As retailers seek new ways to keep consumers engaged, many have looked to technology to streamline their processes and harness greater insight into key elements of their business such as inventory management and customer retention. Retailers are acquiring the tools necessary to optimize their forecasting, customer experience and logistics processes. In result, the increased efficiency, personalization and quality of service means higher revenue and improved customer satisfaction for retail businesses.
Technology has played a large part in retail’s evolution in recent years, contributing to significant improvements in customer acquisition and retention. While emerging technologies like VR and robot automation remain a novelty at present, major developments in artificial intelligence, logistics technology and inventory management platforms are making a direct impact on the way retailers do business. Here, we’ll take you through three technology trends that are transforming retail.
AI is optimizing forecasting and customer experience.
Artificial intelligence (AI) is one of the most talked about technological developments of our time, possessing huge potential to provide insight that can optimize speed, cost and performance in the retail value chain.
Though the first thing people typically think about when they hear the term artificial intelligence is Alexa or Siri, in the world of fashion, AI has the potential to help businesses with things like better demand forecasting and capacity planning. Such advancements would not only help with managing inventory and supply, but also in delivering better service to customers through greater product availability and more efficient deliveries. As outlined by McKinsey & Company in their 2017 report, AI could help to reduce forecasting errors by up to 50%. The report also explains how deep learning can be used to predict eCommerce purchases, potentially resulting in 2 million fewer product returns per year.
In addition to the supply chain benefits, AI provides valuable insights into improving the retail customer experience as a whole. Advanced CRM and marketing systems are able to learn a customer’s habits and preferences through repeated interactions, developing an in-depth shopper profile that can be used to deliver personalized and engaging content such as tailored recommendations or loyalty rewards. Along with dynamic targeting, AI facilitates things like customized virtual storefronts which adapt offerings according to user’s individual characteristics, past purchases and shopping habits. By providing users with more relevant recommendations, shoppers are more likely to purchase, therefore increasing transactions and revenue. Speaking to Business of Fashion on AI, Karen McCormick (CIO at Beringea) said “Retailers can leverage data to provide a more seamless and personal experience for customers, which increases conversion, repeat purchase and loyalty”.
All in all, AI helps to optimize forecasting well as improve customer satisfaction and retention through personalization. According to a 2017 benchmark survey by Boston Retail Partners, 45% of retailers plan to use artificial intelligence in the next three years. Given the vast benefits that AI presents to both customers and retailers alike, it’s highly likely that the coming years will see more retailers turning to AI to drive further growth.
Developments in logistics tech are streamlining the supply chain.
Logistics is an integral part of the retail chain, connecting consumers with their products. Yet as consumers have become accustomed to on-demand services, speedy delivery has become an essential offering and key aspect of the overall shopping experience. Streamlining this process is more important than ever before, with orders required to be fulfilled as efficiently and transparently as possible for customers wanting to track their items.
Data from a recent study by Freightos reveals that 86% of key figures in logistics deem technology the optimum way to increase efficiency and reduce costs. As a result, more technology is being created in order to streamline the supply chain process.
Technology that provides retailers greater insight into their supply chain is integral in allowing them to work towards optimizing these processes, with companies like Flexport equipping businesses with the tools they need to do exactly this. Through condensing supply chain management into one platform that provides a clear, unified view of products internationally, real-time tracking and shipment specific information for each and every order, retailers are able to offer a more efficient and seamless service to their clients. This technology is essential in catering to the on-demand delivery that customers have come to expect, allowing retailers greater control at every stage and therefore enabling them to deliver a better overall customer experience.
Other innovations in the sector include solutions that speed up the supply chain, allowing retailers to offer customers quicker shipping options such as on demand, same day and even one hour delivery. Darkstore is one example of a business helping to standardize this offering by housing retailers’ products in leftover space across a range of storage facilities in major cities. With items spread out across a wider area, these logistics centers are therefore closer to a greater number of customers, allowing for orders to be delivered more efficiently. According to the logistics company, the average brand spends as much as 25% of their revenue on logistics due to inefficient traditional logistics processes; however, Darkstore is helping to bring this down to as little as 3%. For retailers that move enough product in specific locations, this solution will undoubtedly prove a valuable tool in helping to boost efficiency and keep logistics costs down. Vitally, this technology will also allow brands to better compete with the likes of Amazon who are able to offer customers what they want when they want it.
Logistics technology helps retailers offer their customers greater choice and convenience. By creating a better customer experience, they are able to drive more sales and boost customer loyalty.
Inventory Management Innovation
Automated backend systems are giving retailers greater control.
A brand’s understanding of their inventory and product life cycles is central to the success of a business, allowing for optimized planning, logistics, buying and product allocation.
With stronger insight into things like stock levels and future demand of inventory, brands can make better decisions such as tailoring allocations depending on store-level demand, ultimately leading to a better service to customers. For example, brands can fulfill online orders and offer faster delivery by leveraging inventory from stores that are geographically closer to customers. Inventory platforms present the opportunity for considerable gain both in terms of customer satisfaction and in terms of savings by avoiding over or under selling inventory.
By consolidating data from multiple channels to obtain a better understanding of how and why customers make purchase decisions, companies like Celect have developed predictive technology to help inform brands’ online order logistics decisions, store allocation, product assortments and the volume of stock ordered. Through reviewing existing data and past customer choice modelling, Celect provides insights such as the best place to sell a particular item or how much stock should be assigned to a certain store. Business use this information to recover revenue and boost efficiency by reducing inventory stock outs and markdowns, and by fulfilling omnichannel demand with the option that makes the most sense financially and logistically.
Likewise, INTURN is designed to help brands recover control over their off-price business, empowering them to liquidate their excess inventory faster and more effectively. Automating what was previously a manual and time-consuming process with pricing optimization tools and business intelligence, both buyers and sellers can now improve their offers and secure the best deal with better communication and in a shorter period of time, increasing margins by as much as 23%.
Inventory management platforms have allowed brands to gain valuable insights that enable them to optimize for a range of inventory related issues. By automating tedious tasks and providing brands with the information that gives greater oversight of their products’ life cycles, technology is streamlining systems to offer consumers a more efficient service while also helping brands maximize their time and revenue.
Recent developments in retail tech are transforming the fashion world to arm brands and retailers with the tools to improve their forecasting, delivery and inventory management processes. Providing the information and resources to significantly optimize these processes, new technology innovations in retail tech have enabled brands to provide a better overall customer experience by making their services faster and more diverse.
Yet, much of this retail technology is still being developed further. As customer preferences and expectations shift, so too will the tech being created to help brands better cater for these needs. Likewise, as we see things like artificial intelligence become more refined, so too will the ways in which we can apply these learnings to enhance retail processes. As more brands turn to new tech to amp up their competitive advantage, we expect 2019 to hold more retail tech developments than ever before.