Disruption is a much-overused word when describing the retail industry. But there’s no question that the past six months have seen businesses struggle to come to terms with unprecedented economic shock generated by the Covid-19 pandemic.
In the midst of the crisis, it is hard to pick out the winners and losers. Even established e-commerce players have struggled to keep up with demand, losing out to more agile competitors.
One thing is for certain, however. The first half of 2020 has propelled brands far into the future, compressing years of digital transformation into months and even weeks. The challenge now is to accelerate technology roadmaps that align with this massive shift in market and consumer behaviour.
From dot com doom to smartphone success
There are parallels with the past. After the dot com crash of 2000, the survivors learned to build better integrated supply and logistics chains, while nurturing consumer confidence in online payments and home delivery systems.
The 2008 financial crash occurred a year after the launch of the iPhone. It might seem obvious now, but not everyone recognized the potential of mobile shopping. Those that did evolved and now flourish in a sector dominated by social media, SEO, online advertising, and shopping apps.
What about today? Artificial intelligence is being touted as a ‘magic bullet’ with retail predicted to spend $15.3 billion on the technology by 2025. Dig deeper and it becomes clear where AI can make a difference, as long as businesses can manage the costs of transformation.
Chatbots: Although chatbots are already common on e-commerce websites, it’s only in the past year or so that they’ve become genuinely conversational and useful. This matters enormously at a time when people are concerned about their wellbeing and financial security. A quick chatbot response removes friction from the buying process and can increase conversions at many levels of the purchase funnel.
Supply chain: AI has enormous potential to increase supply chain efficiency. This includes accelerating and improving the quality of planning as well as demand management. In short AI has the potential to improve every connection in the supply chain by improving quality management while providing updates in real time at every connection point.
Logistics: Warehouses have been transformed in recent years. This includes data collection and inventory management. AI can also predict demand for products so that orders can be modified and rapidly delivered to a local warehouse, increasing efficiency and reducing the cost of transportation. In addition, autonomous vehicles, from self-driving lorries and vans to drones can help retailers to complete last mile deliveries at lower cost.
Marketing: Computer vision is playing a growing role in retail marketing. Agencies are using AI to match retailers with influencers by analyzing their profiles and fixing a strong brand match. Similarly, agencies can accelerate digital campaigns by using AI to generate brand friendly imagery and short form copy for online advertising.
In store intelligence: Edge computing enables retailers too aggregate and manage huge volumes of data and transform it into actionable knowledge. This includes robots that restock shelves or signage that adapts to the audience. Amazon is experimenting with cameras that identify items as customers pick them from the shelves. This also means that payment is automatic as the shopper leaves the store.
Winners and losers
To survive and flourish in retail beyond 2021 requires the right blend of vision, courage and innovation. There will be many new names, while some established brands will fold, the victims of bankruptcy or acquisition. While we cannot predict with confidence which will fly and which will sink, there is no question that the winners will be those that embed AI and transform their business models, just as their predecessors exploited the internet and mobile devices.