AI Revolution in Retail and Consumer Products

Artificial Intelligence, abbreviated as AI, has been at the centre stage of business innovation since quite a few years now. It shows no signs of slowing down anytime soon. Instead, going by the recent trends, its adoption is expected to increase manifolds in the next couple of years. The rapidly growing competition in the retail industry requires the players to consistently innovate with their consumer products. They need to improve the efficiency of business processes and improve decision-making – exactly what AI is equipped to help them achieve. This will ensure consumer loyalty and further increase their base, helping them to stay buoyant in the challenging retail market conditions.

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A recent report titled “The coming AI revolution in retail and consumer products” conducted by the global IT company, IBM, predicts a bright future for AI-powered innovations. Conducted at the 2019 Big Show, which was hosted by National Retail Federation, the study included participants from 1,900 retail and consumer products from 23 countries.

Let’s take a look at the salient points of the report that was released by IBM’s Business Value.

  • 79% of consumer products and 85% of retail organizations that participated in the survey revealed their plans of integrating AI in their existing better supply chain planning by the year 2021.
  • Two out of five retailers already use AI, and the number is expected to become double by 2021.
  • The retailers surveyed believe that AI may push up their annual revenue growth by a significant 10%.
  • Artificial Intelligence plays an important role in automating demand forecasting and customer engagement.

 

 

 

What is in store for Singles’ Day 2018?

Singles’ Day (11.11) 2018 which will be celebrated on 11 November, will mark the shopping event’s 10th anniversary. It would not be an exaggeration to state that 11.11 has grown much bigger than a commercial fair as is now one of the major annual milestones in China’s cultural calendar, thanks to Alibaba. This year, the company and its partners are gearing up to make this event a phenomenal shopping extravaganza, with sights set on trumping last year’s figures, there is definitely something exciting to look forward to for the shoppers.

 

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During last year’s event, 812 million parcels were delivered and this year the stakes have been raised higher as the prediction for the milestone in 2018 is more than 1 billion parcels. This could pose some serious challenges in terms of logistics and delivery. One of the ways the company is planning to counter those and preparing for the rush is by opening what is said to be the biggest robotic warehouse in China. This new warehouse positioned as an internet of things-powered, “robotic smart warehouse” will have close to 700 automated vehicles.

Another important move to tackle the delivery challenges while trying to cope up with changing demands and offering a better experience is ensuring quick delivery. Hence this year, for the first time, goods ordered during the Singles Day event will be delivered directly from the stores to the customers and in some-cases within minutes. Short-distance delivery services will also be available in more than 280 cities in the country.

This year the event will also be expanding beyond China through Lazada, the Southeast Asia online platform owned by Alibaba. This will prove to be a strategic and inspiring move in an effort to magnify the events footprint and globalize it. Moreover, this event will also witness diversification in a bigger way as it will not only be restricted to purchasing products, but also offer purchase of services.

With all this at play, one thing is sure that Alibaba would be looking to offer a brand new seamless shopping experience by heavily relying on technology such as omni-channel, AI, cloud and so on to provide an online and offline, cross-platform supply-chain solution and enabling them to cut inventory costs, while increasing operating efficiency, especially around 11.11, the busiest season of the year.

As Singles’ Day 2018 is poised to eclipse again this year, it is just a matter time when the figures start coming in and provide a clearer picture of how much more extravagant and successful this year’s event will be.

Why are physical stores important for retail business success?

The retail industry has evolved over the past few decades and the customers have now become the prime focus. With the advent of omni-channel retailing, the entire ball-game for businesses has been about getting to the customer wherever they are and whenever they are available. This has driven the necessity of creating and offering shopping experiences that can have a positive and long-lasting impact on the customers so that they do not move away from the brand.

