Credit: iStock.com by Surasak Suwanmake
For some time now, many retailers have been exploring the use of artificial intelligence to enhance various aspects of their business, from inventory placement to merchandising assortments. However, the conversation gained renewed momentum in 2023 with the emergence of ChatGPT and generative AI. This increased interest in the potential of AI to transform retail operations was prominently featured at NRF 2024: Retail’s Big Show. Brands from around the world showcased their implementations of this technology, targeting improvements in sustainability practices, customer experiences, supply chain efficiency, and more. These displays emphasized retailers’ ongoing efforts to boost margins and cultivate brand loyalty amidst a rapidly evolving customer base through AI. Drawing from the showcased innovations and current industry trends, here are three top areas where I anticipate AI will have a significant impact on retail this year:
Inventory Optimization
With inflation putting pressure on customers’ pocketbooks, 2023 saw retailers scaling back to right-size inventory and reduce excess that was dragging down margins. At NRF 2024, brands demonstrated how they will increase the deployment of inventory management and intelligence tools, including automation, AI and generative AI, to help them gain a better understanding of real-time inventory and deliver a more consistent experience for customers in-store and online.
With self-learning and self-tuning methods for inventory optimization, these tools offer valuable assistance to retailers. They feature integrated capabilities like embedded forecasting and intelligent pricing, providing continuous predictive and prescriptive recommendations regarding assortment composition and effective inventory management strategies. This encompasses tasks such as store-to-store transfers, promotional planning, bundling strategies, and more. These more intelligent and responsive AI-driven inventory management and merchandising systems will aspire to enable retailers to optimize margins while having the agility to capitalize on new trends faster — keeping customers happy and coming back for more.
Supercharged Delivery
At this year’s show, best-in-class delivery solutions were on full display as the process remains a challenging aspect for retailers, requiring consistent and efficient operations to meet customer needs while managing costs, especially as consumers have become accustomed (or even addicted) to fast delivery. Research from Uber shows that 75 percent of consumers expect express delivery as an option, and 72 percent are more likely to continue ordering from companies that offer this service. Using AI, retailers can better predict and coordinate the best delivery options for customers based on not only their preferences, but also inventory availability. For example, a consumer looking for a certain shoe may trigger a discount offer and free same-day delivery for the same shoe in a different color with excess inventory at a local store.
Reducing Returns
Several innovations at NRF 2024 focused on improving supply chain and fulfillment operations for retailers. Through AI, businesses will be able to analyze countless customer reviews to gather insights on current product issues and potentially even predict imminent issues that could be a root cause for returns, such as inconsistent sizing or longevity of the product. In tandem, AI can help identify and suggest everything from sizing to colors based on the same review information and other predictive data. For instance, if data shows a sweater runs big, the retailer can suggest a buyer size down from their standard. Using AI, retailers can gain a more holistic view of how a customer may view, and respond, to each product. This will give buyers the insights they need to make better assortment, purchasing and pricing decisions based on sales and customers’ propensities to like and keep items.
At the heart of these new AI implementations showcased at NRF and across the industry lies data. Before any of these new technologies can truly be effective, retailers need to integrate all their data across applications and platforms into a common data foundation to help derive its full predictive and prescriptive value. Through the use of AI and generative AI, retailers will unlock new value and help improve their operations, people, and bottom lines.
Antony Wildey is vice president, global sales consulting, Oracle Retail.
Total Retail is the go-to source for retailers looking for the latest news and analysis on the retail industry. Be sure to bookmark this helpful and relevant site: https://www.mytotalretail.com/
We, at Board Retailers Association, are here to help you to succeed by providing resources and programs that enable you to lower day to day costs, increase margins and create more remarkable customer experiences. We provide a voice for our Retail Members and will never share your information. BRA has been “protecting retailers and a lifestyle” for over 20 years.
If you are not yet a BRA Retail Member, you can easily opt in to either Regular (no cost) or Distinguished ($100/yr.) Membership via this super simple join form