In-Store OS — An Overview of Standard AI

As part of my UNC AI Bootcamp course, we’re exploring real-world applications of AI technology. I chose to focus on retail enablement platforms, specifically in-store technologies.

I selected Standard AI, one of the leading cashierless shopping platforms powered by computer vision. As this is a practical class, we were assigned to complete our write-ups as a README in Github.

Here is the result.

# ai-case-study

**Week 1 Challenge — Company AI Case Study**

# Beyond Checkout: How Standard AI is Becoming the Backbone of Retail Operations

## Overview and Origin

* **Standard AI (formerly known as Standard Cognition)**

* Founded in a Texas garage in 2015, Standard has been on a long journey to reach their current position. This case study will focus on Standard and explore the rapidly evolving store-based AI technology transforming the retail industry. [More about the company](https://standard.ai/about)

(https://youtu.be/CguA6WjzOkw?si=Xf1fZNQes6mCXXC_)

* The Co-founders of Standard AI include Jordan Fisher [Jordan_Fisher_Overview] (https://www.owler.com/company/standardcognition) (current CEO), David Valdman (departed), and Michael Suswal (departed, current Board Member)

* A group of former SEC engineers conceived the original idea for Standard AI to create retail technology platforms out of computer vision technology.

* Standard AI raised its first funds in 2017 with a Series A round valued at over $51 million, a Series B in 2018 at $35 million, and a Series C in 2021 valued at just over $178 million. Its current valuation is estimated at over $1 billion. [Source:_Forge](https://forgeglobal.com/standard-cognition_ipo/:~:text=The%20company%20has%20raised%20%24235,Draper%20Associates%2C%20and%20SK%20Networks.)

* Standard AI has made several acquisitions, including Skip and Third-Eye. [Source: VentureBeat and BusinessWire](https://venturebeat.com/business/standard-ai-acquires-thirdeye-and-teams-up-to-bolster-autonomous-checkout-tech/)(#https://www.businesswire.com/news/home/20211110005448/en/Standard-AI-Completes-Computer-Vision-Acquisition-Bolsters-ML-Leadership-to-Drive-the-Future-of-Autonomous-Retail)

## Business Activities

* Retailers face three major challenges: lack of available labor, inventory accuracy, and rising shopper expectations set by Amazon. While most retail AI has been focused on automated checkout, there are many other large challenges where AI can play a significant role. [Retail_Challenges](https://www.technofunc.com/index.php/domain-knowledge/retail-industry/item/retail-industry-current-challenges)

Although checkout automation can help address the labor issue, it exacerbates inventory challenges and increases retail theft. Moreover, most cashierless checkout systems need to be more clunky, delivering a poor end-user experience, and are limited to tiny retail footprints.

Standard AI aims to provide solutions to these challenges. It focuses on using computer vision AI to solve complex retail problems. The company’s secret sauce is its focus on expanding from its original focus of cashierless checkout systems to leveraging computer vision in the retail environment.

* Retailers and brands are the primary customer targets for Standard AI. The computer vision market is currently valued at $15 billion and is expected to grow to $40 billion by 2032, a 15% CAGR. Retail is a core market likely worth 30–40% of this total. __**(authors note: as new use cases evolve, these estimates appear conservative)**__

* Standard AI recently launched its Zone Monitoring solution designed to lower costly out-of-stocks and alert staff to potential theft of high-value items. This approach expands beyond the checkout, which is primarily a labor savings for retailers but one that often cannot justify the infrastructure investment with current technology. [Zone_Monitoring_Product_details](https://standard.ai)

* Standard AI’s technologies are all built around computer vision. Once its vision technologies are installed in a retail store, its AI can create digital store twins to help model shopper behavior, increase sales productivity and lower shopper friction. Standard AI leverages Google’s Vertex AI toolkit, which is part of Google Cloud. Additionally, Standard AI is committed to privacy and security and intentionally blocks all identifiable shopper data in its systems. As concerns with AI safety grow, this focused positioning will be a definite competitive advantage. [Standard_AI_Google_Partnership](https://www.pymnts.com/artificial-intelligence-2/2023/standard-ai-adds-google-tools-to-speed-checkout/)

Standard AI recently acquired Skip, a retail point-of-sale provider that will strengthen its position as a complete store operating system.

> **The most valuable part of technology is giving retail employees more time to help shoppers directly vs. managing routine tasks.**

## Landscape

* AI technology is becoming increasingly involved in retail stores, which helps improve customers’ shopping experience and makes it easier for retailers and their employees to work efficiently. This ultimately allows more time to be spent on helping shoppers. Amazon has pioneered retail AI, particularly with its cashierless checkout platform, AmazonGo. The company also uses AI extensively in its online retail and media platforms. However, 85% of all retail transactions still occur in physical stores. Many companies, including Amazon, are working to unlock AI’s potential within retail stores.

Amazon is expected to begin licensing its AmazonGo technology to other retailers shortly. Amazon faces stiff competition from companies such as Trigo, Standard AI (formerly Standard Cognition), Shopic, Caper, Zippin, and Grabango.

