In the current complexion of the retail industry, understanding both the customer and competitor landscape is imperative to survival. Retail planning – a data-based strategy that both attains customer needs and maximises profitability – ensures organisations can personalise the customer experience (CX), while simultaneously optimising inventory, meeting customer demands.
However, wanting to execute a plan and actually implementing it are two very different things. The process of retail planning is complicated and can quickly overwhelm businesses, requiring careful consideration. To plan for the future, retailers must balance a range of factors. This may include internal objectives such as seamless omnichannel hand offs and hyper-personalisation, or considering external influences like seasonal buying habits, new regulations, and emerging retail innovations.
With so many plates spinning at the same time, retailers must look towards emerging technology to remove the congestion associated with planning. If strong planning is effectively instilled, retailers can capitalise on optimum stock management, high customer satisfaction, and improved competitiveness, boosting their profitability.
The purpose of artificial intelligence (AI) retail planning
Regardless of whether the retailer is operating in business-to-consumer (B2C) or direct-to-consumer (D2C) spaces, it must focus on maintaining and enhancing CX. When utilised correctly, a retail plan can anticipate the needs of a customer, directly enhancing satisfaction and loyalty. By providing an exceptional CX in every interaction, retail firms can stimulate repeat purchases for the foreseeable future.
When CX is not prioritised, consumer demand shifts unpredictably, leading to a range of knock-on effects. For example, if there is a drop in demand, not only will revenue fall, but forecasting will become inaccurate and inventory will be mismanaged, rendering all future planning ineffective.
Indeed, a lack of focus on CX is a common pain point in retail plans – however, many proposals also fail due to the tools and technologies underpinning them. Often, organisations use legacy platforms built through traditional retail systems which make the process far slower. Consequently, retail planning is frequently left at an impasse – customers, more than ever, want a personalised CX at mind-bending speeds, but the planning required to achieve this takes too long.
Retailers must rethink how they consider retail planning; utilising AI-powered tools ignites decision-making at record speeds and enriches insights. With such tools, retailers can acknowledge and anticipate evolving customer demands and expectations. By integrating AI into retail planning processes, retailers can remodel critical functions within their operations, such as inventory management, pricing and promotions, and personalised marketing.
Transforming inventory management
Regardless of whether a retailer is planning to make use of in-store spaces, online spaces, or both, managing inventory requires time and resources.
For instance, physical stores need to utilise limited space, so they can continue to facilitate customer demand, without holding unnecessary, and potentially costly, excess stock. In contrast to this, e-commerce platforms must consider different stock-related issues – they must coordinate across fulfilment centres and warehouses to reduce the chances of shipping delays. With half of retailers admitting to losing customers as a result of a poor delivery experience, it is imperative for online stores to dispatch items as soon and as seamlessly as possible.
To address the inventory management conundrum, AI has emerged as the ultimate solution. AI tools can integrate radio-frequency identification (RFID) tags, internet of things (IoT) devices, and edge AI, using computer vision to track stock in real-time. This gives retail organisations a complete and accurate view of their inventory across as many locations as needed – assuring the availability of products for all customers.
Additionally, these tools can alert retailers of the inputs and outputs of their inventory, ensuring effective stock management. What’s more, alerts can be sent to customers to keep them informed of the status of their product throughout the whole ordering process, streamlining the entire journey, from the initial purchase to delivery.
Pricing and promotions
AI retail planning can transform how an organisation manages and tracks its inventory. However, it’s also an invaluable tool when it comes to maximising sales, dependent on seasons or demand.
Promotional strategies, such as buy-one-get-one-free, or dynamic pricing strategies, like Black Friday flash sales, are exceptional ways to remain competitive in an extremely saturated market. For these to be effective, organisations must operate in an agile yet introspective way to help set competitive prices, while remaining as profitable as possible.
By utilising AI-powered platforms, retailers can effectively and efficiently provide real-time pricing updates to reflect inventory levels, competitors pricing, or market demand. During peak seasonal periods, deep learning AI tools provide superior discount levels, factoring in an array of external and internal influences.
Through monitoring and adjusting to competitor stock levels, weather demographics, or even social trends, retailers can enhance revenue and minimise the chances of stockouts.
Personalised marketing
Marketing is a vital part of the retail experience – it helps organisations develop brand identity, attract customers and differentiate themselves from their competitors. However, as the retail industry becomes more financially aware, customers want cheaper products, but with the same degree of personalisation.
To navigate this turbulent space, retailers are leveraging AI to analyse customer behaviour and preferences to produce personalised campaigns, without having to invest immense time and resources towards the activity. For example, some retailers have installed edge AI enabled personalised tablets onto their shopping carts, ensuring customers see relevant messages and offers, tailored to their particular interests and buying habits. This then provides dynamic advertising, stimulating more purchases.
Through the constant analysing of customer interactions, retailers are able to utilise these tools to specify marketing strategies in real time, improving the degree of personalisation without inflating costs in conjunction.
Unlocking the competitive advantage of AI
Ultimately, the organisations who look to adopt AI into their retail planning will gain substantial competitive advantages. These powerful tools simplify previously lengthy processes, while streamlining operations and transforming the speed and level of decision-making.
From stock management to customer forecasting to customer retention, AI-powered retail planning transforms how a retailer interacts with its customers. It provides the ability to predict rather than react to customer needs in a faster and more efficient manner. Implementing these systems transcends being an optional ‘nice to have’ – it is a business necessity for long-term competitiveness.
