There is no doubt or shortage of evidence that the retail industry has seen substantial changes over the past few years. Accelerated by the pandemic, consumers have reimagined their purchasing habits, forcing suppliers to completely restructure their business models. Modern technology in retail has also played a huge role in the way organizations gain insights into their customers’ and competitors’ behaviors. Decision-making is no longer based solely on experience and intuition; machine learning (ML) and artificial intelligence (AI) in retail now provide executives with factual data to drive their decision-making process. As disruption and innovation in the retail tech industry continues at a rapid rate, there are a few key trends driving competitive advantage in today’s market.
1. Real-time Supply Chain Management
While improving Supply Chain Management (SCM) from raw materials to customer delivery is nothing new, the introduction of cloud-scale technologies are definitely the game. With real-time control over and insight into their end-to-end operations, companies can dramatically reduce costs and speed their time to market. This creates a more positive customer, employee, and supplier experience, driving trust, loyalty, and innovation across the supply chain.
Innovative retail technologies have equipped retail leaders with tools that can monitor supply chain discrepancies, improve response times and identify operation and process improvement opportunities. New cloud-enhanced intelligent platforms help connect all value chain stakeholders and break down silos to enable data-driven decisions and better collaboration.
By 2026, Gartner predicts that over 50% of supply chain organizations will be using ML to influence decision-making capabilities. Adopting ML for supply chain management will transform decision-making from what used to be a guessing game to an intelligent, predictive, fact-based system of management, allowing executives to plan and execute strategies with confidence.
One organization already employing ML in their supply chain management is the Indian multinational conglomerate, Mahindra & Mahindra. Mahindra & Mahindra’s Head of Demand and Supply Planning, Aniruddh Srivastava, said that artificial intelligence and machine learning are at the cornerstone of their supply chain strategy. Through their partnership with Blue Yonder, Mahindra & Mahindra was able to increase their forecast accuracy by 10%, allowing them to hold less inventory while improving service levels. By increasing their forecast accuracy by 10%, Mahindra & Mahindra was able to increase their service levels by 10%, while also reducing their inventory investment by 20%. Although the COVID-19 pandemic altered these results and made forecasting accuracy a nightmare, the companies that were using ML, like Mahindra & Mahindra, witnessed significantly less error and saw their forecasts improve much quicker than traditional solutions.
Sustainability is increasingly becoming one of the greatest driving forces of consumer's buying decisions. In fact, Business Wire states that globally, 85% of people have indicated that they have altered their buying behavior towards being more sustainable in the past five years, and more and more people are willing to pay a premium for sustainably made products. With such a significant percentage of consumers prioritizing sustainability, what used to be a unique competitive advantage for businesses is now rapidly becoming table stakes to remain competitive. However, those leveraging modern tools and technologies to track and measure their sustainability efforts are gaining a competitive advantage.
How can tech in retail help companies become more sustainable? Many large retail organizations have been leveraging modern technologies like IoT, blockchain, and AI to help gather the data intelligence to create and support a sustainable value chain. Microsoft Cloud for Sustainability allows retail enterprises a unified view of sustainability data to measure their environmental impact through a connected solution.
A great example is PepsiCo’s precision agriculture tool, iCrop, developed to help European farmers gather real-time data from potato fields to promote regenerative farming. The technology captures just about 240 data points per field and records a variety of factors such as the date of planting, field location, crop emergence, and more. The results have nearly doubled water irrigation accuracy in some cases, allowing farmers to grow more potatoes with less water. As part of PepsiCo’s Positive sustainability program, the company plans to expand this innovation to 7 million acres by 2030.
3. Customer Experience
Finally, ensuring a consistent and elevated customer experience is essential in the retail industry. However, building a great customer experience can no longer be supported by traditional surveys and reviews. Modern retailers are transforming to a more dynamic, real-time, and holistic approach to reveal hidden opportunities for advancement. Today’s target is a 360-degree view of your customer to deliver the omnichannel, personalized experience that today’s consumers and market demand.
Consumer goods leader Unilever, has recently rolled out a new data analytics tool that unifies consumer, retailer, and business data and provides recommendations. Morgan Vawter, Global VP at Unilever’s Data Centre of Excellence stated that the new tool “brings together the perspectives of our customers, shoppers and business to make better, faster decisions that create growth for our business and for our customers.” Unilever is already seeing significant results, as Unilever’s Chief Enterprise Technology Officer, Steve McCrystal adds, “the opportunities to save cash and deliver fuel for growth are huge, and we’re already seeing the results.” Unilever is striving to become a truly data-intelligent organization, where every decision is powered by mature data and advanced retail tech insights to provide an ultimate customer experience.
Supply chain management, sustainability, and customer experience are taking the front seat in retail executives’ focus with major retailers already acting on and realizing incredibly positive results from investments in these areas.
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