* Of these competitors, Standard AI is best positioned to challenge Amazon’s leadership. Founded in a Texas garage in 2015, Standard has been on a long journey to reach their current position. This case study will focus on Standard and explore the rapidly evolving store-based AI technology transforming the retail industry.

* AI technology is becoming increasingly involved in retail stores, which helps improve customers’ shopping experience and makes it easier for retailers and their employees to work efficiently. This ultimately allows more time to be spent on helping shoppers. Amazon has pioneered retail AI, particularly with its cashierless checkout platform, AmazonGo. The company also uses AI extensively in its online retail and media platforms. However, 85% of all retail transactions still occur in physical stores. Many companies, including Amazon, are working to unlock AI’s potential within retail stores. Amazon is expected to begin licensing its AmazonGo technology to other retailers shortly.

* The biggest trend is a shift from shelf-based and sensor technology based on RFID to Computer Vision systems, as AI and computing power have made the technology much more effective. Training **Computer Vision systems on various retail packaging types and combining them with virtual store environments offers entirely new approaches for cashierless checkout, inventory management and understanding shopper behavior patterns.**

* Amazon faces stiff competition from companies such as Trigo, Standard AI (formerly known as Standard Cognition), Shopic, Caper, Zippin, and Grabango. Of these competitors, Standard AI is best positioned to challenge Amazon’s leadership.

## Results

* Standard Cognition has positioned itself as a worthy challenger to Amazon, the current leader in the market. The company has expanded beyond just offering cashierless checkout and is now equipped to tackle the retail industry’s core challenges. This strategic move is a clear justification for retailers to invest in computer vision AI platforms at the store level, enhancing their competitiveness and driving growth.

* _“We’re on the cusp of an AI-powered revolution in retail, driven by the need to manage labor and inflation challenges while meeting the needs of new tech-enabled shoppers. We will continue to bring innovative new checkout solutions to market that will help retailers manage operations and attract new shoppers.”_ — Jordan Fisher, Standard AI CEO [IDC_Retail_Tech] (#https://www.businesswire.com/news/home/20231101666146/en/Standard-AI-Named-an-“IDC-Innovator”-in-Computer-Vision-for-Automated-Checkout-and-Self-Checkout/?feedref=JjAwJuNHiystnCoBq_hl-SP7CEH_PxTjduXJ0SDrbU6qcp-o_pnudlUwsb5apQ1S4gUE65BTfjH3-pSuqdv0gW3cb3F4oTIgUqCPafFkgu67Ap_pA_yJ1XPgPy1DuJnY)

* AI development requires a significant investment, but the progress has been remarkable, despite some setbacks in cashierless technology. Amazon is the only company that has successfully implemented it on a large scale to date, but there are still some challenges to be faced. Access to capital and the evolution of technology are currently the primary success factors for AI. However, computer vision technology is likely to resolve many of the current challenges and overcome some of the cost and logistics barriers in the near future.

By developing itself into a more robust retail enablement technology platform, Standard AI has become a leader in the field and a strong alternative to Amazon and its AmazonGo technology, which is likely to be licensed to other retailers in the near term. As AI continues to attract significant investments, the company has the potential to expand its current investment level or become an attractive acquisition candidate.

## Recommendations

As shoppers’ habits evolve and they increasingly use hybrid shopping environments to fit their specific needs, AI can play a critical role in unifying their experience and removing friction from the shopping channel they choose. Standard AI’s platform is ideal for building additional retail technology products and services to meet these needs.

**Some potential solutions that Standard AI could offer include:**

1. **Personalized Marketing Solutions:** Retailers can better understand shopper behavior by linking in-store and online shopping trips. AI-powered tools can analyze customer behavior and provide personalized marketing such as targeted discounts or product recommendations. These technologies use machine learning for behavior analysis, data analytics for personalization, and integration with existing shopper loyalty systems.

2. **AI-Driven Inventory Management System:** Knowing whether individual SKUs are in-store and available is critical for hybrid shopping, BOPIS, and delivery offerings. Computer Vision systems can solve this problem and identify where shopping list items are in the store. Predictive analytics and integration with supply chain management software are integrated technologies.

3. **Shopper Privacy:** Standard AI can lead the conversation on AI ethics and safety by creating tools for shoppers to manage their in-store tracking and measurement settings. Shoppers can control their privacy while still receiving shopper guidance and promotional opportunities.

4. **Retail Operations Sustainability:** Reducing waste is not only the right thing to do, but it also makes excellent business sense. A shopper OS dashboard can help retailers understand the impacts of their inventory management and shopper journey decisions. Retail sustainability innovation includes AI-driven analytics for operational data, integration with environmental impact databases, and reporting tools.

These technologies align with the growing trend of data-driven decision-making in retail, enhancing customer experience and improving operational efficiency. They are also essential for modern, efficient inventory management, aligning with the needs of retailers to minimize costs and maximize availability. Additionally, these technologies help retailers align with consumer values and regulatory trends while improving operational efficiency.

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> *This document was created as part of the AI Case Study for the UNC AI Bootcamp Week 1 Challenge.*

>> *Original text by John Andrews edited with Grammarly, 2023*