What times we are living in. The Coronavirus has shown us what a real retail apocalypse looks like. Thousands of retailers have been forced to shut down their stores as the disease has spread around the globe. Millions of workers have lost their jobs, others have been pressured into short-term work. The result: total retail sales loss in Europe exceeds €3 billion due to decreased consumer spending and the closures of major sales channels.
A chance to turn the corner: AI and advanced technologies. Retailers who use artificial intelligence have a clear advantage when it comes to business disruptions – they already have the necessary tools to react rapidly to today’s dynamic market and therefore, are more resilient to change than those who don’t rely on data-driven decisions. At aifora, we believe innovation is central to success in a post-corona world, the key to recovery and a must to alleviate the impact of future business disruptions. Check out these 5 retail technologies that will help you fight back:
1. Predictive Analytics
As consumer behavior evolves and new trends emerge, retailers often have trouble keeping up. By the time retailers recognize new trends and patterns, it is often too late. Instead of being proactive, they are forced to constantly play catch-up. This is where predictive analytics can help.
Defined as the process to foresee the actions and behaviors of consumers, predictive analytics analyzes historical data and current data to determine – well, the future. This retail-tech can be implemented in diverse areas if you can provide the right data. It’s not surprising that this cutting-edge technology is top priority for most retailers and the global predictive analytics market is expected to reach a market value of around US$ 25.2 billion by 2026.
Although even predictive analytics may not be able to foresee a crisis (yet), it can help retailers quickly deal with the consequences. Whatever our new normal may look like, making accurate decisions will be more important than ever.
2. Allocation of Stock
The right product, at the right time, in the right place – that’s the adage for retail success. However, many retailers still rely on Excel and human intuition to manage their stock, a process which is rather adventurous than beneficial, considering the magnitude of SKUs that are sold per store per day. As a result, customers find empty shelves in one store, while there’s still plenty of merchandise sitting in another losing its value, and in both cases – cash goes down the drain.
This is why many retailers are planning to upgrade their allocation process with AI in the near future. The truth is, as governments start to ease restrictions and many brick-and-mortar retailers are able to open their doors again, intelligent allocation is the only way to achieve the lowest possible costs, minimum discounts and maximum profit. As restrictions are being eased at different rates in different regions, large retail chains currently face an even greater level of complexity when it comes to allocating merchandise efficiently and effectively across their store network. Disrupted supply chains, constantly changing regulations and fluctuating consumer demand are just a few of the new complications.
It is no secret that customer service can make or break your business. When customer service can’t be provided in person, phone waiting lines are jammed and the inbox is overflowing with inquiries, leaning on automation can relieve the pressure. Chatbots can lend a helping hand when it comes to delivering customer support, without sacrificing customer experience. Especially in this time of crisis, chatbots are demonstrating how valuable automated technology really is.
Moreover, according to Juniper Research, chatbot-based interactions are estimated to generate $7.3 billion in retail sales this year and reach $112 billion by 2023 – and that was before online shops started experiencing an influx of demand. As we evolved to a nation of sofa-shoppers and consumers are adapting their behavior, online shopping has become more relevant. While sales through chatbots double annually, retailers are also able to increase cost savings by 30% through automated processes. It is likely that more retailers will rely on this AI-driven friend as the pandemic’s impact continues to show.
To counter those who still have doubts about this technology, chatbots are not impersonal but rather the opposite, giving customers the personalized experience they desire – and that 24/7 instantly, which most customers actually prefer than waiting for an actual person to reply.
4. Dynamic Pricing & Markdown Optimization
In today’s dynamic market, with the possibilities of advanced technologies and data collection – prices are more dynamic than ever. The global economic fallout from the coronavirus pandemic forces retailers to rethink their entire pricing strategy in order to counterbalance losses. Amid panic and fear, the only thing we can trust to be objective in times like this is data.
As restrictions ease, “non-essential” retailers want to regain lost revenues. However, speeding up revenue growth through extensive price cuts without differentiating between product categories may clear out the inventory that has been collecting dust in closed stores and warehouses for weeks, but will not give you the profits you need.
As the markdown madness begins, many retailers are throwing away cash because they don’t accurately consider the current demand and the price acceptance of the customer. Intelligent markdown optimization can generate the optimum yield at the right time, for each location. Driven by data, AI can determine the amount that is necessary to achieve the individual result – enabling retailers to grow sales at maximum profitability as well as minimize excess inventory.
Dynamic pricing, on the other hand, exploits sales and margin potential by flexibly adjusting prices in a targeted way, taking into consideration real-time changes in supply and demand. It determines the exact impact that a change in price will have on demand, and therefore on profits.Since the new world of retail is more “unpredictable” than ever, retailers need to react timely based on accurate data in order to secure increased margins. Dynamic pricing will be an important tool for retail recovery.
5. Personalized Customer Experience
The truth is, brick-and-mortar retailers are poised for transformation. Due to lockdowns and Social Distancing, consumers have acclimatized themselves to the digital world. And just like the great recession in 2008 – the COVID-19 crisis will have a significant impact on how consumers will shop in the future.
A way for retailers to become attractive again: Personalization. Why? Because of a psychological principle in which people focus on information relevant to them, known as the Cocktail Party Effect – and a party is exactly what consumers are craving after weeks of Social Distancing.
Moreover, McKinsey stresses that retailers should drop “transactional venues” and offer personalized attention in stores. This goes beyond knowing a customer’s name. Customer data should be collected online and offline to really understand the journey behind the name. Only if retailers redefine the role of the store will they be able drive incredible results. Afterall, 71% of consumers feel frustrated when a shopping experience is impersonal.
Taking the Right Actions
The retail environment continues to change and business disruptions like the current global pandemic will continue to take hits at our economy. One thing is clear, when all this is over the world of retail will be a different one. While consumers are staying home, the digital sphere has developed a bigger playground for staying connected to the outerworld. This also means more people by the day are adapting to digitalization which will ultimately shift consumer behavior. In other terms – retailers need to take action and adapt.
All things considered, the COVID-19 crisis has shown us how important digitalization and omnichannel retailing is – and how critical the omnichannel experience for consumers will be going forward. Great decisions can only be based on great data – and big data. With an extensive number of potential and existing customers, product ranges that may come in different sizes, shapes and colors as well as seasonal changes, business disruptions can make demand patterns even more complex. Humans will never be able to consider all these factors and make accurate decisions – but AI can.
We’ve given you multiple options to regain your losses, however, every retailer should figure out their greatest potential for improvement. If you’re ready to kick-start your transformation visit our website or book a demo with a sales representative to learn more about our retail automation platform for data-driven merchandising decisions.