Imagine walking through a store with systems that could immediately detect out-of-stock items, signaling to an employee that the product needed to be replenished. It would also host interactive displays and have the ability to gather information such as when shopping carts needed to be gathered, or when additional registers needed to be staffed.

That's exactly the concept Walmart (NYSE:WMT) is testing in its Neighborhood Market in Levittown, N.Y., with its Intelligent Retail Lab (IRL). The 50,000-square-foot facility houses more than 30,000 items, making it the ideal proving ground for testing Walmart's groundbreaking artificial intelligence (AI) technology.

The aisles of a Walmart store with a massive data center in the background.

Image source: Walmart.

Futuristic shopping experience

One of the biggest frustrations among shoppers is looking for a specific item, only to find that it's out of stock and won't be available for several days. With its real-time AI system, Walmart is looking to change that.

The Walmart store is equipped with an "impressive array of sensors, cameras and processors," according to a company blog. The underlying computer system sports enough processing power to download 27,000 hours' or three years' worth of music -- per second. The data center boasts more than 400 graphics processing units (GPUs) and 10 cooling towers to keep the system from overheating. 

The system gathers real-time information that Walmart will use to improve operations such as product inventory and availability. Sensors and cameras will immediately detect empty spaces on shelves or in display cases and notify an associate to restock the missing products. This will save Walmart employees untold hours scouring store shelves for out-of-stock items.

Second place is the first loser

If some of this sounds vaguely familiar, it is. E-commerce leader Amazon.com (NASDAQ:AMZN) has been testing AI-integrated grocery stores, opening its first location to the public in January 2018. Shoppers download the app to gain access to the store, and once inside they shop as they normally would. The store is equipped with a variety of cameras and sensors that use computer vision, data fusion, and deep learning to digitally detect and track what items a customer has taken from the shelf. Once their shopping is completed, customers leave the store -- without checking out -- and their Amazon account is automatically charged for the items purchased.

The company now has 11 such stores and has been testing a variety of sizes and formats. Amazon ultimately has plans for as many as 3,000 such stores -- all without cashiers. Amazon continues to raise the bar, leaving other retailers to play catch-up.

Though it doesn't require an app, or Walmart is taking this model a step further with its futuristic technology, hoping to finally get the jump on Amazon with its in-store AI system.

A data center with row after row of servers glowing blue.

Walmart's massive in-store data center. Image source: Walmart.https://corporate.walmart.com/photos/walmart-irl-store

Increasing adoption of AI

Walmart's IRL is just the latest in a growing number of steps the world's largest retailer is taking to increase efficiency and improve the customer experience.

In early 2018, Walmart debuted a self-piloting robot infused with AI to roam up and down the aisles, scanning row after row of shelves, to detect out-of-stock items, identify incorrect prices, and locate shelves with missing labels.

Other self-driving AI robots have since joined Walmart's fleet. The latest uses a host of lasers, cameras, and sensors to navigate, and handle the often-overlooked task of floor cleaning. This frees up store associates for more customer-centric duties. After testing in about 100 locations, the floor-cleaning robots have been rolled out to 360 stores.

This is all in addition to the 900 pickup towers Walmart has installed, allowing customers to order online and pick up their orders at the store.

Walmart recently signed a five-year strategic partnership with Microsoft (NASDAQ:MSFT) to act as its preferred cloud provider and adopt a broad range of AI and data analytics technologies. The company will also help Walmart with other facets of its digital transformation.

Competition is ramping up

Walmart can't afford to stand still because its brick-and-mortar rivals and digital opponents like Amazon are bringing their "A" game to the competition. Amazon recently announced it was evolving its free, two-day shipping for Prime members to one-day delivery, effectively moving the goalpost and again forcing other retailers -- like Walmart -- to keep up.