139. Why Shopping Will Never Be The Same Again

0:08Hello and welcome to The Rest is Money with me Steph McGovern and with me Robert Peston. So we have a guest today, Kate Anktill. Now, Kate is a business consultant who I heard speak recently at an event. And I just thought, oh, my God, Robert's going to love all these ideas and things she's explaining in terms of how tech and AI is being used, particularly in the retail sector. So she's worked with some of the biggest brands in the retail sector and looking at how customer experience is going to change, how they're going to use their supply chain differently and all of that type of thing. And all these investment managers who were sat in front of her were pretty blown away by what to expect in terms of how things are going to change for all of us using AI.

0:52It's right up our street. So we thought we'd get her in for a chat. She's a CEO of a company called GDR, which, as I say, is a business consultancy, essentially. Yeah. And, you know, we do talk a lot about artificial intelligence on this program. We haven't actually weirdly talked that much about supermarkets, shops, online retailers. It's such an important part of the economy, retailing. And so a conversation not only about how the experience for all of us of buying the stuff we need is changing at a rate of knots, but also what it means if you work in the industry. Fingers crossed, that'll be pretty compelling.

1:33So here's our interview with Kate Ankertill.

1:39Kate, it's lovely to see you again. So the last time I saw you, I think it was just before Christmas and it was at an investment management conference. And you were basically explaining to all these investment managers why you cannot ignore AI. AI is something we're obsessed about. We keep talking about how it's the next industrial revolution. But yet it's interesting how the adoption is going of AI. Some people are totally avoiding it. Some people are scared of it. And some people are completely embracing it. What's your thoughts on how it is being adopted in business? Because you work with them regularly on this, don't you?

2:12Yes, I think it is a very interesting time to be alive. But what is so fascinating to me, because I speak at a lot of conferences, there is a massive level of eye roll and fatigue, if they think that you're going to be a speaker on AI, because every single speaker is about AI. And I suspect that people are kind of bored. They're embarrassed if they don't know enough about it. They feel worried, sometimes frightened for their jobs. I think not everyone feels that they want to get on board with a whole new revolution and a whole new set of skills once they're beyond the age of about 20. And so I think it's really hard to get people in a mindset after a certain age to unless they are a tech person.

3:03Obviously, that's different. If they're a tech individual and that's their job, obviously, they're all over it. But I mean everyone else, people in general business. And so my job, I like to think of my job being getting people excited about the amazing, fabulous, stunning, incredible, staggering things that AI can do already for absolutely everyone. And in many cases, for free, that makes their lives just so much more interesting and exciting. I mean, obviously, I'm talking a lot about retail and, you know, consumer facing innovation and what brands are doing and what's happening in physical experiences in the real world in business.

3:45And all of that is incorporating AI to the point where you can't not have it. It is the new omnichannel. 15 years ago, if you weren't moving towards being an omnichannel business, then you were heading for the dustbin. And obviously, it's the same now with AI. Everyone knows that. But I think what they've thought of that as mostly so far is the back end, the optimisation, the supply chain, the warehousing, the delivery, all of which absolutely cannot run without AI. If you're Tesco and you need to optimise last mile delivery with trucks going all over the whole country, you've got to make that absolutely optimised.

4:26And the only way that source of complexity can be dealt with is through AI. So everyone knows that and accepts that. And I think what's newer for people and possibly challenging for people to get their head around is the consumer facing side of AI, the agentic AI, the assistance, the fun stuff and the personalization stuff. And that's the bit that I tend to talk about. And so if you look at the personalisation, essentially having a closer relationship with your customer, making sure that you're giving them the kind of recommendations that they're likely to latch on to, which retailers seem in your experience to be ahead and what are they doing?

5:10Well, Zalando, which is the German sort of fashion e-commerce site, has been trialling JackGPT for about a year now. So I think they were kind of early to the game. And they have had some good results in that they're not talking about profit increase, but they are talking about 40 % increase in people putting items into the baskets and increased likelihood of people clicking on products to the tune of 23%. So how do they use ChatGPT in that context? So you can go on their website and have a chat with Zalando, their fashion assistant. And you can say things like, I'm going to a wedding in Barcelona in February.

5:55And it's all quite formal. So it's like a stylist. It is a stylist. And you're typing this in. It's a robot stylist. It's a robot stylist. And you're saying not just where you're going, when. And obviously the AI can then calculate temperature, location. You've said what status you want to look like. But you can also say, and I want to feel a certain way. You can say, I want to feel very dressed up and polished. Or you can say, I want to feel very relaxed and easygoing. And it will then incorporate even slang words, it claims, into the selection of product that it suggests. So could I say something like, I've got chubby arms, I don't love them.

