Nikki Baird
TECHNOLOGY

CSA Q&A: Where is retail IT innovation heading in 2019?

BY Dan Berthiaume

Rapidly evolving technology capabilities are transforming retail in every part of the enterprise.

To get a sense of the direction IT innovation will take retailers in key areas such as inventory management, fulfillment, and customer experience, Chain Store Age sat down with Nikki Baird, VP, retail innovation of Aptos. Baird has more than 20 years’ experience as a retail technology analyst and practitioner with organizations including Forrester, RSR Research, PwC Consulting, and StorePerform.

Artificial Intelligence (AI) is becoming a standard component of many retail IT systems. What is the next step in AI retail innovation?
We have already seen lot of activity around natural language processing and image processing. Where AI has the most potential for 2019 and beyond is in predictions and forecasting. Retailers will apply AI to decision-making in allocation, assortment and replenishment. The only AI activity in this area so far has been in replenishment in the grocery vertical. Grocery inventory is steady, with a rich, continuous stream of data that is easy to access.

“Retailers are solving the easiest problem, but there are more difficult replenishment problems to solve. For example, replenishment in verticals with light SKU depth, such as shoe retail where SKU variations are mostly size and color, or with short lifecycles or intermittent demand.

How is universal mobile connectivity changing the brick-and-mortar customer experience?
Mobile is the key to in-store personalization on both the consumer and employee sides. Retailers have been taking in-store personalization efforts to consumer mobile devices, so the shoppers own the action on their phones. However, you still need an in-store employee there to be helpful and be part of the interaction. An associate with a mobile clienteling app can see whether the consumer’s last interaction with the brand was positive or negative. So for example, if they see the customer’s last interaction was a bad experience with the call center, the associate can acknowledge that fact with an apology or have tools to mitigate the situation.

How are retailers ensuring fulfillment in the new experience-based shopping model?
Retailers are feeling the pressure of experience-based shopping. Twenty-eight omnichannel fulfillment methods have been identified, based on where you buy something, what channel you buy it on, how you have it fulfilled. You may buy an item at a brick-and-mortar store to take home and also order an item for home delivery and another item to pick up at another store.

“Retailers should identify which omnichannel fulfillment methods are most important to them. Customers are coming to expect curbside pickup at a grocery store but not at a mall-based apparel retailer. Most retailers are focused on five to 10 methods. However, they should acknowledge all the variables, because they may lose money on volumes of merchandise that don’t move through certain channels.

What can retailers do to obtain more timely and accurate inventory visibility?
Retailers are starting to try to ensure fulfillment through RFID. They ask, ‘How can I identify all the merchandise in the store without setting the threshold so high?’ RFID’s time has come. More and more retailers with mature omnichannel fulfillment are giving more visibility to inventory in stores with RFID. Alternatively, computer vision is an interesting alternative for grocery stores, as the challenges of RFID in grocery remain high.

How can technology help retailers affordably maintain global supply chains in today’s disruptive environment?
Drop shipping is becoming more popular. Previously, a lot of retailers didn’t want to engage companies they didn’t know with drop shipping. But in the last 6-7 years, the world has flipped on its head and more retailers are willing to take a trial run of drop shipping to find out what inventory of a vendor appeals to their customer and how good they are at meeting commitments. If the results are positive, retailers may broaden the assortment they drop ship, or offer all of a vendor’s drop ship inventory online. As the ease of integration gets better, it changes the trust equation between retailers and suppliers and retailers are more willing to use drop shipping to ‘try before you buy.

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