2020 began as just another year of record sales and positive outlooks for the retail industry. However, the pandemic threw a wrench into the well-oiled supply-chain ecosystem. Production & distribution models that took well over a decade to be perfected instantly came to a halt as businesses across the globe halted operations.
Fast-forward to 9 months later, and there is a common pattern emerging among the retailers who survived the lull in business. They were the ones who had heavily invested in emerging technologies like AI, ML, Cloud, etc., well before the pandemic struck.
Their investment paid off in a big way as they were able to intelligently manage the supply-chain, accurately forecast demand and cut costs wherever possible without compromising on efficiency. In other words, enterprises at the cutting-edge of retail tech tend to out-perform their peers.
And this was the motivation behind this article. This is targeted at retail enterprises who’d like to gain a bird’s eye view of the emerging trends in retail and what the industry outlook will be post-COVID. And what are the technologies that can help retailers become more resilient to future shocks.
Demand Forecasting using ML
Machine learning has emerged as the best way to optimize customer & supplier relationship management and logistics. Even manufacturing & marketing operations are now being enabled by ML algorithms.
Using NLP, cascade models, data from POS systems and other external systems, ML algorithms can dynamically predict future demand, thus enabling smarter inventory management.
Large organizations like PepsiCo, L’Oreal and 3M use ML algorithms for their daily forecasting requirements. However, given the rate at which this technology is becoming affordable, more small and medium scale enterprises are also looking to leverage the power of ML-based forecasting methods.
Retail giant Amazon can predict what you need before even you realize it. They do this with a powerful data science and ML-powered engine running behind their every process. According to Amazon, 35% of all their sales are driven by this recommendation engine.
These recommendations are personalized to each consumer’s tastes thanks to the mountains of data farmed by enterprises.
This personalization trend continues in-store too, with AI helping consumers with:
- In-store navigation
- Augmented Reality-powered trial rooms and product apps
- Virtual shopping assistants that answer queries in real-time
- Smart checkout that can automatically tally up user purchases, a la Amazon Go
The fashion industry; the industry most synonymous with personalization retailers are using conversational interfaces, i.e., intelligent chatbots, to ask consumers questions about their fashion needs, and delving deep into their purchase patterns to suggest related and add-on items. Early estimates suggest that this personalization trend is boosting sales by ~40%!
The Rise Of Voice Commerce
While chatbots have been around for a while, their improvements over successive generations mean that consumers can now fully complete a shopping experience using a conversational assistant.
Estimates peg the number of smart speakers in households at 60million. Combined with the fact that manufactures are now open to label their products as “Alexa enabled”, meaning that it can be ordered through voice commands over Amazon’s Alexa, the trend is pretty clear.
Established retail giants like Walmart and 7-11 have also enabled the voice ordering feature in their apps. The most highlighted benefit of voice commerce is the accessibility factor. People who are differently–abled are now able to complete their shopping experience without having to rely on third-parties.
Strengthening the Retailer-Customer Connection with IoT
IoT in retail is expected to cross USD 2.5 billion by the end of 2020. RFID tags allows retailers to take end-to-end control of tracking and inventory at every stage of the supply chain process. This can be done across store locations anywhere in the world.
Athletic apparel store Lululemon used RFID to update their inventory live across all their global stores and uses this information to intelligently route stock.
Levi’s uses shelf-level sensors within its retail stores that sales associates can use to check availability of size, color and price on the spot. Not only has this improved the overall customer experience, but has also reduced the inventory management cost by 10%.
Beacon technology is being leveraged by smart retailers to broadcast in-store offers to nearby shoppers using Bluetooth technology. This type of targeting marketing is now a reality across many malls in the U.S.
With omnichannel retail gaining priority, accurate tracking of inventory becomes more crucial. Combined with the “Click & Collect” services offered by retailers where consumers can order online and collect their item at any desired physical location, omnichannel powered by IoT is touted as the next big thing in retail.
Even more exciting is the emergence of Artificial Intelligence of Things (AIoT) which promises to someday open up unmanned stores and autonomous warehouses/vehicles. While Amazon Go already operated under this model, there is enormous scope for other retailers to adopt this technology as well.
The Future of Retail is Personal & Smart
Draup has been tracking the rising use of new-age technologies like AI, ML, AR/VR & others in retail through our proprietary dashboard. All signals point to the rapid adoption of such technologies post-COVID-19 to make up for the loss in business.
While industry estimates are conservative when it comes to predicting the full impact of retail disruption due to COVID-19, a simple meta-analysis reveals that retailers at the forefront of digital transformation have indeed fared better.
This means that retailers left badly battered by the pandemic will be looking to accelerate their digital transformation and are in dire need of proven service providers who can implement niche solutions.
Digital service providers can leverage the live stream of strategic and tactical signals on the Signals Cast app to identify potential for partnerships in the retail industry. Moreover, you can use the Ecosystem tool to narrow down on key players across retail, pinpoint their specific technology pain point and pitch them highly-relevant solutions.