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Speech is golden

05 November 2018. Published by Ben Harris, Trainee Solicitor

With voice shopping projected to rise to £3.5 billion in UK sales by 2022, we consider how smart speakers are making waves and breaking barriers in the retail sector.

In the keynote speech of its I/O 2018 developer conference, Google announced "Duplex", an impressive new technology which will enable its Google Assistant AI to schedule hair appointments, make restaurant reservations and find out businesses' holiday opening hours.  You ask Google Assistant to make a reservation, and the AI itself phones the business and independently speaks to them on your behalf – using a remarkably human voice.

Duplex is just one example of the maturing technologies and techniques, including voice recognition and machine learning, which are revolutionising the way we interact with retailers.  Of these, perhaps the most significant impact will be made by smart speakers, the increasingly sophisticated devices providing easy access to voice-controlled virtual assistants in our homes.  With just a short spoken command, consumers can access entertainment, search for information and purchase products online.

Much like apps for smart phones, businesses can also develop 'skills' (or 'actions') to expand smart speakers' capabilities, allowing users to do everything from booking flights to dimming the lights.  Already, over 10% of homes in the US and UK have one of these AI-powered speakers, and it is predicted that towards 70 million will be used in the US alone by 2019.  There are a number of models and AIs to choose from, with the largest tech companies such as Google, Apple, Amazon and Microsoft each offering a different device.  Even Facebook has recently shared its own candidate to be your resident AI friend.

Despite their name, however, these speakers aren't always so smart.  The AI technology, which the tech companies are improving all the time, still makes mistakes.  Reports have included a smart speaker ordering cat food at the inadvertent prompt of a TV advert, an episode of South Park leading to the creation of unwanted 7am alarm clocks, and even one device emitting disturbing random laughter as owners tried to fall asleep.  Introducing into our homes a device which is always listening also raises security concerns – with one couple's device recently discovered to have been recording and transmitting their private conversations without their knowledge.

In the face of all these issues, the fact that smart speaker sales are still rapidly increasing is testament to the significant convenience they offer consumers.  Users intuitively interact with the speakers through speech, so don't have to get to grips with a touchscreen interface.  Groceries can be ordered without lifting a finger, and AI-powered customer service is just a frustrated word away.  Experts suggest that, by 2022, the value of purchases made through voice shopping will grow to around $40 billion in the US and £3.5 billion in the UK.  With around half of US and UK smart speaker users having shopped with their device, those predictions could well become a reality.

Smart speakers can also provide potential customers with personalised product recommendations.  Recent developments in the accuracy of voice recognition technology mean that smart speakers can differentiate between different users, enabling retailers to boost sales through targeted suggestions based on individuals' shopping history.  With tools such as Adobe's voice analytics providing companies with valuable data on how customers interact with their brands through speech, smart speakers offer retailers the chance to build unprecedented brand loyalty.

While that might sound like good news for retailers, there are certainly challenges for them to overcome.  As voice search accounts for an increasingly high percentage of online searches, and consumers expect short and fast spoken responses from their smart speakers, marketers will have to adapt their strategy, brands and budgets to ensure that their products are among the very first suggested, while developers will have to work to integrate smart speaker interactions seamlessly with existing retail systems.  Further, sound-only results (or relatively small screens on some newer models) restrict the extent to which customers can investigate product recommendations before buying.  With consumers yet to build real trust in their smart speakers, this limited ability to gather facts and shop around means that repeat orders and purchases of low-value products are currently more prevalent than sales of expensive electronics or the latest fashion.

But for those retailers who do adapt to this voice-driven new environment, the opportunity is exciting.  Eager to take control of the market, tech companies are partnering with retailers to maximise their offering to consumers.  Google Home provides easy access to shop with many household names such as Argos, Tesco and Costco, while Google's collaboration with H&M on the "Home Stylist" voice app brings a personal stylist experience into the home.  On Amazon's devices, tens of thousands of skills enable effortless orders from companies such as Domino's, Starbucks and Uber.  Amazon and Microsoft have even partnered together to allow consumers access to both companies' AIs from a single device, recognising that users will want to benefit from the specialised skills of different AIs without cluttering their homes with multiple devices. 

As smart speakers and their AIs increasingly infiltrate our homes and voice shopping becomes ever more popular, retailers must plan ahead to make sure their voice, too, will be heard.