AI Allows Retailers to See Into the Unknown

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By Published On: December 4, 20190 Comments

Do you know everything there is to know about your core operations? From stock levels and price points to distribution volumes and promotions? You may believe you do, but without the hard data, it’s impossible.

Most retailers are still largely making decisions based on gut feeling and experience. Without leveraging today’s technological advances a big question mark will always hang over every decision made.

Gartner research has found that the number of enterprises employing artificial intelligence (AI) has grown 270 percent over the past four years. AI shines a light on areas of the business that were previously shrouded in uncertainty. AI and Machine Learning (ML) create more certainty by ensuring that all decisions are data-based. By removing uncertainty, retailers can better predict, act and evolve.

Machines vs. ‘Gut Feeling’

A computer will outperform a human when it comes to making certain decisions in retail. AI can be used to calculate hundreds of millions of probability curves for customers each day. AI can make decisions in real-time, considering all eventualities in a matter of seconds. Whether it’s weather changes or social media behaviours, ML can interpret multiple data points, learn and react. That leads to far more accurate order and pricing decisions. No more guesswork.

But not all retailers trust machines to make decisions. Even when presented with the evidence that machines have the superior capability for inventory decision making, people will often preference their personal experience or ‘gut feeling’ simply due to personal bias. Retailers need to overcome this bias in order to drive the best outcomes.

Will AI Make Jobs Obsolete?

In many cases, we see a bias against AI and ML due to the assumption that they will make people’s jobs obsolete. Of course, the evidence suggests the opposite. AI and ML need to be steered by humans. By doing the grunt work, AI and ML free up our time to be more strategic.

Having an internal data scientist or statistician can be a big help here. They can steer the ship. They should also have a direct line to the C-Suite, weighing in on what decisions will have the greatest impact on the business.

Driving a Culture Change

AI adoption requires a cultural change across the organisation. Not only does the business need to get buy-in it also needs to adjust its internal processes to accommodate the new way of doing things. Naturally, this can be a daunting change, but one with an enormous pay off when done correctly.

Seeing Into the Unknown

Once retailers accept that AI and ML are the way forward and manage a successful implementation, the benefits will be more streamlined, cost-efficient, customer-friendly and supply chain-friendly operations. Most importantly, retailers will be able to ‘see into the unknown’  giving them a significant competitive edge over those retailers still relying on their gut.

Dr Michael Feindt is the Chief Scientific Adviser at Blue Yonder – A JDA company.

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About the Author: Power Retail

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