6:35Exactly. And then it would. Yeah. So it's basically suggesting that it helps with the early stage kind of wide funnel where you're just browsing. And that's a difficult thing to help a customer with. If they don't know what they're looking for yet, you can't really help them. But another really interesting example, I actually found it a year ago, was a startup, but they are working with some American brands at the moment. They're called Psyche AI. But basically, they're a bunch of psychologists who have incorporated AI into their platform, which is designed for retailers and fashion and homewares and so on.

7:09And what they've done is really clever. They've attached the five psychographic typologies for human personality, like agreeableness, neuroticism, extroversion, introversion, to every item of fashion on a website. Right. Right. Because they've done the AI mapping of what kind of person likes what kind of clothes. and each item of clothing, they tag a red one-shoulder dress as very extrovert and a grey boxy t-shirt as very introvert. And based on your first 10 seconds of cursor movement, what you hover on on the first page, they can uniquely customise to your psychographic profile page two. And I've seen this in action and it has shown a completely different page two for me because I'm quite extrovert with fashion compared to my colleague.

8:05You've disappointed us today. You're wearing very introverted stuff. I'm trying to look quite grown up today. But yes, I would go for the one shoulder red dress, but my colleague would not. And her page two was completely different. Now, typically people basically leave a site if it hasn't got stuff they want by page two and a half. So this is incredibly important. So they claim they're not saying who they've done this with, But they're claiming that with their test subjects, that they've had five times increase in, you know, spend and eight times increase in dwell time. And crucially, and I think super important, 25 % reduction in returns.

8:46Because you do not want the planet being clogged up with the carbon footprint of things being returned and they often don't even go back into the supply chain. So that is incredibly important. And I think you cannot now think about certainly e-commerce without deploying AI in that customer facing way that is attuned to that individual psychology. And do you think British retailers are just a bit too conservative at the moment in terms of adopting this stuff? Because, you know, one's impression is that they are behind the curve. I think when you talk to CTOs, Chief Technology Officer, the people that basically sign off these kinds of budgets, they are quite rightly and understandably concerned about basically being sued for, you know, privacy issues or overstepping GDPR mark.

9:34But just to be clear, that psychological profiling, that wouldn't fall foul of privacy or GDPR issues. No, it shouldn't do. But I think when you look into these things and how they work through the whole system, there are always some niggles to be ironed out by the legal department. And I think some people are a bit, you know, put off by the complexity of that. And if it's not become an absolutely standard thing that everyone's doing, they're a bit cautious at first. And I think, yes, we in this country are quite cautious about not exposing our businesses to be sued or hacked or, you know, overstepping any kind of mark.

10:12So I suspect that's possibly why we do have kind of the rule of law. And it's understandable that people's jobs might be on the line if they get it wrong. But I think this is an absolute, as you know, oncoming wave. There is no stopping it. You know, we are eventually all going to have to get on board. Because, I mean, historically, our retail sector, you know, weirdly, I've sort of been immersed in retail for pretty much my entire career. And historically, we were regarded as essentially world leading, you know, incredibly competitive compared to the retailing sector of most other countries. I don't know the extent to which we've maintained productivity in that sense.

10:51But throughout most of the UK, of course, productivity is a major problem. It's way too low. You know, we've talked a lot on this show about how possibly the greatest source of improved productivity for the UK would be fast, bold rollout of different versions of AI. Because, of course, it's not just a uniform service or product. AI takes many, many, many different forms by definition because it's a general purpose technology. I mean, how worried are you? Because we are very worried. that the UK is just not moving fast enough in the round to adopt AI? Yes, I am worried. I am worried about our retail industry.

11:33I spend time in America and I just spoke at the National Retail Federation Big Show, which is the world's biggest retail conference. And the difference in the general sense of optimism in the US for retail compared to us is just, it's totally the opposite. I mean, we're in doom and gloom. We're tiny figures for growth, if any at all. You know, our Christmases are bad. You know, it's I mean, even 2019 before COVID was the worst year we'd ever had for retail in this country. And I turned up in America feeling all gloomy. And there they are. Absolutely. Growth, growth, growth. Massive optimism. You know, they see huge potential for their retail industry.

