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AI is serving herbal tea to HK consumers

According to a recent report, a listed company holdings group has harnessed artificial intelligence (AI) to quench the thirst of consumers and investors with the launch of smart kiosks.

Research by a leading institute in marketing science suggests that the average online consumer spends a mere 19 seconds on choosing which brand to purchase. It’s even worse in stores, where consumers take just 13 seconds to make up their minds.

With such a narrow window of opportunity, shopkeepers have their work cut out when it comes to sizing up customers and making sales. Thus, the group is rolling out intelligent kiosks that use a combination of visual recognition technology and artificial intelligence to identify what each customer is most likely to want, then offers them a choice of tea or healthy food product tailored to their particular tastes.

The new kiosks are smart vending machines fitted with cameras that are connected to the internet, part of the Internet of Things, in turn providing real-time reporting to the company. A camera photographs the customer standing in front of them. The image is transmitted to a cloud for instant analysis by a custom-designed model.

Focusing on multiple factors – climate at the point of sale, the applicant’s age, gender, etc. – the model examines the data in real time, building a predictive profile that tells the relevant kiosk which drink or product a particular customer is most likely to buy. The kiosk can then make a “personalized” herbal product recommendation.

The new AI technology transforms the relationship the retailer has with the customer at the vending kiosk. What was previously an anonymous purchase has now become a profiled person offered the most appropriate beverage, and most importantly a profiled demographic to allow targeted promotion at the point of sale. Beyond this is the ability to plot trends across time and kiosks by any of the variables. Kiosks will become an intelligent device and part of the HFT sales force and ERP architecture.

The general manager and executive director of the group said that there are currently about 10 smart vending machines in operation, and a total of 20 smart vending machines will be launched during the year to cover locations beyond the current 117 stores, especially at commercial and office buildings. The company will be investing in big data research, smart vending machines and the development of unmanned stores.

HFT partnered with a premier IT solution provider to develop the intelligence kiosk. The solutions provider developed a face recognition API, leveraging its parent company’s advanced AI technology to analyse each customer’s features.

In addition, the system can factor in big data from a host of connected or IoT devices, such as point-of-sales data, membership information, inventory records and external factors like temperature and humidity to improve the accuracy of predictions.

There is more to the company’s AI experiment than improving customer satisfaction—there is also an important strategic dimension. For example, the system can generate detailed sales breakdowns by a host of variables, and project the information on an easy-to-read dashboard for strategic planning or instant action. Sample data for Q2 2018 demonstrates that 15-30 year-olds generate the majority of revenue from the widest variety of tea options.

The general manager of the company’s partner stated that the new AI kiosks that will be rolled out in the retail sector are positive proof of how widespread AI has become and the impact it is having on everyone’s daily life.

For the company, the AI-enabled kiosks are part of a long-term goal to enhance efficiency and time to market. The capital expenditure for each new physical store on average is around HK$800,000. The kiosks cost a fraction of this and are 24/7.

The group currently owns 117 self-operated stores in Hong Kong, and it intends to roll out more kiosks across Hong Kong. It was able to report a year-on-year increase in total revenue of 10.1% to HK$391.9 million for the six months ended 30 June 2018.

During the same period, gross profit rose by 6.6% to HK$237.6 million. The kiosks are part of a focused strategy to get closer to customers and generate satisfactory returns for investors.