an evolving intersection with cybersecurity,” Vander Linden says. “Real-time tracking and analysis as enabled by AI-powered systems is allowing retailers to have greater insight into a wide range of critical indicators ranging from inventory levels, user behavior, point-of-sale monitoring and fraud detection.”
Some of the specific ways AI is assisting retailers protect against cybercriminals include anomaly detection, where AI monitors network traffic to detect unusual patterns that may indicate a cyberattack, and transaction monitoring that relies on AI algorithms to analyze transactions for signs of fraud, such as unusual purchasing patterns or multiple transactions from different locations in a short period.
When it comes to data protection, AI is used in encryption management systems to manage and automate encryption processes and ensure data security. AI systems are also being used to control and monitor access to sensitive data, preventing unauthorized access.
8 | In-Store Service
AI can also be beneficial for customers, as Ashley Peterson, owner of Blue Mist Paint & Decorating in Spartanburg, South Carolina, has discovered. She and her husband Heath have been in the independent paint industry for two years but have already tapped into a number of helpful resources and tech tools that have guided their customers on making product choices.
They have been using the color visualizer tool available through the Richard’s Paint website and hope to incorporate Daltile’s Stylizer on their own website to increase web traffic and encourage customers to stay on the website longer.
Peterson says she would love to add a kiosk to the store that would include one or more AI programs that customers can access to play with color and home decor choices.
“In my experience, many consumers don’t know these types of tools exist, so if we can offer them, it would allow us to serve our customers even more,” Peterson says. “I am not convinced that digital paint samples will ever give you the most accurate look, but I think it is a great starting point.”
9 | Operational Forecasting
he learns to improve operations, including inventory management and targeted marketing.
At Hill Country Paints, with locations in College Station, Waco and Houston, Texas, employee development manager Steven Hill is so interested in the ways AI can benefit his operation that he is currently enrolled in an online boot camp for machine learning and artificial intelligence through Ohio State University.
The classes are designed to give students real-world and hands-on experience with the latest AI technologies and methodologies. Because he doesn’t come from a data or computer science background, Hill hopes to use what he learns to implement AI-driven solutions to better optimize inventory management and improve customer service.
“A chatbot will allow us to provide instant support and product recommendations to customers, and by doing so, we can free up our employees to handle more complex tasks,” Hill says. “I would like to implement chatbots to guide customers through a more streamlined and easier process, so my employees can focus on taking care of customers in the store.”
While the classes are not specifically tailored to independent paint retailers, Hill is learning the framework for how different AI technologies, specifically supervised learning and unsupervised learning, could work in retail and his paint operation.
Supervised learning programs with labeled input and output information could be used for more accurate and reliable predictions in areas like sales forecasting, inventory management and customer behavior, Hill says. Supervised learning could also help identify outliers, such as abnormal sales spikes from weather, special store promotions or other reasons, so those situations can be potentially recreated to boost sales again.
“Another big strength with supervised learning is that it has more reliable predictions when it pertains to marketing, allowing for more targeted marketing that can be used to identify and target specific customer segments based on their past purchase behavior and demographic data,” Hill says.
Hill foresees using unsupervised learning, which requires him to do more interpretation of the output data, for market analysis. For example, looking at items frequently purchased together to give insights on better ways to lay out the store.
While taking the classes, Hill has already started playing around with different AI programs, inputting existing data and using models to predict and forecast.
“I’m using a very small set of data, so right now it’s all about getting repetitions in and just practicing and getting the muscle memory down,” Hill says. “To make really good use of this for our business, we need a lot of information, and not just more information, but good quality information. If you give it bad information, you’re going to get bad information back.”
While not glamorous, one of the keys to effectively using AI is having clean data, which Hill says means getting into the nitty gritty of your operation’s spreadsheets.
“It is a lot, and it helps to have someone on staff who is willing to get into the weeds,” he says.
Hill emphasizes that he is by no means an expert in AI, but is excited to learn all he can because he sees the future potential benefits of the technology. Some people have fears of AI taking over jobs, but right now, AI is taking care of those tasks that free up associates to focus on the customer.
“The responsibility is on us as small business retailers to not go into the future kicking and screaming, but rather be reasonable and evolve with what’s coming,” Hill says. “The big boxes are already investing in these technologies, and if we don’t start adapting and implementing, we will never be on the same playing field. We need to take our strengths of better products and higher levels of customer service and leverage those with technology.”
