Adopting AI Ensures Survival in the Post-Pandemic Retail Space
Over the past two years, all aspects of life have been overshadowed by the COVID-19 pandemic. For retailers, it has certainly been a very challenging time. Though, the impact has greatly varied depending on the type of retail business. For example, sectors like fitness, restaurants, and apparel were significantly impacted early on, with many of them, like Brooks Brothers and CEC Entertainment (Chuck E. Cheese), unfortunately falling into bankruptcy. However, grocery retailers, hardware, and drug stores significantly benefited from a sales standpoint. Though they were fortunate to experience a tailwind in sales as a result of the pandemic, they were certainly significantly challenged in operational aspects. Ensuring the safety of their front-line staff and customers, supply chain difficulties, and the rapid shift to online provided immense strategic challenges. As we emerge from the pandemic, they also face labour shortages and inflationary pressures, and will be confronted with new, innovative competitors that are entering the market.
What Can Retailers Expect Post-Pandemic?
The pace of change in the retail world has never been so fast and so significant. The rules of retail are being rewritten, providing opportunities for retailers who act strategically and with speed. The growth of omnichannel and a flood of new retail business models - such as DashMart, who will deliver both restaurant and grocery items to customers within 30 minutes of placing an order - make this a time of great risk for those who stand still and a time of great growth for Merchants who seize the opportunity.
Many B&M retailers like Walmart, Nordstrom, and IKEA had the resources and foresight to deal with pandemic related challenges. Even still, they struggle with profitability in their new undertakings and channels. Furthermore, it is unlikely that circumstances will revert to what they were pre-pandemic. Customer demand for a seamless omnichannel shopping experience will not go away, and many of the new business models and companies will successfully become part of the landscape, while others will falter. The next step for retailers is to focus on efficiency, particularly in new business models and channels, to ensure profitability and long-term survival. Ultimately, at the core of efficiency remains the basics of retail Merchants remember, only done faster, better, and with less labour and cost in the increasingly complex retail world. To accomplish this, AI may well be the answer.
Why AI is Being Used to Solve Post-Pandemic Challenges
AI is revolutionizing every industry and every aspect of our lives, and retail is not excluded. In fact, according to an article from The Wall Street Journal, retail is set to overtake the banking industry in AI investment this year. Retailers are turning to AI technology for a wide range of operational solutions, including optimizing their core category management processes. Ultimately, automating core processes with AI software is the solution Merchants are adopting to solve their category management challenges in this new world. Autonomous planning and execution systems - which have no code, no infrastructure, no data scientists, and no bias – are, in the long run, much less expensive and far more efficient than continuing to hire employees. More importantly, these systems react far faster to market and consumer behavior, providing retailers with the ability to adapt their strategies and thrive in the long-term.
Though AI is the common-sense solution to solving these challenges, adopting AI remains a daunting initiative for many retailers. However, it is important to note that AI does not make the role of the retailer obsolete. Retailers remain the boss of the AI; they set the business strategy and the AI merely executes the gory details. Furthermore, when AI takes on retailers’ rote, repetitive work, they are freed to take on more strategic roles, such as better meeting their customer’s needs and focusing on increasing profitability.
Ultimately, augmenting the skills of Merchants with autonomous systems greatly improves the accuracy of forecasting, the speed of planning, and the optimization of products and prices. In short, AI provides the resources necessary to invest in and drive the success of new and traditional business channels.