The essential advantage of having a brick and mortar retail store is to introduce the products to customer in the context of an allowing them to experience the products and related services and then build on that experience and relationship in person so that it stays with them. This will then foster loyalty and repeat business while also turning these loyal customers into brand ambassadors for the business. Having a retail store is an opportunity for retailers to allow customers experience tangibility of the products and the services as well as leverage the human touch factor by having store associates to engage with the customers directly for assistance and promoting sales. It is a matter of fact that people influence people and this is one major click that retailers can achieve to connect with their customers and build long standing relationships.

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One more aspect of retail stores is when the store is not just used to display products and increase sales, rather it is about leveraging the physical space to create moments and memories that go beyond just selling. For example, in the apparel retail business, having trial rooms have always been a big booster for the business as customers prefer to try out stuff before actually going ahead and buying. So also, other retail verticals like bookstores can provide space for reading and collaborating, or furniture stores can demonstrate some DIY techniques, and so on and so forth.

Thirdly, it would not be an understatement to say that retail stores are the best place for the customer to interact directly with the brand, be it touching or trying out tangible aspects of the brands like products or even coming face-to-face with the human aspect of the brand while engaging with store associates who with the right kind of training can definitely be brand custodians. It is at the brick-and-mortar store that experiential retail can be really demonstrated and experienced.

Thus in this new age of retail, brands that continue with the old line of thinking where the idea is to optimize the floor space purely for sales purposes will definitely see their business plummet. Changing the approach by working on re-purposing every square foot of the space to build that kind of a retail experience that will truly resonate with the customers.

From past to present to future, retail is going to be about ‘location’

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Traditionally, the retail industry has been focused on selling products that have been produced and in order to be able to sell those products, it was necessary for retail marketers to follow the principles of the AIDA model. In other words, they had to draw attention of consumers towards new products in the market and spike their interest in those products by various methods. Their very next move was to cultivate that interest into a desire for the product and then drive consumers towards taking an action, in most cases, purchasing the product and thus completing the sale for the business.

Times have changed and the traditional model of retail has undergone a massive disruption where the focus has moved from selling to understanding and then fulfilling the needs of the customer. The retail industry of today has the customer in the driver’s seat, and for retailers it is all about getting to know the customers’ desire better and create products and services that are able to satisfy those needs. Having said that, the basic principles of marketing in retail – attention, interest, desire and action, still hold good but the context of application of these principles may have changed since the modern day customers are mostly aware and attuned to what they want and generally from where they are going to purchase their products or receive the service(s) they seek.

While the retail industry has treaded this journey from a traditional being to what we call as omni-channel retail in the modern day world, there is one factor that principally, still has a formidable impact on the success of any retail business. And that is ‘location’. Let’s deep dive into this conundrum.

Again going back to the past, while the retail market was product/service oriented, the essentiality of getting these to be noticed by customers compelled retailers to look for the best location to station their offerings, generally a busy place where prospective customers usually frequented. And this importance on the physical location is still a foothold for most retail brands who are running their brick-and-mortar stores. Because, in spite of the rise of e-commerce and mobile commerce, most consumers still prefer to shop at stores and many stats have proven this fact.

Now that’s just one aspect in the context of the location where in the physical location plays an essential part in the success of the retail business. Today, retail is about omni-channel and about unified commerce, and the customer is at the epicenter of the business. The rat race to win the customer is on and the location factor plays an important role to win this race. However, here is where the other aspect in the context of the location comes handy. Taking some cues from the past, getting the products/services to where the customers are is still the right thing to do. But with the advent of the internet and mobile devices and social media, the customer has now become the location as he/she is all over. So today, it is not only about the physical presence, but also the virtual or online presence of the retail brands and moreover, the presence in the right places and channels that’s what is extremely critical. Getting the right product at the right time at the right price is necessary but also at the right place is more than half the battle won. The remaining bit is getting the right message/communication across at the right time and through the right channels or mediums to the customer will enable retailers to have maximum impact and stand out from the rest, to seal the deal with their end customers.

