Consider a New Application for AI in Retail
When someone asks “what does artificial intelligence (AI) do for retail?” the first thing that comes to mind is likely something about personalization and the customer experience. For retailers competing online, it’s critical to offer that “you-know-me” type of experience that the Netflix’s and Amazon.com's of the world provide. Companies that can weave AI and machine learning into their digital experiences enjoy higher customer satisfaction, boosted average order values and conversion rates, and attract customers that come back for more.
Yes, personalization is critical, but there’s another P-word in retail-related AI.
Plan With AI
Before the customer even starts their journey, there’s a chance to use AI in the planning process to optimize the cost of goods, retailers' largest cost category, including the costs of selection, assortment, pricing, promotion, inventory levels, and distribution of products and services to ensure revenues travel up and to the right. As retailers become more familiar with AI through personalization projects, they’ll find an opportunity to focus on another major revenue driver (and cost saver): optimized planning.
Optimize Behind the Scenes
Your customers' website, purchase and support experiences are the end of a much longer journey. The pandemic continues to disrupt manufacturing and shipping timelines. In order to respond swiftly, protect revenue targets, and avoid unexpected costs, retailers should invest in AI-powered solutions that provide insights at each stage of the journey.
Retailers should prioritize technology that allows them to quickly aggregate and analyze data to not only identify where problems are, but troubleshoot potential issues along any part of the supply chain, sales cycle and customer journey. And the impact on the bottom line can be significant. For example, Macy’s announced several updates to its supply chain, including more data-driven sourcing decisions, detailed cost analysis, and greater coordination across design functions. The retailer expects these processes to generate a 6 percent to 8 percent reduction in the cost of goods over the next three years.
Connect Processes
Louise Columbus, principal, IQMS, part of Dassault Systèmes, explains: “Machine learning has the potential to bring an entirely new level of insight and intelligence into [these] teams, making their goals of optimizing production workflows, inventory, Work In Process (WIP), and value chain decisions possible.” Processes, systems and people are all factors that can have a significant impact on production. It can be challenging for cross-functional teams to track and accomplish their shared goals.
Being able to connect processes in real time is critical. Let’s say there’s a 10-week delay in the shipment of a key component used to build a standing desk. With AI-powered search and connected data sources, companies are able to see where the problem originated, what aspects of the business it will impact, and if there are any customers on back order. With all of the information at hand in real time, companies are able to provide much more accurate customer support and work towards a solution before it snowballs into a larger problem.
Level Up Planning in 2021
The online customer experience remains a top priority, but there are major cost savings to be found in using AI to optimize planning processes. Plus, the effects of connected processes can improve the experience post-purchase. Stay open to identifying new places to implement AI-powered projects and find a solution that could take you roaring into 2021.
Garrett Schwegler is program manager, digital commerce at Lucidworks, a provider of machine learning-based e-commerce search and personalization technology.
