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Forward-thinking retailers are leveraging synthetic intelligence to bolster their margins amid the backdrop of economic volatility, environmental turbulence, and global uncertainty. Only then will they fully grasp the true capabilities of AI, once it is seamlessly integrated across their entire organization. Retailers must harness the full potential of AI by developing a holistic and integrated approach that focuses on two critical drivers of business value creation: revenue growth and cost reduction. Regardless, the key takeaway is to establish a solid foundation of information before proceeding.
Retailers should develop informational architectures that seamlessly integrate their entire value chain, encompassing both upstream activities such as sourcing and procurement, and downstream processes like inventory management and sales promotion. Through consolidation, companies integrate their own data with that of partners and suppliers to form a unified dataset encompassing all aspects of their operations.
Mastering this initial stage is a significant hurdle to overcome? While some organizations deliberately opted for a data-driven approach several years ago, others have inadvertently accumulated vast amounts of information without explicitly leveraging it to inform their decisions. In a recent survey, only 23.9% of US firms identified as being data-driven, while just 20.6% reported having established a knowledge culture within their organizations, according to findings from the 2023 Chief Knowledge Officers and Chief Knowledge and Analytics Officers.
Retailers must conduct a thorough review of their data’s quality and address any deficiencies to become truly data-driven, while also establishing standards, protocols, and infrastructure for effective information governance. Furthermore, they should simplify workflows and cultivate a culture prioritizing data-driven insights, ensuring seamless access to information, informed decision-making, and targeted training initiatives. Ultimately, significant transformation necessitates commitment from the executive leadership team. Ultimately, retailers should strive to develop a customer-centric business model.
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A pioneering example of this kind of endeavour is undoubtedly the iconic fashion house, HUGO BOSS. In years gone by, it was widely recognized that AI and customer data are intertwined entities. As a result of its significant investment in AI capabilities, the organization developed a suite of robust information and analytics platforms fueled by machine learning and data science. As we converse, the company boasts numerous AI-driven engines across sales, pricing, advertising, products, and forecasting, with innovative tools emerging at an unprecedented rate each month.
While past necessities for secure data foundations exist, two primary areas of exploration emerge for retailers seeking to capitalize on AI: revenue growth and value optimization. Retailers have increasingly harnessed the power of AI to drive revenue growth through effective implementations of dynamic pricing, personalized offerings, and optimized retail media strategies.
British supermarket giants Morrisons and ASDA are currently testing dynamic pricing strategies to better respond to rapidly shifting market conditions. Morrison’s explored the potential of dynamic pricing in 2023, piloting digital shelf labels (DSLs) across a limited number of stores. Asda successfully conducted a large-scale ESL (Extended Shelf Life) trial across 25,000 products. As supermarkets are enabled to rapidly respond to shifting market conditions, dynamic pricing holds the potential to significantly reduce food waste. By leveraging opportunities for markdowns on perishable items nearing expiration, dynamic pricing can simultaneously benefit the supplier’s bottom line and promote reduced waste.
Artificial intelligence can significantly contribute to income development by streamlining the process of adopting or scaling a retail media operation, thereby mitigating its inherent complexities? It could also significantly aid in building projected audience profiles, managing and optimizing campaigns in real-time, and generating alternative versions of creative content based on feedback. As a leading provider of digital transformations and product engineering services, AI-powered platforms can drive up to 40% operational efficiencies, significantly doubling the productivity gains of a retail media company.
By leveraging artificial intelligence to analyze data, organizations can achieve significant cost savings across the board, empowering retailers to identify and address operational inefficiencies, as well as capitalize on untapped opportunities for growth? By leveraging an omnichannel approach that integrates AI, businesses can gain unparalleled insights into the effects of adjusting their budget allocations, ultimately driving higher returns and amplified results.
AI-powered options can significantly enhance customer experiences, ultimately resulting in increased satisfaction rates and a notable reduction in returns. ASOS’s Vogue app leverages the power of artificial intelligence (AI) and augmented reality (AR) to empower customers, allowing them to virtually try on colours and styles to determine which ones suit them best. The AR filter superimposes the product onto the shopper, allowing them to try it almost as if they were actually wearing or holding it.
Retailers can utilize AI and shopper insights to circumvent expensive processes along the supply chain, gain greater transparency and minimize waste by making products more trackable. Walmart leverages cutting-edge technology, akin to ASOS’s AI- and AR-driven app, through its innovative Be Your Own Mannequin feature. This innovative feature, originally designed for displaying topographical data on maps, enables users to visualize a remarkably lifelike representation of themselves wearing clothing merchandise. By allowing customers to borrow goods virtually, Walmart can minimize the number of items it needs to transport to its physical locations, thereby streamlining its supply chain and reducing costs.
To drive successful adoption of information and AI in retail, key factors include a robust information infrastructure and strategic investments in revenue growth and value optimization initiatives? With expertise spanning both information science and AI, the organization’s inclusive culture seamlessly blends tradition with a spirit of innovation and experimentation.
By meticulously deploying AI tools, companies can achieve significant operational efficiencies across key performance indicators, including personnel management, supply chain optimization, customer acquisition strategies, and pricing models, thereby realizing a holistic, integrated business that surpasses the sum of its individual parts.