The 3 I Mantra for New Age Retail

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The retail industry has been a trendsetter in adopting technology and digitization. As a result, the industry has been revolutionized by the disruptions caused due to the influence of advanced technologies. In fact, the evolution of the retail industry still continues as businesses and consumers collaborate over trade to further influence the need for progressive transformation.

As the power is now in the hands of the consumers, they are driving retail businesses to constantly strive towards not only focusing on the customer, but also conceptualizing and creating experiences that customers can relish and cherish. Be it brick-and-mortar or e-commerce retail companies, every business is looking to capture a large chunk of the customers’ attention and wallet. As a consequence, the competition has intensified leading to a situation where retailers have only one way out – perform or perish. In order to stay in the game, retailers must look at the 3 I mantra: integration, intelligence and innovation.

Integration: Today’s shoppers are not ordinary shoppers, they are a new breed of shoppers who demand convenience and want speed. Moreover, they want to be associated with retail brands that are tech savvy like them and have more than one channel for interacting and shopping. These new breed of shoppers are ‘omni-channel’ shoppers. Thus retailers need to integrate their channels, operations and processes to be able to provide that omni-channel shopping experience that can leave a mark on the customer.

Intelligence: Again drawing inspiration from the customers, retail businesses need to be ready and prepared for their customer who is equipped with information that allows them to make smart and better decisions. In order to better understand the customer, retail companies must capture as much data as possible about their customer and have the data about their product and service offerings along with the knowledge of their operations and processes. Having this comprehensive information, retail owners must derive the intelligence from the data and use it to enhance their business.

Innovation: Every modern day consumer is attracted to new advancements that happen in the market – be it products, services or offerings. The lesson to learn from this is that retail brands must constantly seek to innovate. They must always look out for new ways to create shopping experiences that are unique and innovative. Using innovation – right from production to packaging and marketing of the products, to sales and post sales services, throughout the entire shopping experience will definitely appeal to consumers and will make them crave for more.

Retail businesses seeking to do something new and unique in their space must equip their business with the right retail technology that enables integration, provides intelligence and aids innovation.

5 Fundamental Benefits of Going Omni-channel

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While the debates about retail apocalypse and the demise of physical retail continue, one thing is for sure, these are merely exaggerations based on certain instances, as the big picture depicts otherwise. At this juncture there is one truth only – retail as a business is being re-imagined, re-invented and re-engineered and this is happening because of technology.

Technology has been the principal driver and the enabler of the retail revolution process, leading to the modern day retail scenario where omni-channel is the new norm. All this has been possible because technology has found its place in almost every aspect of retail – right from production to supply-chain to distribution to sales to post sales services. Moreover, it has also influenced various stages of the customer journey, consequentially leading to changes in consumers’ behavior and preferences.

Omni-channel is the offspring of technology. Omni-channel thrives on technology and this is one of the major reasons why, from being a mere buzzword about a decade ago, today it has become the ‘way of life’ for retail businesses and brands. Omni-channel fundamentally offers 5 highly desired abilities – reach, convenience, speed, collaboration and unified commerce.  And in-turn these abilities are the basic benefits of going omni-channel.

In order to be omni-channel ready, retail businesses must use multiple retail touch-points to interact and service their customers. Subsequently, adding more channels expands the horizon of the retail businesses and enables them to reach more customers, while customers on the other hand can reach and interact with their brands through multiple touch-points. With more than one channel to shop from, customers can use different channels during their shopping journey at their own convenience, and as for retailers, they can easily make use of the different channels to influence their consumer along the shopping process. Omni-channel also enables retail brands with speedy access to information related to inventory and customers as well as helps retailers to service customers faster, while customers can receive quick gratification of their purchases or move through the shopping process faster by switching between channels. Omni-channel essentially necessitates the integration of multiple channels, systems and processes, thus facilitating them to work in collaboration, in a way that enables unified commerce. This makes it possible for retailers to have a single version of the truth about their customer and inventory information across the business and also supports them to provide a seamless and unified experience to their customers.

