Survey finds retailers face major risks to business without AI and automation

Researchretail technology Image credit pixabay/geralt (registration required) from Blue Yonder, in association with Microsoft reveals that brick and mortar retailers are missing out on AI and automation and the opportunity to improve customer experience and compete with online retailers.

The reason – bricks and mortar retailers are failing to automate their pricing and replenishment processes.

Brick and mortar retailers rely on manual processes

The new research found that 96 percent of retailers rely on manual processes for their pricing and replenishment strategies, despite near universal recognition of the benefits that greater automation could bring.

The research, which was commissioned by Blue Yonder, a JDA Company in association with Microsoft, surveyed 200 brick and mortar retailers from the UK, Germany, and the U.S. The report examined how retailers are leveraging the latest technologies to achieve a competitive advantage and level the playing field with more agile online retailers.

The research revealed that retailers are committed to their store footprint, with 90 percent reporting that they will either be increasing or maintaining their physical store presence. These retailers also intend to innovate, on average investing 36 percent of their IT budgets in new technology such as artificial intelligence to meet the demands of customers and prepare for the future of retail.

For brick and mortar retailers to meet this demand while competing with, and leapfrogging, online retailers, they must take advantage of cutting-edge technology to optimise their core processes.

Improving the replenishment process

Uwe Weiss, CEO of Blue Yonder
Uwe Weiss, CEO of Blue Yonder

According to the survey, 53 percent of retailers admit there is room for improvement in their replenishment process, while 54 percent say the same for their pricing strategy. These core processes are critical to the success of retail operations. Retailers who overwhelmingly use manual intervention, recognise that leveraging next generation technology to automate these processes would bring a benefits to their business.

The research indicated that 58 percent of retailers report that automated replenishment would generate a better customer experience and 56 percent stating that automated pricing would result in improved profits.

Commenting on the findings, Uwe Weiss, CEO of Blue Yonder said: “It is clear that retailers recognise the benefits that automation can bring to their businesses. But perhaps most significant is the agility it gives them to compete with their ecommerce rivals.”

He added: “Online retailers have been able to make small and regular adjustments to their pricing for years, instantly reacting to consumer demand and trends to keep their prices optimised and maximise sales, while brick and mortar retailers have been trying to manage with manually-operated, outdated and static pricing strategies.”

Utilising Artificial Intelligence (AI)

Relying on manual intervention to execute critical processes such as pricing and replenishment leaves retailers open to inaccuracies. For instance, not having the right products available or priced at a sub-optimal level, resulting in lost sales. Intelligent technologies, such as automation and AI, can provide insight on pricing and forecast stock levels. Furthermore, they can deliver better replenishment and pricing decisions to retailers. AI solutions can analyse vast quantities of data to completely automate these processes and eliminate the burden of manual intervention. This would enable retailers to devote more of their resources to improving the customer experience.

ShiSh Shridhar, Microsoft Global Retail Industry Solutions Director, commented: “Cloud technologies and AI are powerful tools in helping retailers achieve a higher degree of automation in their pricing and replenishment approaches.”

Uwe concluded: “Traditional retailers need to see themselves as disruptors, moving away from outdated processes that they have used for decades and looking for new technologies to transform their businesses. If brick and mortar retailers are to compete with their online rivals, they will need to radically adjust their approach to technology and data. Retailers need to begin thinking of data not only as one of their most important assets, but also as the key that can enable them to build better relationships with their customers, optimize their supply chains and pricing, and survive and thrive in a more competitive and challenging market.”

The research polled 200 senior IT and business decision-makers in retailers across the UK, Germany and the US. All the organizations participating had both online and physical retail operations and revenues of over $500million.

Of the 200 retailers questioned, 23 percent came from the fashion sector, 34 percent from general merchandise, 21 percent from grocery and 22 percent from the department store sector

What does this mean for retailers.

With a fast-moving marketplace, new technologies and evolving consumer expectations, the retail industry is changing faster than ever. Numerous major retailers are closing high street stores in 2018 – Debenhams, Evans Cycles, House of Fraser to name a few. It is up to retailers to bring consumers into their stores, have the products that consumers want on the shelves, priced at a point that will maximize sales and deliver a healthy profit margin.

The stores that are staying open, have to move forward with consumer trends and adapt their operations to focus on providing the very best customer experience. More brands are starting to focus on bringing digital experiences into the store.

However, a significant segment of click and mortar stores are forgetting the importance of updating their back office systems, to support the changes being made to the front of the store.

Many retailers are still doing things the way they have always done them, without changing how they operate their stores. These retailers are failing to meet the changing needs of their customers.

However, with automated pricing solutions, retailers have the flexibility and agility to optimise prices in their stores. This should deliver a better experience for customers and enable them to compete more effectively with their online rivals.


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