When the COVID cases in the U.S. steadily peaked in November, major grocery chains such as Kroger, H-E-B, and Giant brought limits on toilet paper and paper towels. A CNN report revealed that 19% of paper products, namely, toilet papers and paper towels, and 16% of household cleaning products were sold out. An Imnar Intelligence showed that 57% of shoppers considered restocking in fear due to the potential second wave of COVID-19.
COVID-19 is a 2020 impediment. But inventory distortion had already proved itself to be a multi-billion-dollar scourge before the pandemic disruption.
The pandemic only helped dissolve the mild sugar-coating inventory distortion had enjoyed. The effect of this exposure translates to an impact of $1.8tn in inventory distortion ($1.14tn in out-of-stocks and $626bn in overstocks).
The pandemic sparked a 300% increase in online orders — especially for the essentials-based category.
On one side we had people scared of visiting crowded places like malls and movie theatres. On the other side, we had empty shelves and large grocery chains imposing ‘limit’ bans thwarting paranoid buying.
Panic buying affects the economy
Justin Wolfers, an economics professor at the University of Michigan, said, “The economics of toilet paper shortages is the same as bank runs. Even if you’re not freaked out about a pandemic, you worry that everyone else is & they’ll stockpile too, and you don’t want to be the left paperless.”
It is not possible to stop people from feeling the fear of being left out. It is impossible to prevent people from buying what they think they need to buy. What is possible is harmonizing the notes between demand and supply when there is no demand and supply when there is no supply.
Assessing demand and supply is no longer a human being’s job. It is AI’s job.
The failure stories of retail chains post-pandemic have become kind of a staple. Every morning we wake up and wonder which store will pull down its shutters next.
According to S&P Global Intelligence, 2020 recorded 593 bankruptcies (as of November 29, 2020) – the highest for this decade. Even having 118 years of tenure in the industry does not help.
This year, J. C. Penney, the iconic American retail chain, filed for bankruptcy (receiving a bailout from Simon Property Group and Brookfield in October).
Termed ‘Retail 4.0’, retail businesses were forced to use data deeply like never before post-COVID. A Capgemini study found that consumers between 41 and 50 in India preferred facial recognition authentication interfaces to avoid physical contact.
Mirrorize, a company that uses patent-pending technology (with a combination of AI, image processing, and data analytics) has grown by 300% in the last months for equipping small and mid-sized retail customers with a 3D body measurement tool (that leverages AI, advanced computer vision, deep learning, and mesh processing) to provide precise body measurements and create bespoke suits instantly.
In-store visits during this year’s Black Friday plunged by 52%. People are increasingly choosing safety over store discounts.
As consumers hesitate to step into the store to experience the brand, brands welcome the idea of stepping into the consumer’s home to give the ultimate brand experience using virtual try-on apps and AI. Last month, L’Oréal Paris launched its ‘Signature Faces’, an AR-based virtual makeup for social media – which allowed users to wear virtual makeup during video calls (such as Google Meet, Microsoft Teams, and Skype).
Reduced footfalls in stores translate to reduced earnings for shop owners. This only means the only way offline stores can continue to run is by eliminating avoidable overheads.
The U.S. lost 40 million jobs during the peak of the pandemic. 42% of these jobs are never making a return. Supermarkets and restaurant chains are seeking automation and robots to reduce their overheads.
Machines do not need to wear a mask, nor do they need to sanitize a thousand times during the day. Automation keeps costs low and productivity high.
70% of senior members in organizations prefer non-technical employees with automation and AI skills.
With private investments in AI exceeding $70bn last year and companies resorting to automation to increase the thinning profit margins, it is safe to say that AI is no longer an optional skill to have; instead, it is mandatory.
AI solutions to reduce losses
According to an Appris Retail ‘2019 Consumer Returns in the Retail Industry’ report, the total merchandise returns account for $309 Bn in lost sales for US retailers.
TCS Optumetra™, the AI-Powered Retail Optimization Suite helps integrate and optimize merchandising and supply chain decisions.
TCS’ Optumera™ applies real-time computational intelligence to track and pre-empt competitors’ prices, assortment and inventory across channels using computational intelligence, which reduces returns.
After analyzing 43 in-session use cases, the Capgemini Research Institute disclosed that retailers have the potential of saving over $300 Bn by scaling AI deployments across the entire retail chain.
By leveraging IA, retailers and CPG companies expect to grow their revenues by 10% or more in the next 2-3 years.
AIP+, Accenture’s Applied Intelligence is configurable and integratable AI services is built to make AI adoption and scaling across channels and verticals easy. Unlike other AI retail integrations, Accenture’s AIP+ does not aim at replacing existing AI frameworks. It is designed to complement existing AI infrastructures within a value chain.
At Draup, we rely on AI to reskill employees in AI and automation. Using our AI-based algorithm, employers can evaluate characteristics across teams and locations. Companies can identify the skills, tools, and certifications needed for next-gen job roles to enable organization-wide reskilling.