Supermarket chain taps AI to improve automated replenishment
Time-starved shoppers expect their favorite grocers to have the staples they need when they enter the store — and supermarkets are hard-pressed to deliver.
U.K. grocer Morrisons is addressing this customer demand by adopting artificial intelligence to optimize replenishment and automate ordering among 26,000 ambient and long-life product SKUs in all its 491 stores. The Blue Yonder Replenishment Optimization technology automatically analyzes sales data and other data sources from Morrisons, and combines this with external data, such as weather forecasts and public holidays.
By applying data to the system’s machine learning algorithms, the solution learns as it goes and can manage a vast and complex amount of data to make highly accurate ordering decisions. This automated analysis can predict the level of demand down to the individual product and store location. Blue Yonder’s technology then fully automates ordering per store and per product.
Based on cloud technology, the system provides a low total cost of ownership and is highly scalable.
Since it launched in 2016, the technology processes data across the chain’s 491 stores, automates over 13 million ordering decisions per day, and has reducing shelf gaps by up to 30%, the company said.
“Our new automated ordering system has been our biggest new initiative. The system is capital light, and utilizes cloud technology and store-specific historic sales data to forecast stock requirements,” Morrisons’ CEO, David Potts said. “It is reducing costs and stock levels, while also saving time for colleagues, and providing a better offer for customers.”
Survey: Retail CFOs bullish about 2017, but…
Bolstered by positive consumer indicators, retail CFOs are largely optimistic for 2017. But competition and consolidation could cloud their outlook.
That’s according to BDO USA’s 11th annual Retail Compass Survey of CFOs, in which respondents predict a 4.9% bump in total sales this year, up from 3.4% in 2016. The bullish predictions are echoed by online sales projections, with a 10.7% increase expected for the year ahead — the highest in survey history.
Still, with regulation and competition concerns mounting, there may be a bifurcation of industry performance this year. In fact, 38% of respondents cite competition and consolidation as their most concerning risk in 2017; and 11% of surveyed CFOs plan to invest more capital in M&A activity this year.
“The 2016 holiday season was a moment of reckoning for many in the retail industry,” said Natalie Kotlyar, national Leader of BDO’s consumer business practice. “Some are fired up following record-breaking results, and others are catching their last sparks. 2017 holds promise, but there’s no room for coasting in a marketplace so saturated with new and legacy concepts.”
All retail CFOs are coming to terms with escalating competition in the industry. Overall, 46% of retailers expect an uptick in deal activity, and just 1% project a decrease. Retail CFOs expect buyers will pay an average EBITDA multiple of 7.0, the highest in our survey’s history.
Additional findings of the 2017 BDO Retail Compass Survey of CFOs include:
• Trump’s tax and regulatory priorities drive uncertainty. When asked about potential tax changes, 61% of retailers say a reduction in the U.S. corporate tax rate would have the greatest impact on their business.
Another 19% cite potential state income and franchise tax audits and 10% point to expanding sales and use taxes as having the greatest impact. Retailers are keeping a close eye on the fate of the highly impactful border-adjustment tax proposal, which could impact the price of imported goods and lead to increased costs for consumers.
• Retailers integrate tech in pursuit of a perfected omnichannel recipe. It’s increasingly imperative that retailers move beyond a one-dimensional business model or risk becoming obsolete, which includes striking the right balance between brick-and-mortar and e-commerce offerings and capabilities.
As retailers assess how to take their in-store experience to the next level, 52% plan to invest in redesigning and remodeling stores. At the same time, many are focusing online, resulting in 68% planning to invest more capital in e-commerce and mobile channels in 2017. To help those channels communicate and improve operational efficiencies, 74% of retailers will invest in IT systems technology this year.
• Focusing on building a bedrock, starting with the supply chain. Consumers seamlessly transition between online and off — and they expect retailers to enable these behaviors. Ensuring transactions can take place smoothly starts with the supply chain. Thus, 39% of retail CFOs intend to invest more capital in their supply chain in 2017. And 14% of retail CFOs are most concerned with issues involving U.S. and foreign suppliers this year.
• Preparing for cyber risk and regulation. This year, 82% of retailers are EMV compliant, up from 76% last year.
EMV aside, 70% expect cybersecurity regulation to increase at least somewhat in the next year, and just three percent believe regulation will decrease. To prepare for regulations and security risks alike, 57% of those surveyed noted they increased cybersecurity spending in the past 12 months.
Sunglass retailer ups the ante on digital commerce
As it prepares to enter “a high-growth period” for its online business, Solstice Sunglasses needed a solution that could support this endeavor and future expansion plans.
Solstice, a retailer with 105 store locations throughout the U.S, strives to offer the same level of service to both online and in-store customers looking for luxury, designer and sport sunglasses. To achieve this goal, the company selected the ncommerce platform, an end-to-end digital commerce platform from Newgistics.
Besides delivering an innovative end-user experience, the platform is pre-integrated with leading technologies, which provides Solstice with fast implementation time and cost-effectiveness.
Based on curated partnerships and integration of leading technologies including SAP Hybris, Google Cloud Platform, CyberSource, Sailthru and Fastly, ncommerce can be implemented in nearly half the time and at 30% less than the cost of a typical e-commerce platform deployment that requires custom integrations, Newgistics said.
“We need a solution that will grow and scale with our aggressive goals, without burdening us by requiring constant management and upkeep,” said Jan Michel, senior VP of Solstice Sunglasses. “With ncommerce, we get the best technology without any of the technical hassle so we can focus on growing our business.”