THE UNTAPPED POWER OF ARTIFICIAL INTELLIGENCE IN THE RETAIL INDUSTRY

The global retail industry is undergoing tremendous disruption as a result of the Covid-19 pandemic. The Omicron variant adds new problems in the global supply chain industry. It is certainly isn’t a Black Friday but a dark Friday. Consumers have veered online as a result of the coronavirus and this has led to massive wealth gains for e-commerce startups and technology giants. Rand Merchant Bank calculates that the value of the e-commerce industry will be R225 Billion in 5 years.

At Ashanti ai, we believe that a lot of money is at stake and agile players can even tap into more investment opportunities. Strategic planning will require the power of big data and artificial intelligence.

As a retailer, you are faced with a network of decisions that are often ambiguous and volatile. And it’s upon this background that most decisions are made. The implications are vast and will determine the winners and losers in the market.

KPMG emphasized on this year’s quarterly reflection on the retail sector that, “ The recent crisis has drawn a stark line under any indecision: the choices retailers make in the coming months will influence their success over the next 5 years or more.”

Retailers need to change strategy

Think about this real-life scenario, it seems strategic for many executives to minimize store chains, and downscale investment on the physical property because consumer behavior has shifted. At the same time, a study by Pargo reveals that online purchases only account for 1% of total retail sales. This statistic may seem insignificant and might steer other executives to invest more in physical property because 99 % of the total sales come from offline services. Both of these extreme choices are not winning choices.

The reason for this is simple; consumers have multiple options and they are exercising all of them. They are not necessarily offline or exclusively online. They are considering many factors such as price, delivery, shopping experience, security, and more. They may be using the physical stores to browse products but purchase them online instead. For a retail chain, these permutations involve multiple stores.

Let us complicate these retail strategic decisions by factoring in macro and international forces that are beyond our control. Take, for example, the July economic riots that were unforeseen, and no plans were devised to deal with such a retail disruption at such a scale.

Many business owners whose shops were looted are faced with tough choices. Is it better to rebuild a smaller store in a shopping center or reconstruct the same one again or reduce the number of stores in your retail chain?

All of these considerations require making sense of qualitative and quantitative data to make intuitive business decisions that are customer-centric. Intelligence can also reveal new opportunities that aren't obvious to see. Did you know that it is possible for a physical store to have weak sales and profit but is a strong contributor to the overall retail performance? This is what we call the halo effect.

The retail industry is evolving and technology is an enabler for innovative business strategies and execution. Big data, predictive analytics, and artificial intelligence empower businesses to build solutions and products that smash their everyday costs. They further provide a journey map of the customer that informs executives of profitable and sustainable management decisions they can explore.

It is not about algorithms but competitive insights

Data alone is not enough but excellent machine learning models are necessary for converting big data into insights. Retail competition is at an all-time high . Entrepreneurs need to make inventory management decisions, demand forecasting, track and respond to consumer behavior, monitor the competition, and create marketing activities with quantifiable returns on investment. All these choices happen in different departments but at the same time, they are choices that influence each other.

Predictive analytics empowers you to order the right amount of stock so that stores won’t end up with too much or too little. However, artificial intelligence is more than just algorithms, it is about creating the perfect shopping experience.

One example is heat mapping in the store. The hybrid of cameras and computer vision reveals which products are available picked up, which are returned, and where the customer goes after departing the shelf. You can utilize this intelligence to create experiences that expand engagement with products and encourage shoppers to learn more. More and more creative technology products will continue to come out, retailers who don’t adapt might not survive.

Takalani Madzhadzhi ( FASSA) is the Chief Executive Officer of Ashanti AI