Shinsegae Department Store uses AI in marketing push

Shinsegae Department Store has become the first South Korean retailer to deploy a marketing strategy using AI technology.

A wave of artificial intelligence (AI) is sweeping the nation’s retail industry, as major department stores and online shopping malls rush to adopt the latest technology to attract consumers.

From this week, Shinsegae Department Store is introducing a personalisation service called “S Mind”, which will analyse each customer’s brand preferences and come up with product suggestions.

Using a database of some 5 million existing customers, S Mind will take into consideration around 100 factors including the purchase history, gender, age, and location.

The results, which will include suggested brands and related shopping information, will be sent to customers through Shinsegae’s mobile application.

Shinsegae predicts its latest move will generate additional sales revenue of 100 billion won annually.

The new system, established solely with South Korean developers and data analysts, was four years in the making before its completion.

Shinsegae Department Store’s rival, Lotte Department Store, teamed up with IBM Korea last December to develop a new mobile app AI feature that is expected to be released by the end of this year.

Lotte’s new ‘Recommendation Bot’ will work as a shopping advisor to make suggestions through voice messages or texts, and will give app users information on the latest trends and celebrity fashion news.

Kim Myeong-gu, who is responsible for omni-channel marketing at Lotte, said, “With the overload of information today, many customers find it tiresome to make a choice.

“Our new AI-based recommendation feature will differentiate our marketing strategy with that of our competitors,” he added.

As the major retail chains are beginning to embrace AI technology that will redraw the landscape of how we shop, the industry as a whole and the government are also backing the trend.

A new alliance was formed yesterday which will see the retail and distribution industry work closely with IT and manufacturing companies to adopt the fourth industrial revolution.

Dubbed the “Retail Industry Convergence Alliance,” the cross-industry coalition will help spread the use of new technologies in various fields including research and development.

The fourth industrial revolution, typified by advanced technology such as AI, IoT, robots, augmented reality and virtual reality is rapidly being incorporated into the retail and distribution industry around the world.

An official from the Korean Ministry of Industry said: “For our retail industry to be acknowledged as a global platform, it’s important to emphasise having the right business environment for innovation and cooperation.

“The government will help with subsidies to make sure the collective effort between various industries leads to new business opportunities and markets.”