4 minute read • published in partnership with SCCG
Insight: Artificial intelligence within the retail supply chain
The traditional consumers’ buying experience hasn’t faced too many changes in the past few years. Consumers still go inside a shop, search for the right product and eventually make a purchase if they are satisfied with the correlation between item quality, and price. Yet, as technology develops, by using Artificial Intelligence (AI), retailers can now harness the power to change and improve their customers’ experience within their shops. The Supply Chain Consulting Group explores how, by applying automation, personalisation, and increasing efficiency, a consumer’s shopping experience can be upgraded, and convenience, extravagantly enhanced.
Advancing technology encourages competition, regardless of the size of a business or its location, and as such, many firms can now benefit from adding AI into their daily functions. AI and digitisation can help companies to benefit from competitive advantage and return on investment (ROI). Additionally, businesses can gather more in-depth consumer information, detailing shopping habits, patterns and preferences.
AI within supply chain allows tracking and assessing of all the aspects required to improve the demand forecasting accuracy, adjusting the forecast based on aspects such as real-time sales, or even, the predicted weather.
When sales and customers’ data are processed using AI algorithms, the AI model discovers actionable information about a business, including its customers, and its inventory. All of which is data that could be sent to suppliers. Moreover, this data provided by retailers that was gathered through smart algorithms, to improve and advance their services, and logistics, can be helpful in reshaping warehouse management; and recommending automated sorting or implementing self-managing inventory systems, using drones and vehicles.
Supply chain and logistics companies could also use smart algorithms, to provide valuable information, including the number of trucks available for delivery ahead of time, in-turn updating customers on price and approximate time frames, for future deliveries.
The quick expansion of computers allows businesses to incorporate AI into their functions; From FMCG to fashion retail, some retailers have even started to include in-store AI, to create a more interactive shopping experience for their clients.
Artificial Intelligence can also help to enhance customer experience, as it can change the relationship between the logistics provides and customers. Understanding personalisation, and therefore revealing supply and demand. For example, DHL cooperates with Amazon, offering a voice-based service to track consumers’ parcels and get shipment information by using Amazon Alexa-Echo, by simply asking Alexa to detail the delivery status of their parcel.
Fashion retailer H&M uses AI to keep popular articles in stock. Their specific AI algorithm helps the store know what items to promote and stock amongst different locations, synthetically predicting supply and demand, as accurately as possible, based on location, purchases made and remaining available inventory.
Within the multinational chain of personal care and beauty stores – Sephora – customers can find their perfect foundation without even having to physically apply any samples. This is because they have implemented ‘Colour IQ’ software, which supports the shop’s automation by scanning customers’ faces; in turn providing them with personalised recommendations for both foundation and concealer shades.
Created mainly for ordering and collecting online purchases, while the main Zara Westfield Stratford store underwent refurbishment, an innovative, temporary new Augmented Reality (AR) pop-up store was set-up; and made available from January until May.
Zara designed the store, to provide a concisely curated selection of trending men and women’s fashion items, and allowed customers to virtually try the items on, in-store and get them delivered at their homes, on the same or following day when purchased before 2pm. The in-store Zara mirrors contained embedded information screens, and once the customer was trying or scanning an item, matching accessories to complete the outfit were also suggested, whilst still specifically tailoring potential purchases to the individual customer.
Figures are beginning to show an increased prominence of businesses investing in AI within the Retail Supply Chain. When correctly utilised, optimum innovations can help to optimise inventory control, which is usually represented, with a notable reduction in a company’s costs holistically, across supply chain operations. Statistics predict that spending on AI in the retail supply chain is likely to increase up to £10bn each year by 2025, with an estimated annual growth of over 45% year on year (Blumeglobal, 2019).
Whilst technology already dominates a large scale of today’s supply chain and logistics solutions; it is ultimately, Artificial Intelligence, that is the promising future for effectively managing the retail supply chain, delivering lower costs, faster deliveries and overall, enhanced customer satisfaction.