Long Unsung, Chief Merchants Are Critical in the Age of AI
These days there's no shortage of additions to the C-suite. Creative job titles abound, and roles that didn’t exist a decade ago like chief experience officer or chief digital officer are becoming more common.
The choice to add these positions to the decision-making table reflects the core value of these functions. Companies are realizing that their businesses are changing, and they're prioritizing leadership and strategic thinking around these pillars. In the case of the chief digital officer, this thinking makes complete sense as every customer experience will be digital first and evolving fast.
Yet one executive title remains a core, essential position that often goes unrecognized for the level of experience and skill it requires to keep retail organizations successful in the marketplace: the chief merchandising officer or “chief merchant.” The job requires both a deep institutional knowledge of the company, its history and relationships with vendors, as well as market trends and shifts in consumer behavior.
Chief merchants have the most comprehensive view of all revenue-driving aspects of the business, and their role is absolutely critical to the transformation of retail. In addition, chief merchants are professionals who started their careers working at the store or as a buyer. Without them, many companies would be left rudderless — forced to navigate the ever-changing tides of retail adrift.
It’s time we recognized their contributions in a more meaningful way. We need to shine a light on the unique mix of creative and analytical smarts that make chief merchants so vital, and we need to give them the modern artificial intelligence (AI) tools necessary to do their jobs as their role changes.
The Changing Role of the Unsung Heroes of Retail
The gradual shift in consumer purchasing behavior from brick-and-mortar to digital and omnichannel has forced retailers to rethink their market approach. Chief merchants are tasked with finding compelling merchandise while they also work to accommodate added flexibility for modern customers, including strategies like buy online, pick up in-store.
To remain competitive, chief merchants need to understand consumer behavior through an increasingly analytical lens with insights into all channels. Because digital has changed the way customers shop and the complexities associated with delivering the right product, at the right time via the right channel, chief merchants must be comfortable using analytics to guide their omnichannel recommendations for product pricing, placement, promotions and timing, and ensure the data connecting these systems is accurate.
Managing daily tasks like negotiating with vendors and evaluating new products will remain chief merchants’ top priorities. However, as the role evolves, experience with emerging technologies is a huge plus — particularly with AI-based tools, which can greatly speed up and improve decisions.
AI isn't a silver bullet for retailers. Nor will it replace the role of chief merchants. Used effectively for tasks like demand forecasting and pricing, however, it can augment their decades of hands-on experience identifying consumer trends and vastly improve strategies that make an impact at the store level.
How AI Can Empower the Chief Merchant’s Decision Making
With control of up to 90 percent of the cash coming in and out of the business, the chief merchant is arguably the most responsible for top-line growth and bottom-line performance, next to the CEO. And if retail is a $6 trillion global market, the chief merchant is responsible for the buying and selling of trillions of dollars in goods worldwide. Recognizing this enormous responsibility, we need to give these key decision makers the tools they need to do their jobs.
AI takes the guesswork out of store-level decisions, improves operational efficiency, and helps chief merchants focus on market issues that require big-picture, strategic thinking. Using their intimate knowledge of the business, chief merchants can ultimately steer the application of AI tools into the areas where they can make the biggest impact. For example, say a retailer is having trouble managing its store-level forecasting with inconsistent demand between locations, causing problems with its supply chain. The chief merchant can use AI to improve forecast accuracy and allocate inventory effectively for superior cost savings.
Consider another example where AI can help chief merchants: pricing and promotions. Before trying expensive, blind in-store tests, retailers can simulate performance changes across channels using different variables. Alternatively, they can measure the potential cannibalization effects of introducing a lower-priced private-label brand, and compare the effects on related categories.
Chief merchants and their teams can further monetize their data by using AI to better segment their customers, understand their expectations, and personalize their buying experiences. With more accurate inventories and products that appeal to more consumers, retailers can reduce their risk of overages and markdowns even as they adapt to a more robust omnichannel marketplace.
Chief merchants can further refine their processes using AI and spend more of their time on high-level, strategic tasks — making them more important than ever.
Kerry Liu is the co-founder and CEO at Rubikloud, the world’s leading AI and machine learning platform for enterprise retailers.
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