By: Samarth Baral
For most Americans, the term “artificial intelligence” used to be strongly associated with science fiction. As of 2018, however, the impact of AI on consumer-oriented firms has been substantial, and its long-term economic implications are wide-ranging.
Until only a few years ago, the words “artificial intelligence” (AI) likely evoked something deeply fictional and fantastical for most Americans – something as Jarvis from Iron Man or even the Terminator. As of 2018, however, AI has been firmly established as a valuable and revolutionary form of technology, increasingly used by consumer-oriented firms, and set to be prominent in nearly every industry. A report by the accounting firm PricewaterhouseCoopers predicts that AI will generate approximately $16 trillion for the global economy by 2030, and these numbers are likely to increase exponentially thereon. Even recently, AI has been affecting consumer-oriented firms in a significant way, and although there are many obvious benefits associated with its rise, AI’s long-term economic effects are subject to much debate.
AI’s impact on consumer-oriented businesses is one of the most substantial among the plethora of industries it has revolutionized, and this trend is likely to continue. Amazon is one of the latest to embrace this trend, opening its first cashierless grocery store called Amazon Go in January – a prominent innovation in redefining consumers’ shopping experience. It has since opened up three more, the latest being in Chicago, which opened last month. Amazon Go’s new, top-quality products, the store’s convenience, and the user-friendliness of its mobile application all contribute to the chain’s success since its opening day – a day in which customers were awed by the efficient service and innovative technology boasted by the store. Although there are currently only four of these stores nationwide, the tech giant aims to open several more in its prime target cities of New York and San Francisco, and eventually open over 3,000 cashier-less convenience stores across the country by 2021 (which would make Amazon Go among the largest grocery chains in the US).
Other consumer-oriented firms are also embracing this trend. With customer service currently being the primary tool used by businesses to gain a competitive advantage, a number of businesses are leveraging AI to compete effectively with competitors. Mikhail Naumov, President and co-founder of DigitalGenius, stated in September that AI is a “game-changer” when it comes to customer service, and Twitter aims to have 85% of all customer service interactions handled without a human agent by 2020. For both of these firms, AI will help erase superfluous costs from firms’ contact centers while allowing customer interactions to flourish. In the case of DigitalGenius, the company has managed to acquire many customers that are content using the automated version of their customer service, allowing them to cut the treatment time of customer support tickets significantly. As a result, customer service representatives and agents have more than 30% more time daily, which has been used constructively by support agents to offer upgrades and new products to customers, causing the contact center to become more profitable. Indeed, it is undeniable that AI allows businesses to become more profitable and efficient by creating value for their customers.
Although AI clearly augments efficiency for both producers and consumers, there is significant speculation in the American media concerning AI taking over jobs and throwing millions into poverty. A Bruegel analysis shows that “54% of EU jobs [are] at risk of computerization,” arguing that job losses are very likely to be significant. This point is further substantiated by a report submitted by McKinsey, one of the leading management consulting firms, which speculates that “in 60 percent of occupations, at least one-third of activities could be automated” by 2030. Predictably, this fraction could be much higher in consumer-oriented industries – specifically restaurants and fast-food chains, in which many types of employees (such as waiters and cashiers) could be replaced. The report also expects between 400 to 800 million people to displaced by automation technology in the next 12 years – hardly a prediction to be excited about.
Although these disadvantages may seem daunting, the rise of AI also comes with less obvious benefits, and several strategies can be employed reduce its negative effects. Undoubtedly, the growth of automation technology will create an increasingly high demand for AI developers, managers, and researchers tasked with continually developing and enhancing AI. This means that although many low-skilled and tedious jobs (such as those in consumer-oriented service industries) may eventually be replaced, the net result may be more cost-effective and productively efficient, while the American economy’s focus on the technology sector is likely to increase. With this shift in focus inevitable, changes in the education and training systems can facilitate the economic transition we are likely to experience due to AI. A more generalized education curriculum that incorporates mandatory technical training along with existing core areas of study may be needed for workers to be efficient in a highly automated society. Workers in low-skilled industries that are currently at risk of displacement, once provided with adequate training, can add to the economy by increasing the efficiency in workforce that will inevitably be achieved by AI.
In closing, the impact of AI on consumer-oriented firms is substantial, and its long-term economic implications are wide-ranging, likely yielding both positive and negative societal outcomes. However, it may be best to consider AI’s rise as an inevitability and accommodate this change the best we can to both enhance its positives aspects and reduce the impact of its drawbacks. Renowned computer science professor Randy Pausch once famously said, “We cannot change the cards we are dealt, just how we play the hand.” With the American economy constantly changing and irreversibly evolving at an ever-increasing rate in the 21st century, this wisdom is needed more than ever.
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