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Retailers see enormous opportunities in the use of artificial intelligence

Retail companies highly value the potential of artificial intelligence (AI) in supply chain optimisation. But there are some hurdles that make the industry hesitant to use it. This is shown by a study conducted by EHI Retail Institute among retail companies in German-speaking countries on behalf of the Finnish retail software specialist Relex.

In the study, which took place within the framework of an online survey from April to June 2021, Relex had it investigated to what extent the use of AI in retail supply chain management has already been implemented or is currently being planned. Indeed, AI is seen as an important success factor for supply chain management in the short and medium term.

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76 percent of the retail companies surveyed describe it as very important or important. When asked about their company’s actual interest in implementing AI, 68 per cent of respondents indicated great or potential interest, with only 32 per cent expressing neutral or showing little interest.

AI is slowly gaining acceptance for sales forecasting

However, the actual implementation of AI in supply chain management is still in its infancy. Sales forecasts are the most common field of application for artificial intelligence, at just 16.7 per cent. This is followed by campaign forecasting, inventory management and goods flow smoothing (about 8-9 per cent each).

At the bottom of the list are markdown optimisations, the integration of weather forecasts for store deliveries and placement planning in shops taking into account delivery frequency (over 70 per cent have not yet successfully implemented these).

Useful in the fight against out-of-shelfs

When asked about the positive effects AI could bring, 76 per cent of the participants named inventory optimisation and 80 per cent an increase in merchandise availability as key areas for improvement.

In second place was increasing delivery reliability, which was rated as particularly important by 52 percent of respondents. Applications such as increasing the efficiency of store processes, shortening lead times and reducing handling costs were also cited as potential areas that could benefit from AI applications.

Acceptance problems slow down deployment

The most frequently cited reasons against the introduction of AI-driven systems: Investment costs as well as the lack of qualified specialists on the labour market. But acceptance problems by employees in their own companies also speak against introduction, according to the respondents.

In fact, employees in retail often perceive AI as a threat that endangers their jobs: The introduction of corresponding systems must therefore be well planned and accompanied by well thought-out change management. The insufficient availability and quality of the required data is also mentioned as a hurdle.

AI as an answer to current challenges

There is no question that AI is neither a panacea for the new challenges facing the industry nor can it replace humans. However, AI enables retailers to make better decisions faster – an invaluable asset in an industry where millions of goods flows need to be managed. 

When artificial intelligence is applied to retail optimisation, it delivers amazing results: higher margins and sales, reduced spoilage and more effective utilisation of inventory and capacity. The benefits for the retailer, its customers and also the environment are immense. However, the use of AI in a retail operation must always be carefully and practically planned.

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Björn Weber

Björn Weber has been a journalist, analyst and consultant specialising in the retail and consumer goods industry for over 20 years. Prior to founding Fourspot, which is publishing The Retail Optimiser, Björn Weber headed the international analyst group LZ Retailytics. Previously, he was Research Director Retail Technology and Head of Planet Retail in Germany. Before that, Björn Weber was editor for IT & logistics topics at Lebensmittel Zeitung for eight years. Björn Weber is a member of the jury of the Retail Technology Award (Reta Europe) of the EHI. He is a regular speaker at events of the EHI, the NRF, industry media and the Consumer Goods Forum.

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