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COVID, AI and Retail: And a Mermaid Shall Lead Them

As we consider how to ease into a more social commercial life in the next phase of the COVID-19 episode of our history – let’s call it the semi-quarantine phase – Starbucks, using artificial intelligence predictive analysis – may show us the optimal way back toward a more normal life.

The “third place” coffee house company is investing in AI not only to determine which stores are safest to open early, but to assist with mobile ordering, contactless product receipt and cashless payments – all strategies that can assist any retailer returning to a less isolated business operation.

Quoted in the Washington Post this week, a Starbucks spokesman said, “We are putting immense emphasis on the safest and most convenient way for customers to order their favorites from Starbucks. As we gradually come out of isolation, people will crave the connection and community that are fundamental to humanity.”

The company is emphasizing cashless purchase, promoting Starbuck’s mobile application, which is already used by about 20 million customers. Encouraging people to order through the app not only creates a stickier customer experience, but makes distance ordering and curbside pickup easier, which should provide comfort to more customers as they emerge from retail isolation.

Retailers are struggling to survive the general U.S. commercial and hospitality shutdown, with some major companies already contemplating bankruptcy as the country rolls toward its third month of isolation and distancing. J. Crew and Foodfirst Global Restaurants (Bravo/Brio) have already filed for bankruptcy, as retailers as diverse as J.C. Penney and Neiman Marcus have discussed the option.

As nearly all companies consider their rent burdens at a time when no one is visiting stores, machine learning programs can be harnessed to determine which real estate to keep and where to move for appropriate downsizing. AI may even help determine how to propose rent reductions and payment extensions to landlords.

Starbucks’ reliance on AI solutions is not new – the company introduced its “Deep Brew” AI program last year.  As reported by the Motley Fool “AI will be going through the mounds of data it already has in areas like scheduling, inventory, and restaurant traffic. It will automate scheduling and inventory, and it will be tailored to each restaurant. Scheduling and inventory are necessary tasks, but monotonous and uncreative, which is why Starbucks wants to free employees from having to focus attention on them.”

Starbucks CEO Kevin Johnson said that AI computing is aimed at delivering a better experience for everyone involved, which he called “nurturing humanity”. The AI is supposed to take over thankless and uninteresting tasks, so that baristas and other Starbucks employees have more time, energy and focus for personal interaction and developing their skillsets.

So, less than a year after announcing how Deep Brew will increase and improve human interaction, Starbuck turns to AI to optimize operations in a time of necessarily reduced human interactions. In February of this year, before the country was quarantined, Starbucks announced it was adding 4000 AI-enabled espresso machines to stores. The AI allows tracking of coffee sales and usage, and predictive analytic self-monitoring of the brewing machines for maintenance requirements. Johnson said, “Deep Brew will increasingly power our personalization engine, optimize store labor allocations and drive inventory management in our stores.”

Starbucks had already built a delivery relationship with Uber Eats and in July 2019 took an equity stake in Brightloom, a restaurant tech company with experience with low touch kiosks. Brightloom has been providing software “to use existing data to unlock the potential” of current customers. The company’s focus on technology is likely to make it a leader in the hospitality industry – surviving and thriving despite a human and business disaster.

Other companies can learn from Starbucks. Not only its focus on customers, but its ability to harness technology in the effort. People are vital to any hospitality business, but smart use of artificial intelligence can make those people safer and more effective.

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume X, Number 128

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About this Author

Theodore Claypoole, Intellectual Property Attorney, Womble Carlyle, private sector lawyer, data breach legal counsel, software development law
Senior Partner

As a Partner of the Firm’s Intellectual Property Practice Group, Ted leads the firm’s IP Transaction Team, as well as data breach incident response teams in the public and private sectors. Ted addressed information security risk management, and cross-border data transfer issue, including those involving the European Union and the Data Protection Safe Harbor. He also negotiates and prepares business process outsourcing, distribution, branding, software development, hosted application and electronic commerce agreements for all types of companies.

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