12:18We, on the other hand, lack investment. We've got the car crash that is the rate system. We are in advance of the US in terms of our e-commerce adoption. We're about 30%. They're about 20. So, you know, 80 % of Americans still buy most things in stores, whereas we are. Wow, 80 %? 80%, yes. It's only 20 % e-commerce for them. You know, China's nearer 50 % e-commerce, so we're not up with China. but we are in advance of most other countries apart from China so we are fast adopters for e-commerce and that is due to grow about four percent in this coming year so e-commerce is still growing although it's obviously slowed in its growth now I do worry I think rates are not fit for purpose I think that as AI business rates for retail I mean I think it's yeah I know you've talked about it before and I know you you feel it personally because you have your own retail entity But I've been saying for years, this is just an absolute scandal.

13:16The fact that there's such an uneven playing field between the cost of physical retail is staggering. Of course, you know, it's the cost of power and heating and all the heat going out the front doors because people feel they have to have the front door open. Otherwise, people won't come in. Cost of employing people. Young people don't want to work in those jobs anymore. You know, the stuff that's being stolen, unbelievable problems for physical retailers. You know, potentially up to 10 % shrink for some supermarkets in central... People, just to get... Not everybody will understand shrink means theft.

13:51Theft. Big time theft. We in this country are total tea leaves, especially when it comes to self-checkout. Is it much worse here than, for example, you just said you've been in America. Do they not have the same problem in America? Well, American security guards do tend to have guns, which tends to put people off sometimes. Are you recommending that there are security guards, Carrie? No. Just to be clear, I'm not recommending that we have guns. But no, in certain central city environments like San Francisco, Walgreens are closing stores because basically they feel it's not worth having a pharmacy in a city centre space where basically everything gets nicked.

14:31so it's all behind closed kind of locked cabinets it's a horrible shopping experience you know it is a problem everywhere it is a cost of living issue and it's also a in this country has been a decriminalization issue which i think we've gone down the wrong route of not prosecuting people if they only steal relatively small amounts but they do it a lot in fact cooper has said she's gripping this yes well i'm moving forward on that but back to your general question i do worry about productivity in this country I do for retail I do think we need to adopt AI absolutely everywhere across almost all aspects of all retail both consumer facing and back end and to do it faster than we currently are absolutely that's part of my job obviously involves a lot of investment that these companies don't necessarily have the money to put into at the moment do you think there's that barrier where people don't see the long-term monetary gain they just think hang on this is going to be too much money to start with particularly like small businesses on on high streets yes i mean it's always difficult to modify and adapt your business practices for the new trends isn't it um but typically we tend to see the ones that survive are the ones that do manage to do it and the ones that don't survive are the ones that typically don't manage to do it are you seeing any brand new retailers being set up purely based on the promise of ai i think most kind of brand new direct consumer young brands would be set up incorporating the AI platforms that are doing the best job to start with.

16:04They just wouldn't even consider doing it without. Absolutely. So it would be, you know, marketing to the individual. They're probably starting to think about unique personalized messaging with things like celebrity avatars. We saw a great example last summer where Jennifer Lopez had an avatar that you could deploy using your words, your text that you typed into the Virgin Voyages website. And then it surrendered Jennifer Lopez saying to Uncle Max, Uncle Max, you really should come on this cruise in September because I'm going and it's my birthday. And then Jennifer Lopez is looking all glamorous on the ship.

16:42And then Uncle Uncle Max gets there and goes, where's Jennifer Lopez? Uncle Max gets the email, you know, kind of addressed personally to him. So, you know, there are amazing, fun things you can do with AI. And I can't imagine. I mean, I have my own avatar. It's not that expensive. What do you do with your avatar? We've got to find what Kate does with her avatar. Yeah, go on. Well, when I can't be bothered to tart myself up and set up all the lights and everything in the studio at home, I just type in the text that I want my avatar to say. and then I also then press the button to say and can you make that in Portuguese or Japanese or Arabic so that it sends out whatever message I've typed it's basically it's text to video but it looks like me it sounds like me it's me looking glamorous and it can be me in any language a lot of people are doing obviously singing and speaking pussycat so you haven't decided to turn yourself into pussycat yet no I've tried to look quite professional in mine I've seen the Japanese version and it's really impressive because I remember seeing that at the conference it looks like it is you talking Japanese it doesn't yeah look like it's fake or anything so lots more to discuss after the break and with any luck Kate will be here in person or she may have supplied her AI agent instead yeah maybe we should do the next bit in Japanese

17:59just on the point you were saying about retailers adopting it and just again looking at my perspective on this as a small business in retail we're actually using a lot of free ai stuff to do things for us and take away some of the bureaucracy in terms of you know can you do a job advert for me for this particular person or can you do help me with the health and safety side of this and and then obviously we check it all and stuff but it's interesting how actually people might not realise there's lots of ways of using the free AI already out there to do some of the work that can really slow you down as a retailer because there is so much bureaucracy.