While omni-channel is necessary, it has potentials that can really do wonders to the retail business and retailers must try to capitalize on this. Employing the right omni-channel retail software will help retailers become truly and holistically omni-channel and thereafter reap its benefits big time.

Omni-channel Retailing is not about the channel, it is about the Customer

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In the modern day scenario, while there are numerous elements that play a role in the success of a retail business, the most essential element is to be responsive to customer demand and meet customer expectations. However this seems to be a challenging ask in today’s digital era as the consumer behavior and expectations are highly dynamic and constantly evolving. For the consumers of today, shopping is no longer just wanting to purchase products — they also demand entertaining, convenient and personalized shopping experiences. Add to this the complexity of handling multiple channels where customers can connect with the brand or shop from.

Omni-channel retailing has gained popularity over the years and now it has become the new norm and necessity for retail business to thrive and flourish. Be it brick and mortar retail companies or e-commerce companies – most have realized the dire need to go omni-channel and are thus adding new channels to their operations so as to facilitate their business with the opportunity to be where the customer is. However, one of the biggest roadblock for retailers achieving success in omni-channel is focusing on the channels and not on the customer. Retailers must understand that very essence of omni-channel lies in delivering a seamless customer experience across channels and hence it is imperative to focus on customer centricity. Here’s how:

Understanding and meeting customer expectations

Considering the shopping habits of today’s shopper it is clear that consumers themselves have dramatically changed. Technology such as the internet and social media have significantly expanded their horizons enabling them to consume more information, find a wide range of products and share about their experiences. Emphasis is on curated offerings that customers seek along with personalized product recommendations. Retail companies can find success by realizing, considering and understanding consumers’ shopping preferences and then using retail technology solutions to provide more personalized experiences. In order to continue meeting the demands of evolving consumer expectations, it is very important for retail owners to follow the shopper journey and then orchestrate information, pricing, inventory and promotions as the consumer moves through to the path to purchase.

Encouraging and enhancing consumer engagement

It is not just about delivering a personalized and seamless omni-channel experience, rather it is about being able to do it consistently. This is what retailers should seek to achieve in order to be able to stay in the game. It is important for the retailer to understand that each and every part of the shopping journey is important. Therefore they must not only focus on the purchase but also aspects like information gathering, opinion seeking, post-sales services, promotions and so on as the customer moves along their shopping journey. Importantly, the retail brand must be able to stay connected with the customer across the entire journey span, transcending multiple channels. Moreover the brand should seek to enhance their relationship with customer through constant engagement that is personalized and relevant to them. Retail business’ success lies in not only realizing that whether the customer purchases or not, every touch-point across the customer journey there is an opportunity for the retail company to meet its customer but also must be seized by the retailer and efforts should be taken to keep the customer positively engaged. With the right retail software, this is definitely possible to achieve.

Creating and enriching customer experience

As mentioned above, retail is no longer about just the transaction between the retailer and customer. It is way deeper than that and retailers must go beyond their usual practices to reach that depth. As the modern day consumers are evolving dynamically, they are not just seeking to satisfy their material wants by purchasing products; they are craving experiences – experiences that will leave an impact on them and want them to come back and stay loyal to the brand. From the customers’ perspective, it is easier for them to stick with a retail brand that stands true to their expectations. Retailers must constantly look to create and deliver enriched omni-channel shopping experiences as well as ensure that these experiences are seamlessly unified and are specially curated for the customer. By creating these personalized shopping experiences across the customer journey, retailers will able to address the needs of their consumers on their own turf – eventually moving from shopping carts to the consumers’ hearts thus leading to sales, positive experiences and brand advocacy. The right mix of retail technology and innovation will make it possible for retailers to achieve success.

Unifying the customer experience during this festive shopping season

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With Black Friday and Cyber Monday – presumably, the biggest days for shopping right around the corner, it is one of the best times of the year for two main reasons – the festive season is very near and the festive shopping gets going in full swing. Retail companies looking to ring in higher festive shopping sales this year need to get a few basic things right for the festive shopping such as their display, merchandise, promotions and so on. Having said that, it is the age of omni-channel retailing and as such, brands must also look to leap ahead in their game, in order to deliver the unified omni-channel customer experience that shoppers would be expecting during this festive shopping season.

