Supply chain management is an ongoing challenge for retailers. When supply chain issues occur, they affect product availability and a company's ability to give consumers what they want when they want it. AI in retail helps to resolve many of these challenges by quickly analyzing massive volumes of data to identify issues and predict trends - enabling retailers to make smarter decisions and be more proactive than reactive.
For example, AI can help retailers with inventory management by predicting when supply could be low so store employees can restock or reorder items more quickly, as well as predicting when some items may need to be marked down because they are not selling fast enough. The technology can also help retailers with forecasting and planning, providing them with access to insights about monthly, seasonal and annual buying trends in their business. A home improvement retailer may be able to see purchases of lawnmowers ramp up in January, for instance, so the company may decide to increase inventory during this time and launch several marketing promotions to boost sales.
Digital twins, or digital versions of real-world products, are another AI-powered technology. Using sensors enabled by the Internet of Things (IoT) in physical stores, retailers are able to gather data about real-world customer interactions. A digital twin can then simulate this behavior or scenario in a virtual environment and provide insights that allow retailers to improve forecasting, demand planning, store operations and customer service. Digital twins can serve retailers in several ways, including helping them reconfigure their store layout to meet social distancing requirements, experiment with different fulfillment models such as curbside pickup to get goods to customers safely and more conveniently, or test the positioning of promotional displays and in-store signage to understand what approach is most effective for converting customers.
All of these applications of AI in retail can lead to greater customer engagement, satisfaction and sales.