18:38Absolutely yeah I totally agree we use a load of the free stuff as well everything from writing proper letters to kind of checking HR policy tax policy I personally use it for obviously I do check everything yeah and if you're using something like you know all the typical e-commerce platforms would now have AI built in so that instead of you having to go to a studio and photograph every item of you know mugs if you're selling mugs or jeans if you're selling jeans you just you know have it rendered and then you just type in put these jeans on a attractive 30 year old woman walking in a park wearing a black top and then those jeans are perfectly rendered in 3d but and what about the person who's the woman is that just a made-up person it's just a made-up person or it In some cases, it might be an actual actress or model that has licensed her image either way.

19:35But essentially, the costs of merchandising and photographing product and placing it in different backgrounds and being able to see it in three dimensions has massively reduced and obviously halved or more than half the time of putting those kinds of images together. There's an interesting debate about whether particularly a larger company needs to control every aspect of the use of AI by their people or should relax a bit if there are people are just deciding to use DeepSeq or JetGPT. There was an interesting story, actually, literally this morning on the BBC about a law firm called Hill Dickinson, where it just noticed that lots of its people, lawyers, paralegals, were using ChatGPT, DeepSeek.

20:22And it actually sent out a memo saying, actually, we don't want you without our authorization to use these things. And it's asked them not to. So looking at that, I was thinking to myself, this seems actually probably as long as you've got responsible employees, it might be overkill. But do you think that actually, you know, in a bigger organisation, you should be concerned about unauthorised use of generative AI? Because obviously, frankly, particularly in the law, these sorts of services are phenomenally helpful. I think the reality is that if you're a law firm, you probably can't get professional insurance if your people are using general GPT, chat GPT.

21:01So I think the way people are moving is towards having custom vertically trained GPTs, which are in sandboxes. So it's trained to their specifications with their data and their legal kind of precedent. And it's not allowed to just make stuff up because it's got it from the Internet. and that would protect their customers and their employees from that kind of possibility of getting stuff wrong and being sued because you've always got potential for juniors being a bit slapdash, I would imagine. I do think we should rely on our governments to employ legislation which does protect its citizens. I think it's a governmental level and an international kind of governmental level protection that is required for both copyright, for the creators, and I don't think that's been fully in place.

21:47I know that's we're moving in the right direction and also for privacy. I mean, I personally think we're moving towards a world inexorably where we will all have our own personal assistant. I mean, I personally use Pi quite a lot, which is inflection AI. Very personable, very chatty. It's like a friend gets to know you, remembers you. You choose the voice, you choose the persona. Obviously, there's potential for it to remember every single question I've ever asked it and everyone else has asked it. And that's obviously how they're training it. And that's why it's free. I was interested in what you've said about how there's a kind of there's two growing trends in terms of the there's the empathetic AI and then this kind of ambient AI.

22:29Can you just explain what you mean by it and what that's going to mean like day to day for people when you talk about these things? Yes, all the tech titans pretty much are all saying the same thing, which is that within, you know, three years now, because I've been saying this for the last two years, everyone is going to have a personal AI assistant. that will be agentic. Now, agentic is a phrase that nobody agrees what that means. I was at this retail show. People who haven't come across it, it's agent with an IC on the end, just so that people out there know what we're talking about. We all know what an agent is, I hope.

23:01My understanding of what that means is AI that can start to do real things for you in the real world, as opposed to shuffle words around, or write clever poetry, or summarise things, or create music. So that's all happening within the digital world. Whereas my understanding of agentic AI is AI which can start to do things for you in the digital world on the Internet, typically, but then it actually has real world manifestations and it can do that without human oversight. so the theory is that you could give a task to an AI operator is a new agentic AI that's just come out from open AI in the US it's kind of just in test at the moment so it's not really out yet nobody really knows what it's going to do but in theory it should be able to book flights for you sync with your calendar make suggestions that would be appropriate to your work life book flights and you know actually pay for them if you've given it permission and sometimes it It might take a day or two to actually come back with the results of whatever problem you've given it.

