There’s a good chance that you’ve heard about the “retail apocalypse” among various business circles, and there are many factors challenging this sector.. Some retail organizations are failing because they have too many stores, too much debt, or perhaps they haven’t sufficiently digitally transformed. Other retailers struggle because they mismanage customer expectations around inventory, pricing or other factors when compared to their competition.
I sat down with Todd Michaud, President and Chief Customer Officer at Hypersonix, a long-time retail technology veteran, to discuss retail demand forecasting, the on-going coronavirus pandemic, and how AI could potentially improve retail demand forecasting dramatically.
COVID-19 And Retail Demand
There is one glaring obstacle facing retailers all around the world right now: the COVID-19 pandemic. When I asked Todd whether it was an exaggeration that retail would “change forever” as a result of the pandemic, he responded that it was “certainly looking that way.” He believes that some shoppers in some retail segments are “never looking back” concerning the way they shop now, whether regarding online shopping or consumers opting for more food at home options versus the pre-Covid trend of food away from home.
Michaud acknowledges that a digital transformation was already taking place, with Amazon and Walmart being the apparent disruptors. However, he also made it clear that there will be some retailers that actually manage to benefit from the pandemic. For example, if you are a grocery or drug store retailer – you may find that business volume has never been better. However, Michaud believes that this may be the end for some of our favorite retail brands that aren’t prepared for these changing demand patterns.
Regardless, Michaud thinks there is already a “new normal” emerging for some shoppers, who may find it less attractive to pivot from online shopping back to traditional shopping experiences that were prevelent pre-pandemic. Either way, he believes “many retailers will have to adjust and quickly.”
Forecasting Before the Pandemic
Michaud who has worked in and around retail demand forecasting for many years, and he makes it clear that accurate forecasting was already difficult before COVID-19. Of course, a global pandemic definitely makes it harder than ever, considering it changes consumer behavior in an unprecedented fashion. Michaud says that the changing customer journey is making it harder than ever to forecast accurately. Some retailers also might be making predictions with legacy systems built with a focus on in-store traffic, which means that they may lack the ability to accurately forecast curbside and home delivery channels..
Michaud makes it clear that accurate retail demand forecasting can affect and be influenced by everything ranging from pricing to promotions to product assortments and even inventory. Understanding the demand planning impacts of seasonality, weather, events and other causal factors are essential to a retailer’s ability to forecast accurately. Retailers that use outdated forecasting technologies and models also may not be able to account for quick and dynamic changes – and could lead to an organization “missing the mark”. Michaud also points out that one of the most critical best practices around retail demand forecasting is that it should be holistic and enterprise-wide, presenting “one version of the truth.”
Traditionally, retailers have depended upon multiple, sometimes contradictory, and maybe even suboptimal, retail demand forecasting engines embedded in best of breed software applications. This is one reason why Michaud believes that AI is changing the game in retail demand forecasting because it has the ability to synthesize disparate forecasts into one more accurate view.
AI Means Accuracy
It’s no secret that data is more important than ever, and many experts have pointed out that some of the most valuable businesses in the world are, in fact, data companies. Michaud believes that AI and machine learning is essential when it comes to retailers producing more data, evaluating more scenarios, and creating more accurate predictions.
Michaud believes AI truly allows retail organizations to dynamically interpret, adjust and shape ever changing consumer behavior, whether it is helping a retailer figure out the right price point, determine the right promotional offer, or optimize the inventory investments in a more meaningful and accurate way. He also makes it clear that AI will be particularly relevant with respect to “channel specificity”. Retailers can no longer depend on demand forecasting tools that “don’t do digital well” because they were built when store traffic was a given retailer’s only traffic, meaning that they are biased towards stores and not tuned for ecommerce.
There is nothing wrong with benefiting from historical data, but AI allows retailers to understand what is happening in real-time regarding consumer trends, journeys, and expectations. Some retailers might be used to revising their forecasts on a monthly, or even daily basis, but AI can provide a much more dynamic perspective concerning the consumer experience. In this respect, Michaud believes that AI is “essential to any successful retailer working in these unprecedented times.”
Done right, AI-powered retail demand forecasting can help retailers “save money and make money” by being better tuned to the needs of our shoppers.
Hypersonix, an AI-powered Analytics Platform for Retail, helps retailers accomplish these goals by processing billions of data points from different data sources in real-time and providing technical and non-technical decision-makers with instant access to intelligence and recommendations in seconds.
Harnessing the power of AI innovations like machine learning and natural language processing, Hypersonix offers its customers an exceptionally simple and fast “Google-like” text and voice search experience for their business augmented by “Jarvix” an embedded virtual decision assistant. The company offers a full suite of descriptive, diagnostic, predictive, and prescriptive analytics designed to help its customers understand what is happening, why is it happening, and what can you do about it.
Want to see how Hypersonix can help your business? Request a personalized demo today.
✎ by Alex Brannan, Senior Solutions Consultant at Hypersonix, Inc.