The retail industry, like many others, is currently experiencing a significant transformation, both by the upsurge in online shopping as well as through the application of Artificial Intelligence (AI) to help forecast sales and enhance the customer experience. As such, AI is helping retailers predict consumer demand, and it provides them with insights to help develop personalized services to consumers during their online purchasing journey.
Despite the fact that 2020 has been a challenging year, it’s safe to say that many Americans will be trying to make the most of the holiday season – soon to be kicking off with Thanksgiving, followed by ever-exciting Black Friday!
Although COVID-19 has brought about serious disruptions to the economy, the effects to retail have been mixed. At the highest level, in-store shopping is expected take a serious hit this year, however, online holiday spending is forecasted to “surpass $189B in 2020 – up 33% YoY.” The next question then becomes: what are retailers doing to capitalize on this surge in shopping?
How AI is Transforming the World of Retail
As is the case with other industries, retail has been going through a form of digital transformation. Most notably, this is through the application of Artificial Intelligence (AI) – machine learning powered by big data – to predict demand and personalize services.
Given the sheer volume of data retailers are able to capture and analyze around consumers’ past purchasing activity, they are able to predict future behavior through propensity modelling. Models that leverage AI take it a step further in terms of accuracy as the foundation of these machine learning engines are essentially artificial neural networks that can simulate the learning process of human brains.
The results of these modelling exercises allow retailers to accurately forecast the number of products and stock keeping units to keep in inventory. On top of that, it gives companies the ability to better plan for and manage pricing, logistics and distribution. From the retailer’s perspective, this is a serious advantage and can help reduce costs, manage timelines and risk and, of course, drive efficiency gains.
As far as personalizing services are concerned, the use of recommendation engines, which also predict future behavior based on past activity, elevates the online shopping experience by bringing to consumers “things they may like” or targeting them with ads for similar or complementary products. In other words, it’s the last call prior to the checkout process where all the information is brought to shoppers, without hampering or disrupting their online experience. Giants like Amazon gain substantial revenue by these last-minute upsell and cross-sell opportunities.
The Growing Adoption and Applicability of AI Across Other Industries
While retail is one industry that is realizing the benefits of applying AI to their business operations, it is not alone. According to Forbes, other key industries include: software (DevOps and cloud hosting), manufacturing, cybersecurity, construction, mental health, city planning, supply chain management, education, senior care, business intelligence and fashion.
Within the EHSQ software space, our recent acquisition of ehsAI, a next wave compliance automation technology provider, will enable us to help organizations greatly reduce the costs and risks of permitting and compliance management on a global scale, at that. With compliance being a top business priority for most organizations that we serve, AI strengthens our ability to help them achieve their compliance targets and ultimately deliver greater value.
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