Retailers Should Not Rely Solely On AI Technology

Retailers should not rely purely on software driven by artificial intelligence (AI) and machine-learning for sales models, says Douglas Bennett, of A&G Real Estate Partners. Bennett says tech firms increasingly offer store recommendations without being able to transparently explain how their models arrive at the results. A study by A&G shows stores in areas with growing populations appeared to be associated with lower sales and therefore the model was picking up a proxy for something else. “Lacking the intuition of an analyst or real estate executive, a black box (software) could miss this distinction and encourage the retailer to steer clear of high-growth markets.” Bennett says a good analytical team will meet with cSuite executives to gain a solid understanding of their real estate goals, ideal demographics, and target markets, deepen the conversation by engaging in detailed drilldowns involving the finance and real estate groups, and ask for the retailer’s past analyses and the assumptions that went into them, rather than blindly relying on legacy models.