‘Click and Collect’ or ‘Buy Online Pick up In-store (BOPIS)’ is one of the revolutionary omni-channel retailing techniques that retail businesses can adopt into their strategies and operations to cater to  festive shoppers’ expectations. As the name ‘Click and Collect’ suggests, the concept is that shoppers can make their purchases online and then opt to collect the products at their desired ‘brick and mortar’ stores. This way, shoppers can use both online and offline channels at their convenience to shop and to receive gratification of their purchases. As per a recent survey, 58% of shoppers will use a buy online, pick up in-store (BOPIS) fulfillment option for their holiday shopping this year. The benefits are multifold. For shoppers, it is the ease and convenience of shopping so that they may avoid the need to look for products at the stores during the festive rush and eliminating the wait time due to shipping. For retailers, it is the enhancement of their brand presence both online and offline, and the opportunity to ‘cross sell’ and ‘up sell’. This could be both online through suggestions and offers, and offline when the shoppers come to collect their products at the store. ‘Click and collect’ or ‘BOPIS’ can therefore enable retailers to offer a seamless omni-channel customer experience during their festive shopping.

Another technique or strategy that retail businesses can employ this festive season to increase sales and boost customer loyalty across channels is ‘endless aisle’. An omni-channel concept, ‘endless aisle’ fundamentally enables shoppers to shop online for products that are not available at that brick and mortar retail store, with the help of handheld devices or kiosks that populate additional product assortments/options through e-commerce sites. The best part is, this can be done right from the store. So a shopper looking to buy a particular product but unable to locate it at the store, can still buy that product from the online portal at the store. This helps eliminate the risk of lost sales for retailers and the frustration for shoppers during out of stock situations. Moreover, it saves shoppers the effort to look for the product elsewhere and thus enhances their experience and trust in the retail brand, cementing the brand-customer relationship. Like ‘Click and Collect’, even ‘endless aisle’ involves both offline and online channels thus empowering retailers to deliver a unified customer experience across channels.

The Singles’ Day Phenomenon and what should the Indian retail businesses learn from it!

Black Friday, the day after Thanksgiving in the United States, generally kicked off the holiday shopping season with crazy deals offered by retailers to get in more sales. But this year the story seems to be different. This past weekend, on November 11, or Singles’ Day, as it is popularly known in mainland China, got the global headlines gaga about it, setting a new start for the crazy shopping frenzy.

Before looking into what really happened, a brief privy about Singles’ day.
Chinese Singles’ Day or Guanggun Jie is a festival widespread among young Mainland Chinese people who celebrate the fact that they are proud of being single. The 11th day of November (11/11), is chosen because the number “1” resembles an individual that is single. As the day started getting popular, once a celebration for China’s singles, Singles’ Day has turned to be a 24 hour shopping extravaganza.

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So how did Singles’ Day 2017 create history?
This year, the sales on Singles’ Day was more than 3 times the combined sales for Black Friday and Cyber Monday 2016 of US$6.79 billion in the United States, resulting this festival being the largest offline and online shopping day in the world thanks to Alibaba, the Chinese e-Commerce giant now rivaling Amazon, doing sales 168.2 billion yuan (approx. US$25.3 billion). Looking at the previous years, Alibaba’s sites Tmall and Taobao garnered sales of US$5.8 billion in 2013, US$9.3 billion in 2014, US$14.3 billion in 2015, and US$17.8 billion in 2016. Thus, this year’s sales of above US$25 billion has broken the previous year’s record.

While the US$25.4 billion worth of sales can be etched into record books, Alibaba also set a world record for payment transactions. Its mobile wallet app Alipay processed 256,000 payment transactions per second in 2017 taking the tally of the transactions processed by Alipay in the entire 24 hours to 1.48 billion. And that is not it, the delivery orders through Cainiao – Alibaba’s logistics affiliate reached close to 700 million, breaking 2016’s record.

