Shownotes
This Omni Talk Retail Fast Five segment explores Luna, the AI agent now running a real retail store in San Francisco.
Chris Walton and Shelley Huff break down what AI-managed retail could mean for merchandising, operations, leadership, and the future of middle management in retail.
Along the way, they discuss automation, AI-driven buying decisions, and why this may be the worst AI technology will ever be.
⏩ Tune in for the full episode here.
#AI #RetailTechnology #RetailInnovation #FutureOfRetail
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Transcripts
We begin today with the story of a San Francisco store that has no human boss, just an AI named Luna.
Speaker A:Whoa.
Speaker A:According to USA Today, an AI agent named Luna is now the boss of a real retail store in San Francisco.
Speaker A:Backed by a $100,000 budget from its creators at Andon Labs, Luna picked the inventory, designed the store, hired the human staff, and signed the lease.
Speaker A:Believe it or not, Luna communicates with customers via a corded telephone handset in the store and manages her human employees via sl, handling data, planning and logistics, while the human staff handled the warmth and in person customer service.
Speaker A:Yeah, I bet.
Speaker A:Luna chose all the inventory, designed a mural for the store wall, commissioned painters to execute it, and even signed up for trash collection in ADT security system and AT&T Internet.
Speaker A:However, Shelly, however, Shelly and OmniTok fans, there have been some early stumbles.
Speaker A:Luna has reportedly been over ordering candles.
Speaker A:There are no visible price tags on products.
Speaker A:Yeah, that's a problem.
Speaker A:Customers must ask Luna for prices via the phone.
Speaker A:And two female employees were found to be paid $2 less per hour than the one male employee, though Luna said it was actually based on retail experience.
Speaker A:Shelly, we're going to start you off on this one.
Speaker A:This is a story that doesn't typically make, you know, make our headlines, but this one is so unique, we're going to start off with this.
Speaker A:And believe it or not, and not surprisingly, the A and M consumer and retail groups put you on the spot.
Speaker A:Question of the week.
Speaker A:So here it is.
Speaker A:Putting aside the question for the moment of whether retail is ready for an AI run store concept, what are the most important things the retail industry should seek to learn from such an experiment?
Speaker B:Well, I personally think this is so cool.
Speaker B:And this is what I love about what's happening in Silicon Valley right now and the renaissance that is happening in that part of the country.
Speaker B:This, to me, is not about AI replacing retail leadership.
Speaker B:It's about it replacing the or supporting the operational layer underneath retail execution.
Speaker B:And so I think this just signals where AI is going, which is about really middle management automation.
Speaker B:So when we say AI, we mean automation.
Speaker B:And so when I talk about middle management automation, I mean things around planning, allocation, assortment, all of those things.
Speaker B:And Chris, I see, I think the biggest takeaways are we can imagine a world now where a buyer, for instance, might be selecting an item and negotiating pricing and AI is doing the rest.
Speaker B:And so leadership comes about around, you know, becomes about not only managing people, but around leading systems and understanding each of those operational layers so those can continue to be enhanced What I thought was funny about this and the candle situation is that you and I both know buyers buy too much or too little of things all the time, myself included.
Speaker B:And so this, to me, is interesting because Luna will most likely learn from this and not make that error again.
Speaker B:And in real life, buyers may be in a role three or four years and move categories and you're having to teach a person all over again.
Speaker B:And so I think this ultimately leads to fewer mistakes as AI continues to learn here.
Speaker B:But.
Speaker B:But I think it's super interesting.
Speaker B:And I also think what's unique about this is that consumer experience and consumer experience scores are going to continue to be incredibly important to the retailers that do it the best.
Speaker B:And so what I think we'll learn from this is which categories and which shopping circumstances are going to require more human intervention than not.
Speaker B:And so one thing I think about is if I want to buy a stick of gum, I probably don't expect to interact with people as much, but if I'm buying an Hermes scarf or a luxury handbag, that's high consideration.
Speaker B:I do.
Speaker B:Um, but again, super excited that companies are trying this.
Speaker B:They're not the only ones.
Speaker B:I'm interested to see more of this come out of Silicon Valley, and I'll be eager to see what continues to happen with Luna.
Speaker A:Wow.
