As new and disruptive technologies have come into the grocery retail marketplace, retailers are facing now, more than ever, an overwhelming number of options that could potentially improve their business. There is no one-size-fits all solution, however, and retailers must determine which new technology will work best in their organization. Increasingly, they’re hitting on artificial intelligence (AI) as the technology that is going to help them move the needle on their business.
“AI is a roadmap of change,” says Gary Saarenvirta, Founder and CEO of Daisy Intelligence. “If retailers are going to implement AI in retail, they need to understand how it will change processes, and be committed to it as a core decision-making engine.”
Whether or not AI should be part of an organization’s strategic vision is the easy part. Retailers need to first ask themselves where they want to be in business, and look at how much it is currently costing them to serve their customer base, says Thom Blischok, chairman and CEO of the Dialogic Group, a group advisory services company to both the retail and CPG industry. The challenge comes as retailers consider how the part AI will play in changing their operating model.
“AI is part of a transformation strategy. It is not the transformation strategy,” Blischok explains. “It helps you eliminate the mundane, accelerate the decision process, and helps you fine tune and build scenarios to improve the overall experience, whether in store or online.”
Solidifying the AI vision
More and more AI is a critical part of a retailer’s vision for the future of their business. But simply deciding that AI is part of your strategy doesn’t mean that significant change will happen overnight. In fact, before AI can even be implemented within an organization, there needs to be a solid strategic vision of why and how AI is being brought into the organization, and how it will be used.
“AI is in some ways a new novelty, a shiny penny,” Blischok says. “However, that new shiny option does have legs, and those legs are about how to change the operating model.” AI is not a replacement for something, he adds, it is a transformation of something. And that might be a transformation of how to forecast products, or how to sort, or how to price products, and making those determinations and understanding the opportunities at hand without people involved.
“The biggest contribution of AI to the retail business will be helping retailers optimize decision making by using intelligence to accelerate the process of decision making,” Blischok says. “So many retailers are looking at AI as a savior, as a way to automate, a way to look at data. But really it’s a way to change the processes of making decisions by using technology to do the heavy lifting to begin with.”
And ultimately, adds Saarenvirta, retailers need to look at the end of their AI vision to best understand how AI will help them now. “It’s a view of the road map with the end state that says AI will be your core decision making process for merchandise planning, or supply chain planning,” he explains. “Whatever you intend to use AI for, that long-term road map is critical to the transformational piece. Because it’s the transformational piece that is more complicated than the technology.”
When retailers include AI as part of their overall strategic vision, they are committing to remaining relevant and competitive in the marketplace. But doing so also means that they need to have a clear vision of who they are, who they want to be, as well as where they are, and where they want to go.
AI can take you there. Are you ready to lead organization change?