Written by: Katerina Minski | 5 min read
The world as we know it has become a vastly digital place - technology has made our lives easier, faster, better, and more fun. This revolution has also seeped into every industry - reimagining and improving it constantly, at a rapid rate. The substantial shift to a more digital world has required the vital reimagination of the traditionally conservative retail industry, expanding the array of opportunities to further appeal to a wide range of consumers.
Below, I will discuss how technology impacts pricing within the retail industry, how personalization tools affect consumer experiences, and how AI is represented within virtually any retailer.
Item Pricing Using Technology
Currently, retailers typically rely on excel or an in-house ERP system to price items. This is generally difficult and time-consuming to manage - requiring hours of human labour.
In 2020, 58% of top retailers said they will have implementation plans regarding AI Pricing technology by the end of 2021 (Forbes, 2021). AI can place retailers ahead of current technological trends by using the ability of software to optimize prices at an individual level. AI uses machine learning to create algorithms that track data patterns in consumer behaviour. By factoring in external information like market fluctuation, and working in conjunction with consumer trends, retailers can predict optimal pricing strategies to achieve sales goals.
Determining Accurate Prices
With AI automated pricing technology and data analytic capabilities at executives' fingertips, retailers can anticipate consumers' price sensitivity based on past data. By accessing this data and discussing it with vendors and other stakeholders, retailers can plan more effective pricing plans in advance. For example, Micheal Kors has previously reported using machine learning to set accurate prices to maximize sales and minimize inventory on hand.
Tracking Inventory Levels
AI smart pricing further aids in price adjustments on challenging and fluctuating categories, such as perishables. Walmart has implemented this technology during COVID shortages, due to shipment hold-offs and fewer in-person workers. Using real-time data to improve efficiency in the meat aisle, Walmart was able to increase sales by 30% in the category (Forbes, 2021). The ability to adjust prices quickly in alignment with fluctuating supply and demand is critical for optimal sales.
This technology inherently reduces operating costs, as less labour is required. Lastly, it provides the opportunity for innovation, ensuring retailers are more aware of gaps in the market and can use these insights to increase profitability.
Personalization Tools; Indoor Positioning Systems (IPS)
Personalization tools, notably Indoor Position Systems (IPS), have been prominent in the retail industry for a few years, increasing with the post-pandemic transition back to brick-and-mortar shopping. IPS is an aid in navigating indoor retail areas with GPS to help consumers shop more accurately. IPS has excellent innovative potential in the industry - through targeted suggestions, tracking consumer traffic, and inventory check-ins.
Shopping malls, for instance, provide consumers with the convenience of having all their favourite retail stores under one roof; IPS makes shopping at malls even more convenient. IPS helps the consumer navigate the mall, similar to a store directory, but in real-time and through the convenience of their phone.
User Location & Safety Concerns
Shoppers can load the mall application on their devices and see their precise location at all times. This allows for more straightforward navigation of the store directory and more time to browse the mall. Visually impaired shoppers can also benefit from IPS systems through audio navigation commands to be verbally directed to stores and products of interest.
IPS also allows for location sharing between devices; this is beneficial for parents looking to monitor a child's location during a trip to the mall. Users may also send direct messages to information desk staff to receive in-person assistance if needed.
Mall safety concerns are also addressed using IPS systems in the event of an emergency. IPS can be used to alert and direct visitors to evacuate the premises based on their current location in the mall. This minimizes the inevitable chaos during emergencies and allows crowd control to conduct a seamless exit. IPS can also locate fire extinguishers and defibrillators by proximity, furthering the appealing safety components of IPS.
Customer Loyalty
Customer loyalty can be further fostered through IPS, as consumers are able to have an enhanced shopping mall experience. For example, there is an opportunity to implement customer perks when using IPS to strengthen brand commitment and increase revenue for the mall and its partners.
Targeted Advertising
With IPS's detailed location tracking, shopping malls can implement targeted ads that can be distributed in real-time throughout the mall. Advertisements pop up on consumers’ devices as they walk through the mall; specifically, targeted advertisements that are believed to perform best on this particular consumer based on data analytics.
IPS further allows for improved consumer loyalty, as retailers can customize offers based on factors like time spent in the store. Innovation potential cultivates as VIP programs through IPS can promote rewards that drive consumers to want to visit the store more often.
Artificial Intelligence Enhancing Retail Experiences
As mentioned previously, AI has the potential to completely reimagine the traditional retail experience and take it to a new level of personalization and efficiency. Evidently, these AI trends have seeped into most of the retailers we know and love today.
Robots Aid in Item Tracking
Lowes Companies, an American retail company specializing in home improvement and hardware, has created the LoweBot to help customers find their way around the store and locate items of interest. The robot roams the store searching for consumers needing help, asks them questions, and assists them in identifying certain items. By providing directions and maps and sharing specialist knowledge with the consumer, LoweBots enhance the consumer shopping experience, while accurately tracking inventory numbers.
AI assistance in Flu Tracking
AI has also been tremendously helpful in the pharmaceutical retail space. Walgreen Company, an American pharmacy retail chain, uses data collected from tracking antiviral prescriptions at numerous locations to track the spread of the flu. This data is then compiled onto a map for user discretion - providing a visual reference to gauge how bad the flu is in a particular area. This technology also helps Walgreen stock up on applicable inventory of flu-related products.
AI recommendations in the Cosmetics Industry
At Sephora, employees are equipped with handheld devices that carry specialized software, such as Colour IQ and Lip IQ. When held to the face, these devices can scan surfaces to capture a person's exact skin tone and match it to their current in-store shade library. This simplifies cosmetics shopping and shade matching - which can be a very tedious task. Sephora believes that consumer loyalty is about personalization; by creating more efficient shopping experiences, retailers can build emotional connections with consumers, which ultimately drives revenue.
Technology, artificial intelligence, and data analytics have completely reimagined the traditional conservative retail industry, driving innovation to keep up with consumer trends and demand. Pricing using machine learning, IPS, and AI tools are the notable features that have drastically shifted customary practices. Technological trends have seeped into the retailers we know and love today, transforming the retail experience and taking it to a new level of personalization and efficiency the industry has never seen before.
Citations:
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How color IQ, Sephora's shade-matching skin care tool, boosts brand loyalty. Digiday. (2016, April 13). Retrieved August 2, 2022, from https://digiday.com/marketing/color-iq-sephoras-shade-matching-skin-care-tool-boosts-brand-loyalty/
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