A few years ago Samantha Zirkin and her husband took their two young children and traveled around the world volunteering at orphanages, schools, and homes for abandoned or abused children.
“I saw many children with the same sad story: dad gone, mother dead or dying after working under appalling conditions in a garment factory, no sanitation, no medical care,” she recounts. “Some children had been so malnourished they could not stand on their own two legs. I decided to delve into the retail world to learn about the supply chain and workers’ rights. And I wanted to know if people would pay $70 instead of $50 for an item they knew had been produced under fair conditions.”
Tackling the Big Issues in Retail
Today Samantha is the CEO and founder of Point 93, a company that addresses several big problems in retail. Point 93’s software replaces discounting with dynamic pricing and addresses the need to reeducate customers. “Customers have been conditioned to expect deep discounts which hurt the retailers brand and bottom line,” she explains. “Our solution encourages positive buying behavior and allows customers to provide feedback about product, price and in store experience.”
Most importantly, the software enables retailers to share their corporate social responsibility (CSR) campaigns with customers and analyze their impact on sales and loyalty.
“Retailers invest a lot in CSR activities, but they do a poor job communicating about them. They often don’t know whether their customers care about the campaigns or if they are willing to pay more for items produced under ethical conditions,” says Samantha.
Retail with a Purpose
Research like the SAP/EY market study shows that as digital transformation takes hold across all industries and lines of business, profit alone will not make companies successful. Successful companies must offer their employees a sense of purpose. Take the case of CVS, the American pharmacy chain that stopped selling tobacco products in 2014 because it conflicted with their purpose of helping people on a path to better health.
“CVS has a history of being purpose led,” Helena Foulkes, president of CVS Pharmacy and executive vice president of CVS Health, said recently at NRF’s Big Show 2018. “We walked away from $2 billion in sales to be a leader in healthcare.”
One year later, the company was able to show a measurable, positive effect on public health nationwide. Not only did people purchase fewer cigarettes in states where CVS had stores, they also bought more nicotine patches. This purpose-driven decision did not harm the drugstore giant’s overall sales which have been up, thanks to new business from in store medical services and health plans.
For all its advances and amazement, modern commerce is a double-edged sword. Some consumerist habits can be wasteful or harmful. Is it possible to improve conditions in a garment industry that depends on cut-throat pricing to drive consumption and is notorious for cutting costs at the expense of its employees?
AI to the Rescue
Experts believe artificial intelligence (AI) could help make retail more purpose driven. According to Francesca Rossi, AI Ethics Global Leader at IBM Research, ethical retail should start with the design of algorithms that determine how retailers use data to understand consumers and meet their demands.
“To help human society flourish, we must ask the right questions from the beginning in order to design the human experience differently,” she said at a panel discussion at NRF 2018. Rossi went on to explain the importance of making AI a multi disciplinary effort: “We shouldn’t leave AI in the hands of developers and designers. AI must become a multi stakeholder effort involving psychologists, economists, philosophers, the users, and so on.”
Tenzin Priyardashi, director of the Ethics Initiative at the MIT Media Lab, agreed with Rossi during the discussion. “Normally, you wouldn’t expect to find a monk like me at a retail event,” he quipped. “I believe in moderate consumption. We should ask ourselves: ‘What is a healthy rate of consumption?’ Retailers now have the right data at their disposal, the right insight into consumer behavior, and very powerful tools that can challenge society to be more responsible when it comes to healthy consumption.”
Machine learning and AI can help reward responsible buying behavior
Massive supply chain inefficiencies, environmental damage, and low wages that perpetuate the cycle of human suffering and poverty are all part of the hidden cost and long-term damage that can be caused by modern commerce. But it doesn’t have to be like that. Machine learning and AI can help retailers and product managers create dialogues along the customer journey and reward responsible buying behavior. Technology can give the shopper the opportunity to ask about the source of a product or understand what goes on behind the scenes to determine its price. Transparency enables informed decisions.
But we don’t have to wait for machines to guide the way. As consumers, we can all use technology to learn more about the source of our garments, our food, our medications, and then use common sense to do the right thing.
For more information about SAP at NRF, visit www.sap.com/nrf.