From February 16-20, the EuroShop opened its doors to the world of retail again. 16 exhibition halls covering 123,800 sq.m. with 2,300 exhibitors from 57 countries who demonstrated their solutions specifically innovated for retail. Despite the ongoing corona virus epidemic, the world’s no. 1 retail trade fair brought together 94,000 visitors from 146 countries.
But what’s all the buzz really about?
Retailers want to have a closer look at what the future holds and seek new ideas to develop their business. A central element for optimization: retail technology. One could find countless advanced technologies that have the power to change the way retailers operate. In today’s fast-paced dynamic market, innovations abound, and whether one is up to speed will determine the success or failure of a business.
So, what does the future of retail hold?
AI and Machine Learning
For decades, when we thought of the future, we thought about the rise of AI. Well, we’ve arrived in that future – AI in retail is here and now and is expected to reach a global market size of $23,426.3 million by 2026. Here’s why AI is taking over in retail:
- Analysis of large and complex data sets
- Better and real-time decision making
- Higher efficiency
According to a study by the Capgemini Research Institute, retailers could save at least $340 billion by 2020, if AI was deployed across operations. We put together a list of 5 AI-innovations every CEO should consider to maximize profitability.
Most retailers regularly experience the struggle of keeping shelves stocked and minimizing excess inventory at the same time. While out-of-stock situations cause missed sales opportunities and leave customers frustrated, excess inventory is disposed of or burnt at the end of the season. As a result, retailers not only burn actual cash but damage their reputation as consumers continue to develop a trend for sustainable shopping. However, technological advancements that enable efficient inventory planning are now able to resolve these problems. Machine Learning (ML) algorithms can accurately predict actual demand, reducing retailer’s forecasting error by 30-50%. Therefore, retailers can not only decrease losses but also generate higher profits through increased product availability across all sales channels. Moreover, by automating these processes, retailers maximize efficiency and significantly reduce costs. There are different solutions that target different aspects of inventory management, for example:
We’ve all seen or even experienced our fair share of chatbot failures over the past years – whether it was the neglect of processing simple human answers, or the copying of the worst traits of humanity leading to racist and sexually-charged messages. These backfires may have left some retailers wondering if an AI-driven chatbot would do more harm than good. However, if a chatbot is executed properly, such a backfire can be avoided, and retailers can significantly increase sales. According to a RetailDive study, chatbots will drive $112B in retail sales by 2023. Chatbots not only maximize sales, they also reduce the workload of employees who often don’t have the capacity to answer all emails and calls in a timely manner, thus improving the entire customer experience in the process.
The continuous transformation of how we pay for products and services has probably hit every consumer by now and well, aren’t we all quite happy about this change? Efficiency has become crucial in balancing our work and personal life. Today, technological advancements are the cornerstone of efficiency, speeding up annoying processes that are unavoidable in our daily life and thus allowing us to focus on what’s real important to us. No wonder a recent study concluded that 66% of consumers prefer self-service technology over traditional interactions.
Amazon, being not only a “retailer” but also an innovative tech-company, took “self-service” technology to a new level. Its Just Walk Out Shopping technology, automatically records the products a consumer takes off the shelf in the Amazon Go App and then charges their Amazon account when they leave the store – without anyone having to do anything. Now, we all know that when Amazon starts something it’ll most likely apply for the entire retail industry in the future. In fact, it has already begun – Amazon announced that retailers are already signing contracts to get that “Just Walk Out” experience.
Ever wondered what’s the perfect price? When and by how much do you need to mark down prices in order to sell off your inventory without suffering a loss in profitability? Today the art of pricing has been merged with advanced capabilities of AI to make this possible. Demand-based pricing is a great opportunity for retailers to increase profits through data-driven pricing decisions. Intelligent markdown optimization alone has proven to save retailers over $60M. The study by Digital Commerce 360 also revealed that 52% of shoppers received promotional offers for products they would’ve happily paid the full price for. The best part: with the right solution provider, retailers don’t even need to invest a lot of implementation effort. For example, aifora offers cloud-based pricing solutions that use AI to optimize prices across all channels and automate the underlying process. Real-time price changes can be implemented in both online and offline retail, with the support of electronic shelf labels.
NRF’s latest security survey revealed that Organized Retail Crime (ORC) causes retailers a shrink worth $777,877 per $1 billion in sales. But it’s not just ORC that puts retailers at risk, also cyber-related incidents like website hacking, internal theft as well as e-commerce crimes jeopardize retailers’ profitability and brand image. And retail theft is a problem that’s not going away. However, today there are very advanced solutions that use facial recognition to identify threats or violations in real-time, allowing retailers to decrease losses significantly.
A New Wave of Digitalization is Upon us
As consumer expectations for increased product availability and the omnichannel experience (in the store, online and basically everywhere) grows – retailers should reshape their business models and adapt processes accordingly.
Amplified intelligence, i.e. the collaboration between humans and AI, is critical to ensure continuous success. Retail CEOs and decision-makers need to stay on top of the latest tech-trends to stay ahead of competition. Of course, blindly following every trend is not the answer. Here are the things you need to consider before implementing AI technologies in your business:
- What problem do you want to solve?
- What is it you want to achieve with this solution?
- How will you implement it in your company?
The future is in your own hands. The only thing that is certain: doing nothing is not an option.