Merchandising Upgraded: Why AI is breathing new life into the heart of retail
The dynamic in retail has shifted. Retailers today operate in an integrated marketplace – one in which the consumer has greater choice than ever before, as well as all the power.
At the same time, consumers are increasingly difficult to please. They are quick to switch brand allegiance, they expect their personal tastes to be anticipated and catered to – as they are on streaming sites like Spotify and Netflix – and many will only do business with those that share their personal values and concerns.
Satisfying today’s consumers is therefore incredibly difficult, especially for physical stores that lack the agility of their online-only rivals.
So how should retailers respond? For many, it could be time to take a fresh look at one of the cornerstones of any retail business – its merchandising. And, as industry leaders are finding, one of the most effective ways of doing this is to adopt AI technologies.
In our view, AI creates three key advantages for a brand’s merchandising strategy.
Analytics: The next frontier of insight
To understand which products will delight your customers, driving insight through consumer data is essential. AI can help here by enabling retailers to analyze untapped data sources – competitors’ discount offers, for example, or the complete purchasing histories of every customer.
By crawling online shopping sites, AI can tell retailers what’s popular in different countries. From social media, it can unearth the microtrends that will soon go mainstream.
Leading retailers are already combining internal with publicly available external data to identify trends in real time and predict their arcs and longevity using machine learning. They can design customer choice models that predict what consumers prefer to purchase when given specific choices, taking demand forecasting to the next level of precision.
The creative edge: Freeing employees from “drudge work”
The abundance of data creates huge opportunities, and plenty of challenges, especially because retailers today risk drowning in information. They can, however, use AI to sift through data at great speed, with significantly less human involvement than before.
In so doing, AI reduces the burden of transactional, repetitive analysis, and gives retailers time to think and work more strategically. One benefit is that AI can support the tagging of item attributes. Being able to populate hundreds of attributes for an item using image recognition and deep learning changes the game on time-consuming tasks. Freed from monotonous, lengthy activities, employees have the scope to think more laterally and take a more active role in innovation, customer engagement and other uniquely “human” value-adding activities.
Consumer experience: The deciding factor
Experience is everything in retail – consumers know it and brands need to remember it. Retailers that get the experience right – by giving consumers the personalized merchandising they crave – will leap ahead of their rivals, and will likely be using AI-sourced insights to do so.
Consider, for example, how AI can analyze unstructured data and find exactly what will resonate with individual consumers. Retailers can use AI to help consumers find the items that appear on their social feeds, for example, and show how and where to buy them. The retailer that factors this kind of capability into its merchandising will delight its customers, who seek personalization, convenience, and responsiveness.
AI can also make a difference to the physical experience. By segmenting and curating their merchandise to be hyper-localized, brands can reimagine the in-store shopping process. Some are collecting data about their consumers while they are browsing in-store and then predicting what they might be interested in buying. They can then send over retail assistants to help them make the right purchase and make the experience more valuable.
Conclusion: The beginning of an unpredictable journey
As emerging technologies transform and re-energize the retail sector, merchandising is becoming more critical and challenging than ever before. Leading retailers will be those that can use AI to make the activity more engaging and fulfilling, as well as less grueling from an administration standpoint. The outcome is a stronger proposition for fickle consumers, a compelling experience, and more time for innovation.
AI is breathing new life into retailers’ merchandising strategies and the most forward-thinking retailers accept that what we are seeing today is only the start of what is to come. As AI solutions mature and are implemented at scale, as innovative brands take chances on bold new experiences and retail strategies, we will see a new wave of opportunities and challenges for the sector. Simply put, the AI journey is only just beginning.
Jill Standish is senior managing director and head of Accenture’s Retail practice; Courtney Spitz is managing director of Accenture Retail.
No comments found