The experience of Covid-19 has had many twists and turns, but as 2022 unfolds there is growing confidence that the worst is behind us. Thanks to vaccines and the fast-spreading yet less virulent omicron variant, expectations are that infections will peak mid-February and leave communities with high levels of immunity.
Retailer leaders are focusing on what it will take to be successful as the pandemic recedes. There is no shortage of challenges: overstretched supply chains, surging inflation, and staffing shortages. However, as Bob Keaveney, the managing editor of BizTech magazine, reflected following the National Retail Federation trade show this month, one factor stands clear: data.
Keaveney cited the power of data in all three of his takeaways from the event. We believe he is right that mastery of data and analytics will be the key to retail success but would add that pricing should be retailers’ first target.
Physical stores are set to get smarter
Increased online shopping was the major and predictable trend of 2020 and 2021. The question now is how that trend will take shape as stores reopen and consumers feel more confident about visiting them. If the holidays were a sign of things to come, physical stores have cause for hope. According to Shelley E. Kohan, writing in Forbes, “overall retail holiday visits for 2021 still remained relatively close to, if not above, 2019 levels and far ahead of 2020 numbers.”
However, as Keaveney points out, “in-person shoppers are the consumers about whom retailers have the least reliable data.” David Dobson, Intel’s global industry director for retail, hospitality, and consumer goods, believes the store is set for a data makeover. “Expect changes to stores in 2022 and beyond,” he says.
Among the changes are self-scanning and purchasing using a cellphone, saving shoppers time by avoiding checkout lines, and giving retailers much richer behavioral and transactional insights. Other innovations include smart shelves that automate restocking alerts, and AI-enabled video surveillance equipped that helps to track patterns of shoppers’ movements and intentions.
The cloud will help retailers avoid data siloes
One of the challenges for any retailer trying to measure and make sense of their business is the problem of siloed or isolated data. The risk is that clever analysis of one dataset misses the big picture and problems fail to be properly understood.
That’s less of a worry in 2022. Cloud computing allows retailers to combine their data in one location, introduce external datasets, and achieve more comprehensive analyses. Maturity of the technology has made it more accessible and affordable for smaller retailers, and less disruptive for the biggest.
“We’re seeing a lot of our retail customers acting in some ways like tech companies do, in terms of adopting technology, putting it into market and being more nimble,”
– Shelly Bransten (Corporate VP of Global Retail and Consumer Goods, Microsoft)
AI will help retailers turn data into action
More insights from physical stores and the dismantling of data silos are signs of progress, but will this be enough? Keaveney’s article recounts an IBM tech exec’s story of visiting a flagship retail store and noticing the disconnect between a store worker’s manual stock take and the store’s faltering digital signage. While this separation of systems and their data may seem conspicuous to a technologist, it is routine and often overlooked throughout the retail industry.
The challenge for innovators keen to drive change is less about bosses accepting there is a problem and more about finding a workable solution. What will it really take for a clipboard-wielding store worker to switch to an AI-enabled interface?
Overcoming the retail industry’s inertia means making the benefits of data analytics relevant, useable, and obviously advantageous to its serried ranks. Imagine that workers’ stock take revealing an excess of a certain product, then empowering them to create an instant promotion on those digital signs.
Make pricing your first target for retail AI
According to Anita Raj writing in Fast Company, “pricing is right up there with customer experience when it comes to competitive differentiation.” We couldn’t agree more: the foundation of retailing is making the right goods available to consumers at the right price.
In a low-margin industry, with pandemic-induced disruption to supply chains and inflation, pricing is becoming even more complex. This is a prime opportunity to improve margin by using the analytics horsepower of artificial intelligence to make sense of the wealth of data in the cloud.
This is a strategic opportunity. AI-powered analytics not only assists workers to optimize prices and promotions but also enables an entire business to align based on a shared understanding of complex data. The software will continuously scrutinize the intricacies of wholesale price hikes, restrictions in supply, regional product preferences, local weather-related demand factors, and more. Its outputs enable those responsible for setting prices, from category managers to marketing execs, to make quick yet smart decisions. Broad-based analysis avoids internal misalignments and inefficiencies, allowing improvements on margin to emerge.
If you are considering where to begin with data, analytics, and AI in 2022, we’d venture that Pricing Intelligence is a smart place to start. For more information, contact us.
