Oct 09, 2022Ed. Note: This article was previously posted at Retail TouchPoints.
Over the last couple of years, the retail industry has been navigating against brutal headwinds: the worst pandemic in 100 years, global supply chain disruptions, and accelerating inflation—all made worse by 1.1 million unfilled retail jobs. With a recession looming, retail businesses find themselves between a rock and a hard place.
Still, every crisis brings about some positive changes. Retailers are discovering new strategies for customer service, supply chains, inventory management, pricing and promotion. They are preparing their brick-and-mortar stores for the digital age, reinventing legacy systems and beginning to tackle such advanced technologies as artificial intelligence (AI).
This article provides a high-level overview for executives of how AI can help retailers resolve short- and long-term challenges like improving customer experience, circumventing supply chain and inventory disruptions, and offsetting the lack of motivated employees.
Elevated Customer Experience as a Primary Benefit of Digital and AI Revolutions
In the near future, digital and physical experiences will only continue to merge. The key for retailers' success is to leverage the vast amounts of data at their disposal to elevate these experiences with AI. Companies can approach AI adoption case by case, tackling better personalization and autonomy, adopting smart features like auto-merchandising and chatbots and developing holistic, end-to-end customer journeys.
Where should the C-suite's vision for customer-centric AI use cases start? Identify an area where AI can make a big difference for customers (e.g. experience personalization, support automation, self-service). Make a list of potential use cases, accounting for their KPIs, ROI and the impact on the company's processes. Hire the right people and remove any obstacles to their success (e.g. data access, buy-in across the board, management fears of change, team silos). Abandon business-as-usual and start reimagining your company's processes and technologies, accounting for AI and data. And support cross-team collaboration and agile mindsets to help your management and employees see the value of AI.
The adoption of customer-centric AI use cases involves significant investment but enables retailers to make both digital and physical world experiences more customer-friendly. AI paves the way for companies to transition to digital, data-driven business models that will dominate the retail market in the future, ranging from ecommerce platforms to cashierless stores offering highly personalized products, both physically and digitally.
Resilient Supply Chains and Inventory as a Major Factor in Improving Competitiveness
Global disruptions continue to affect the manufacturing, movement and distribution of goods, demonstrating that product availability can become the greatest competitive advantage for a business. According to Deloitte's 2022 retail industry outlook, "Eighty percent of executives believe consumers will prioritize stock availability over retailer loyalty in the upcoming year."
What does it mean? On a higher strategic level, retailers should identify new consumer shopping trends and devise strategies to fill gaps and optimize stock. In practical terms, they should enhance demand planning, inventory management and fulfillment forecasting capabilities through AI and advanced analytics. For instance, Blue Bottle Coffee, a specialty coffee roaster and retailer, has reinforced its supply chain and inventory by introducing an AI-powered predictive ordering solution that enables café leaders to accurately forecast order quantities. By reducing the amount of products that cafés either under- or over-order, Blue Bottle ensures that their guests always have a fresh supply while food waste and spend are minimized.
Product availability rests on a delicate balance between over- and understock that AI can help to maintain. With AI, retailers can improve product utilization, reduce waste and grow faster than their competitors, by keeping products on the shelf while spending less across the entire supply chain.
Enhanced Employee Recruitment and Retention as a Combination of Insight and Technology
In tough times, it makes sense for retailers to focus on their customers, but they should also prioritize their workforce. During a recession, employee turnover and the time, stress, and cost of hiring and training new employees can literally become the straw that breaks the camel's back. How can AI technology help retailers turn labor concerns into opportunities? Empower recruiters with insights about candidates to help them assess their culture fit, and improve their relationships with hiring managers by using data to measure KPIs such as quality of hire. And improve career progression planning by analyzing data on employee performance to identify and counter stagnation with new learning and development (L&D) programs.
Bear in mind: The more data AI algorithms receive, the better able they are to perform a wide range of tasks, from narrowing the pool of qualified applicants to identifying new areas of growth for employee resource groups (ERGs). Thus, by combining the power of AI and data, retailers can move away from guesswork toward precise "people" strategies to recruit and retain highly productive employees.
Becoming a Retail Champion with AI
Determining where to direct recession-squeezed resources for the biggest return is not simple. The pandemic, supply chain issues and labor problems have made it more complicated. But some retailers are already turning these challenges into opportunities by using modern technology like AI to get a new angle on their strategies, customers and employees. By doing so, they are able to strengthen their businesses and gain market share at the expense of their more conservative competitors.
As the retail industry is likely entering an era of consumer frugality, AI-empowered retailers can offset consumer trends by offering better customer experiences, maintaining a resilient supply chain and hiring a more motivated workforce to propel their business forward while guarding against future disruptions.
Helen Khais is the director of customer success operations at Provectus. For more than 10 years, Khais has worked in an array of customer-facing roles. She's got vast and strong consulting experience with AI/ML, data and analytics, business intelligence, IoT, infrastructure and app development. Khais has been working with startups, midsize and enterprise customers within retail and ecommerce, healthcare and life sciences, fintech and other industries. She is always focused on finding solutions to the challenges her customers are facing and encourages her peers to work hard and achieve success.