Harnessing the Transformative Power of Data Analytics and Artificial Intelligence In Retail
Lines of cars parked in front of stores, filled with customers waiting in their vehicles for items they have purchased online. Consumers taking their business from one store to another in search of a better, more personalized shopping experience, faster delivery, or the satisfaction of finding the items they want without driving from location to location. Retailers scratching their heads ever harder about how to stock their shelves, grappling with product shortages, and fighting competition from their market as well as from other market segments.
There are no two ways about it: While the retail industry has always been in a state of change, the pace of change is picking up dramatically. Consider just a few numbers:
- 92% of retailers say customers expect a personalized experience, up from 85% last year.
- 86% of consumers are willing to pay more for a better customer experience.
- 71% of consumers are receiving items through local delivery more frequently than before the pandemic began, while 69% of consumers utilize “buy online, pick up in-store” (BOPIS).
- 67% of US millennials are likely to purchase products and services from brands using a chatbot.
- 47% of shoppers are (now) open to purchasing items through a bot.
Consumers are becoming increasingly demanding — they expect a higher caliber of customer service, personalized assistance, immediate or near-immediate access to merchandise, and a hassle-free experience whether shopping in-store or online. They are also more insistent on beginning their shopping journey online and complete it in-store, or vice versa — as well as on faster home delivery. A larger-than-ever number of consumers, even older consumers, have transitioned to purchasing all or most of their groceries online; many will continue to do so going forward. In all shopping endeavors, it is all about quick, safe, and easy.
At the same time, competitive pressure from within and outside the retail sector is driving retailers to explore and adopt new business and operational models — for example, introducing new digital marketplace and direct-to-consumer models, redesigning healthcare delivery, and enhancing last-mile fulfillment options, such as BOPIS. Change is also occurring on the employee side as associates are tasked with additional responsibilities, such as filling online orders or clienteling in an already-packed day, to meet evolving customer expectations.
Not surprisingly, the COVID-19 pandemic and its anticipated aftermath have complicated — and continue to complicate — this picture. Consumers have faced product shortages and difficulty finding order delivery windows. COVID-19-related concerns also mean elevated customer experience requirements — consumers aim to minimize browsing time, to avoid going to multiple stores to find the items they need, or to shop primarily online. The end-result: marked consumer interest in — and retailers’ initiatives to deliver — high-caliber combined physical and digital (“phygital”) experiences.
The pandemic has also created havoc for already-strained supply chains, disrupting international supply routes and creating unprecedented demand for certain merchandise, among other challenges. Asked to list the top five supply chain obstacles that reduce their supply chain efficiency and productivity, 73% of retailers queried for RIS News’ “Supply Chain Technology Study 2020” cited an ability to adjust or respond to fluctuations in demand, while 71% pointed to a lack of real-time inventory visibility; 56%, to an inability to make rapid adjustments with supply chain partners; and 56%, to “inventory sources stretched too far.”
These collective forces necessitate digital transformation by retailers at a pace faster than ever before. Read on and discover how the key components of this transformation — data, analytics and automated technology tools powered by an artificial intelligence (AI) engine that leverages algorithms to mimic human processes, drawing conclusions from data — can help set retailers apart.