Speaker A:Okay.
Speaker A:Okay, so, wow.
Speaker A:All right, so.
Speaker A:So be honest with me.
Speaker A:Be honest with me.
Speaker A:So was that, Was that your initial take when you read the headline, or were you kind of like, oh, wow, this is weird, or did you, did you come at that, like, after you digested it, knowing that we were going to talk about it today?
Speaker A:Be honest.
Speaker B:No, honestly, I am excited about what's happening.
Speaker B:Excited about what's happening with AI as it relates to retail.
Speaker B:So when I read this headline, I was like, yes, someone finally stepped forward and is going all the way with it.
Speaker B:And that's a typical way of Silicon Valley companies coming at this.
Speaker B:They're going to go as far as they possibly can, they're going to learn, they're going to iterate, and then they're going to execute beautifully.
Speaker B:And, you know, a couple days ago, I had lunch with another founder who's building another automation layer for retailers that's basically ingesting different forms of AI that can serve as one stop shop for many elements of retail execution.
Speaker B:So when I read this, it made me excited because there's actually a physical presence with this.
Speaker B:But there's a lot of companies working on this and it's really.
Speaker B:And it makes it an exciting Time to be a retailer.
Speaker A:Wow.
Speaker A:Yeah, it presses the envelope, right?
Speaker A:I mean, that's the cool thing about it.
Speaker A:Yeah, man, I, I, I 100% agree with you.
Speaker A:I think it's wrong to dismiss this too quickly.
Speaker A:And if you're reading this and you have, you know, I'd encourage you to, I think, Shelley, you're dead right.
Speaker A:You got it.
Speaker A:You got to think about it from the lens that you're discussing it.
Speaker A:I had a really interesting conversation this morning with Scott Price, who's the CEO you might even know, a former Walmart guy, but currently the CEO of DFI Group, which is a large grocer in Asia.
Speaker A:And he, he said, I asked him at the end, I said, you know, how are you thinking about AI impacting your business?
Speaker A:And he brought up a framework where he's looking at it from three lenses.
Speaker A:First is the consumer facing side, which is what we've been talking about on the podcast every week, like, you know, using the LLMs to search for product and that kind of thing.
Speaker A:Second is the general, the productivity that you're going to get from using agents and deploying them in your operation, which is a little bit of what's happening here.
Speaker A:And then, Shelly, the part that you made me think about, because I wasn't going to talk about this until you mentioned it, was he also said it can make the buyers better at their jobs, it can make them better negotiators, better planogram designers, better product designers.
Speaker A:And, and that was really interesting.
Speaker A:So he and I called it kind of the, the productivity plus.
Speaker A:So there's the standard day to day productivity of all the jobs people don't want to get done.
Speaker A:But then there's also the improvement on the jobs, which is interesting when you said like, yeah, we've all overbought candles, but hey, we could actually stop doing that in the long run if we think about deploying this the, the right way.
Speaker A:So then the next thing I'd say is like, you know, the implications to me are this.
Speaker A:Shelley, like, as executives, I want to get your thoughts on this too.
Speaker A:As executives, we are not going to just be managing people going forward.
Speaker A:We're going to be managing agents and how we manage agents and who knows how to manage agents and who learns how to manage agents is going to be what separates those from who are successful in the long run versus those that don't.
Speaker A:But you get the last word on that one.
Speaker B:I couldn't agree more.
Speaker B:And I think there's going to be, you know, and we can talk about retail leadership.
Speaker B:But when you think about understanding all the layers of a retailer and the systems that have to work together, that's where really great experience comes through because you know how the questions to ask and the guidance that has to be provided not only to the people but the system.
Speaker B:And I think about that in terms of how you lead an organization and actually build the systems required.
Speaker B:If you are not experienced of decades working across every aspect of the business, I think it becomes much more difficult to lead a retailer.
Speaker A:Right.
Speaker A:And that's, that's another great point too because the other thing we were talking about today a lot at the World Retail Congress was you have to know your process.
Speaker A:Like you can start with your goal but you have to know your process to actually do this the right way as well.
Speaker A:Shelley which is what you're talking about.
Speaker A:And so that's gonna put a premium on everything as well.
Speaker A:Great point.
Speaker B:Thank you.