24:10So you could say to it, do an analysis of what I should invest in for my pension portfolio. And it would come back two days later and give you a full analysis. But as I understand it, I mean, it is still a bit clunky and it makes mistakes, but it is nonetheless sort of remarkable because you can actually watch it in real time if you want to. You can say, you know, I'd like to get a flight to New York and you can actually see it going to different websites, looking for best deals. It may come back and ask you the odd question along the way about whether you have a preference. You're all right changing or whatever.

24:49Yeah. I mean, the thing that is also I think it's going to be slightly worrying for some people. So long as you provide your payment details, it'll even make the purchase on your behalf. So it does look like, in other words, a sort of human being having been given instruction by you, as you say, an agent or an assistant, but a robot assistant. So it is in science fiction terms. We're already at places that a few years ago we thought were impossible. And they claim it's a PhD level human intelligence equivalent. So a very clever person booking your flight. I'd rather just have someone with common sense rather than with a PhD book on my flights, to be honest.

25:32But just on the point of getting things wrong, you know, it's something me and my friends who all work in different industries keep talking about at the moment. My friend who's in the pharmaceutical sector is saying how they have a personalised AI, which, as you guys were talking about earlier, it's got the specific data of the company and she uses it every single day. Our other friend who's a teacher is like, what are you all doing using AI? And, you know, we've given her the task this week of trying to use AI in her job as a teacher. So every day we're like, tell us if you've used it. And she's been helping kids with UCAS applications and things like that and using it in that sense.

26:05But then another friend of ours who works in marketing was saying they've been using AI, but it keeps getting things wrong. So there was a measurement this guy needed to, can you tell me what, you know, how much I'd need to increase this certain product by in order for it to have these dimensions. and it got it wrong and he could see it got it wrong. So then he spent ages doing the calculation himself to find out it definitely was wrong. So then he started arguing with the AI going, you got it wrong. And the AI's like, we haven't, you have. And then put in the calculation and then the AI eventually came back and said, you're right, we got it wrong.

26:40But so there's this really weird relationship going on. You feel like you can trust it and then you can't. Although what I like about, you know, whether it's the latest iterations of OpenAI's ChatGPT or indeed DeepSeek is the way that they are now showing their workings at considerable length. And I think that does build confidence because you can read the workings and see where they may have made a mistake. And indeed, in some of these cases, they also show you their sources. So I do think, although you cannot, of course, we all still see AI making mistakes. I think the ability to spot those mistakes before any of us then ourselves look like fools by claiming that something is real when it's not, it has improved enormously.

27:31So, I mean, I think there are, you know, I think the other thing, I mean, interestingly, and I would love, I don't know if you think this is worth doing. I was talking the other day to somebody who works with one of these new digital services for schools. Yeah. And actually the potential of freeing up enormous amounts of time for teachers to concentrate on kids who have bigger requirements as a result of adopting many of these new digital platforms. So he was, for example, explaining to me that they can literally see in real time by the use of this digital platform as part of individuals work, which kids are struggling with a particular problem.

28:16literally in real time and you just go and talk to them and help them. And you can also see those who are finding it all too easy and need more challenging stuff. So, you know, in the right kind of way, the productivity of teachers can be massively enhanced. Yes, and AI now, you can use it to do lesson plans for you, to set homework. You can, you know, put in and say, based on this curriculum, can you create, you know, four lessons on this particular topic? So there's definitely productivity. So we ought to come back to this, I think. Yeah, yeah. explore um just on the the retail sector then and your expertise kit what are we going to see change do you think like i know we were talking about the the fact that maybe the uk is not as optimistic and everything in terms of retail at the moment compared to america but how is it going to change for people do you think going forward i think that we will move towards a world where you know we probably will have options where we have free agents personal assistance uh if you don't mind your data being sold or you might pay for one if you want the you know sort of apple version where you are protected in terms of privacy and so on i think i'll wait for the apple one myself um where it becomes your absolute expert in whatever it is you're interested in so i would be interested in having a personal nutritionist for example that advises me on you know for my age perhaps i should be upping my protein perhaps i'd be interested in reducing my carbon footprint with the groceries I buy, for example.

29:42Perhaps I want it to also seek out deals for me on a weekly basis, make sure that deliveries only come when it knows I'm going to be in because it has access to my diary, etc. But then also I might want a fashion stylist. I might want even, I'm just making this up, but why not have, say, Coco Chanel? Maybe I want a bit of Chanel advice in terms of my wardrobe. Obviously, she's no longer with us. She's no longer with us, but maybe her estate does a deal or maybe I have George Clooney, Mr. Coffee for Nespresso. And any question I've got on coffee, then my preferred avatar or my preferred persona within my suite of AI advisors might be George.