Think Tank: Merchandising With Intelligence
Today’s consumers are increasingly hard to please. They’re accustomed to highly individualized, instant experiences from their streaming subscriptions, e-commerce merchants, and other digital services. They expect brands to have a clear and consistent purpose and, ideally, to share their values too. And, when they step into the store, they’re now increasingly looking for retailers to supply the same kinds of hyper-personalized experience.
That changes how a retailer needs to think about its merchandising. It remains a core part of every retail business, of course. But the ground has shifted, and simply doing more of the same is no longer enough. Now a merchant must know what a customer wants before they set foot in the store — and before they even know it themselves. Merchants must become curators and problem solvers on behalf of their customers. And they must think how to use disruptive merchandising to stay ahead of the competition – and keep customers coming back time and again.
The secret to making it happen? A new kind of merchandising model. One that manages an effective blend of intelligent technologies and human creativity to free a merchant from their grueling and time-consuming admin tasks and create the space to completely reimagine how best to sell to customers in the digital age.
In these new models, technologies like artificial intelligence will have a fundamental role to play. The latest developments have advanced the technology to such an extent that it can now augment retail operations by bringing new levels of intelligence and creativity to merchandising. Here’s how.
Precision Automation
AI will take precision automation to new places. Unleashing the creativity of a merchandising workforce means first and foremost creating a space in which ideas can flourish. And that means removing the routine, the repetitive and the time-consuming from their day-to-day work. That’s where AI can really change the game.
Consider the data that powers so much of today’s retail operations. Retailers are drowning in it. Of course, it’s the key to the effective analysis of sales trends and other vital insights. But, for a human workforce, it can be a grueling slog to manage information in such large volumes. AI-powered tools, in contrast, can sift through vast amounts of data at high speed, radically reducing the amount of human involvement required.
That will revolutionize tasks like tagging item attributes, for instance, where AI tools like computer vision and deep learning can be used to populate large numbers of item attributes much faster and more cost-effectively than a human workforce could ever hope to achieve.
But AI is about more than just speed — it also brings greater precision. Thus, a retailer’s approach to predictable tasks like item setup, order management and answering vendor enquiries can be executed with far less scope for human error.
So, precision automation saves money and increases accuracy. Most importantly, it creates a space to maximize a retailer’s use of its most valuable resource — the creative human brain.
Intelligent Analytics
AI brings a new intelligence to retail analytics. Imagine knowing what offers your competitors are using in each locality to tempt your customers at any moment. Or seeing the complete purchasing history of each of a store’s customers. Or spotting tomorrow’s micro-trends from anywhere in the world. By crawling e-commerce services, social media, and other sources, AI can give a retailer all this at unprecedented speed.
Some are already blending internal and external data sources and applying machine learning to see trends develop — and predict their longevity — in something like real time. They’re also using cognitive models to tailor product offerings to individual consumers on a hyper-localized level. Customer choice models can, for example, already predict with confidence which choices consumers will make when presented with a set of options, taking demand forecasting to a new level.
What’s more, this is only the start. AI will soon create completely new kinds of retail analytics capabilities. With the increasing use of in-store digital tools like video and IoT sensors, for instance, technologies like image recognition and computer vision will let a retailer detect consumer reactions and insights into shopping behavior directly as it happens.
Strategic Merchandising
With precision automation and intelligent analytics in place, retailers have a foundation on which to build a truly strategic approach to their merchandising. They’ll have the insights they need to give consumers the personalized, responsive, unique services they increasingly want — in store as well as online. Their merchandising teams will be freed from lengthy and routine work and will have the time and space to apply their creativity to fine-tuning the very best customer experiences.
AI is starting to find its way into the retail industry with the start-up community — with companies such as FindMine. And, there are new entrants that have built their entire strategy around knowing consumers and leveraging AI to refine their value to the consumer:
FindMine automates the manual process of curating window displays, endcaps, and online look books. It uses AI to analyze an entire product catalogue and find the pieces most likely to complement each other.
Screenshop uses AI and computer vision technology to instantly convert fashion images into a list of “shoppable” results — connecting the user with retailers offering the apparel and accessories featured.
Stitch Fix uses algorithms to create highly personalized shopping experiences. Users fill out a style profile, then a combination of expert human stylists and AI-powered predictive algorithms are used to select the fashion pieces most likely to suit each individual.
This shows just how critical merchandising is getting in the digital age — and just how creative. That’s because, as machines take over the administrative graft, its focus is shifting to its more engaging, energizing, and fulfilling aspects — for the benefit of customers and employees. AI is here to help retailers unleash their creativity — and provide a fertile space for new ideas to grow.
Jill Standish is senior managing director and head of Accenture’s Retail practice and Courtney Spitz is managing director, Accenture Retail.
For more business insights from WWD, see:
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