Alibaba said that it had turned 100,000 physical shops around China into “smart stores” for this year’s event and via these pop-up smart stores and in-store technology, Alibaba and the retail brands helped drive online traffic to brick-and-mortar stores, further erasing the boundaries between the two channels.

While all that happened in China, the Singles’ Day online shopping craze picked up in some of the Southeast Asian countries like Singapore too, where Singles’ Day is still a relatively new thing. Lazada, the Southeast Asian online retailer owned by Alibaba, sold US$123 million of merchandise, a 171 per cent increase over the previous year. Shoppers in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam ordered 6.5 million items, 191 per cent or nearly double that of last year.

4 important learnings from the Singles’ Day 2017 shopping event:

  • Omni-channel retailing is the real deal when it comes to breaking sales records in a single day eclipsing previous years’ sales, as Alibaba and participating retail brands used both physical and online channels to help consumers make the most of the festival
  • Promotions with the right messaging and at the right time can boost sales, as Alibaba started promotions 3 weeks before the event with a motto that resembles the sort of greetings, Chinese across the world exchange at the Lunar New Year
  • Customer engagement is key to make success of a shopping day as Alibaba engaged with its customers not only before the event through promotions but also offered its most-loyal customers and viewers a gala that featured international and Chinese stars
  • Mobile is a very important shopping channel for the success of shopping events, as Alibaba said that 90% of their sales were made on mobile and over 70% of orders on Lazada were placed from mobile devices

What’s in it for Indian retailers?
The above mentioned learnings are definitely worth analyzing and applying in the Indian retail market, especially during festival shopping events and one day this will help the shopping event(s) in India eclipse the likes of Black Friday and Singles’ Day and grab international headlines. Another thought to ponder is, should Indian retailers look at Singles’ Day as an opportunity and a reason to boost their sales?

Internet of Things (IoT) in Retail – Smart Shelves

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The possibilities related to retail have truly been endless – omni-channel, VR, AR, AI, and IoT being some of them. While these may seem like stiff challenges for retailers to implement, they need to recognize the opportunities hidden behind these challenges. These opportunities could impel retailers to explore newer and more efficient avenues to cater to their customers’ needs, to streamline business processes, and to improve bottom lines.

One such opportunity that knocks on the door of retailers is Internet of Things (IoT). It is no more a buzzword, it has gained prominent significance in the retail space. The Internet of things (IoT) is a network of connected devices embedded with electronics, software, sensors, actuators, and so on which enable these objects to collect and exchange data. This concept of IoT has many applications depending on the physical devices that are connected and one of the most remarkable applications of IoT in retail is Smart Shelves. As the name suggest, shelves that have been made capable of storing, processing and sharing data are known as smart shelves. They provide with various benefits to the retailers such as:

  1. Easy replenishment: As smart shelves are capable of monitoring data pertaining to the items placed on them, they send real time updates to the retailers so as to enable them to restock the shelves as and when required.
  2. Customer interest identification: The shelves can identify which products are more sought after and which are not by analyzing the data associated with product returns. This also helps retailers in identifying customers’ interests and better manage their inventory.
  3. Tracking misplaced items: There are various instances where items get misplaced, causing a dent to the retailers’ bottom line. Smart shelves can help retailers to curb the problem of misplaced items by alerting them through notifications and allowing them to look into the matter without causing any damage to the sales and the inventory.
  4. Pricing display: An interactive kiosk or LED panel attached to the shelves can really enhance the efficiency of the store as it will allow people to search for the desired product and associated price, promotions and other relevant information without any trouble.

In the modern age of digitalization and tech savvy customers, it is imperative for retailers to identify the points/strategies which can be implemented to improve the overall performance of the business. IoT along with various other techniques such as omni-channel retail and AI can help retailers achieve the desired growth in a short span of time.