Artificial intelligence (AI) is a powerful technology that, for many years, has been gaining support from every part of the world, and the technology is now slowly recognized and adapted by the different sectors here in the Philippines. It might not happen today, but with the advancement of technology and the growing need to improve and succeed in every aspect, we can only expect that one of these days, artificial intelligence will be fully embraced by the different sectors, most especially retail.

Today, we can find AIs for retail developed to improve customer service, marketing, sales, and inventory through the use of data analytics and machine learning. Entrepreneurs can now create new opportunities in increasing their sales by generating detailed information about their customer’s purchasing behavior as well as their likelihood of closing a deal. Increasing the ROI can now be successfully achieved through boosting customer engagement and retention and effective strategic marketing.

You might already be familiar with chatbots and smart sales assistants since they are the front liners in engaging customers. Yes, they are the ones introducing you to new deals and promotions via text or chat, and yes, they are just some of the examples of AIs that business owners are incorporating into the system. There is no better way of having your inquiries and issues answered and resolved quickly than asking these AIs.

 

Technology is not perfect, even an artificial intelligent one that mimics the skills, thinking, movement, and behavior of humans. Despite this, we expect that the use of AI will continue to be an open option in most businesses, and maybe one day, the term AI will become a household name. What we can only do at the moment is to try to identify the possible negative externalities and find a solution for them with the help of the government.

If you are a customer who enjoys creativity in looking for an item, you might like your trusted online shop to have a smart search bar. You can upload a picture of the item you are looking for or draw it, and the smart technology will provide you results with the same or similar design. It seems like online shopping can be more fun in the future!

There are other AIs out there (developed either locally or internationally) that are promising and will no doubt help boost businesses to become more competitive. The list of the benefits of using AI seemed to be endless and interested business owners might become more focused on the advantages and overlook the negative externalities that come with the use of these technologies. Yes, negative externalities do exist from the use of AIs not only in retail but also in other sectors. But these are almost always not expected nor detected early by the users, so when the effect becomes evident, there is little to do to reverse it. Issues like privacy and security breach and downgrading of employees are some of the perceived disadvantages of AI use.

 

EMPLOYMENT & WAGE

Transitioning of businesses to the use of AI will undoubtedly cause an employment and wage gap. When the AI can support customer service and marketing management, for example, the services provided by the employees who are a part of the team might become redundant, resulting in stagnation, and worst, termination. Some tasks are not fully automatable but might be improved when paired with AI. In this case, employees undergo reskilling/retraining to adapt to the new automated process and cutting the workload of the employees could be a factor for a cut in the wages.

It is a whole different story when only large businesses have the resources to adopt AI. The advancement in the processes will make them more competitive, shifting market share from non-adopters of AI. In response, firms who are lagging will have to cut their resources and, in the worst-case scenario, close their business, which would also result in unemployment.

 

PRIVACY & SECURITY BREACH

Migration to a new platform (AI-driven) requires the transfer of a large amount of data from an on-premise data center to another or cloud. In rare unfortunate events, hacking also happens that could result in the loss of terabytes of data.

Let us also not forget about chatbots, which for most of the time, put online business to the advantage. They are online bots that can be “trained” to perform a task and react according to commands. Imagine a developer programmed a bot and launch it under the guise of a customer service representative, with the intention to phish information from unsuspecting customers.

So the question is, how can we prevent these negative externalities from happening or lessen their impact? How can we mitigate the effects on the labor force? Perhaps the support should start by educating and training the labor force base on their qualifications long before the transition. The government should also create a program covering benefits and job reallocation assistance for the displaced workers in the process. The bottom line is that the retail sector, labor force, and of course, the government should all prepare for this inevitable change.

In the case of a privacy and security breach, who will likely be held responsible for the damages? How about when customer data leak because of uncontrolled AI? Answering these questions would start a debate on whether the AI alone is deemed responsible or the liability lies on its developer or user. Perhaps creating a law or regulation that addresses the trials in AI adoption and usage and specifying the standards or guidelines on who will be held accountable for AI failure should be made a priority.

We understand that the creation of such a specific law or policy is a long process, so as early as possible, we must take the first step by bringing this matter to the attention of stakeholders and our leaders. We need to tap each sector, including retail, dialogue with them about the risks of AI adoption and the importance of bringing this to the legislative bodies. Again, the process will be painstakingly slow, but the release of a new policy or law of responsible AI adoption is something we can look forward to.

Let’s face it. Technology is not perfect, even an artificial intelligent one that mimics the skills, thinking, movement, and behavior of humans. Despite this, we expect that the use of AI will continue to be an open option in most businesses, and maybe one day, the term AI will become a household name. What we can only do at the moment is to try to identify the possible negative externalities and find a solution for them with the help of the government.