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The Retail Sector is Still Finding Its Way with Artificial Intelligence

December 19, 2023


The retail sector continues to endure tectonic shifts as business landscapes and consumer behaviors change. First, there was the so-called “retail apocalypse,” then came the pandemic, which was followed by inventory challenges, inflation, and an economic slowdown. Supply chain journalist Helen Atkinson observes that all of these changes are going to separate winners from losers. She cites Howard Meitiner, former president and chief executive officer of Sephora USA, who “thinks we’re going to see a lot of companies go out of business that are trying to prop up a business model that simply doesn’t work anymore. … Consumers want an omnichannel, integrated experience, Meitiner says. … The winners this season are going to be companies that keep their loyal customers close, and maintain a real focus on customer service.”[1]


It comes as no surprise that retailers have turned to cognitive technologies (aka artificial intelligence) to help them better understand the rapidly changing environment in which they must operate. The staff at ISP.PAGE observes, “Cognitive computing is rapidly becoming a transformative force in the retail industry, offering the key to unlocking customer insights and enhancing engagement. This advanced technology, which mimics human thought processes, is poised to revolutionize the way retailers interact with their customers, predict trends, and make strategic decisions.”[2]


AI in the Retail Sector


Understanding Consumer Behavior. Changing consumer behavior is hard to gauge. As the ISP.PAGE staff notes, “Traditionally, retailers have relied on historical data and basic analytics to understand their customers. However, these methods often fail to capture the complexity and dynamism of consumer behavior. Cognitive computing, on the other hand, can analyze and learn from a wide range of data sources in real-time, providing a more comprehensive and nuanced understanding of customers.” Cognitive solutions, like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, can help retailers understand changing consumer behavior so they are not always playing a game of catch-up.


Inventory Management. Anat Shakedd, Chief Executive Officer and co-founder of Nexite, reports, “[Because] retailers are finding it increasingly difficult to find the staffing support they need, … employees today are less inclined to deal with common challenges such as inventory management and filling buy online, pickup in store (BOPIS) orders. Much of the challenge comes from brick-and-mortar stores trying to find the balance between online and in-person shopping after years of only having to manage online orders. This has understandably resulted in some disconnect between the two. … This is a perfect example of a scenario where technology — artificial intelligence and automation in particular — can offer a solution. Technology today has the power to give retailers and their customers detailed, real-time visibility into stock count on the item level across the chain, which allows for optimized store efficiency and inventory management. It also helps employees avoid having to manage customer frustration.”[3]


Personalization. Whether it’s personalized communications or personalized products, the importance of personalization has been touted for over a decade. Many retailers are still experimenting with ways that artificial intelligence can help them with their personalization efforts. Freelance writer Geoff Williams asserts, “AI technology could help greatly with the bottom line, if customers feel more confident about what they’re buying.”[4] He reports, for example, “Levi’s plans on utilizing AI to help with its models in an effort to offer more diverse body types.” In a world characterized by information overload, grabbing a consumer’s attention is becoming more difficult. That’s one reason that targeted marketing has gained traction. Ananda “Andy” Chakravarty, Vice president of Research at IDC Retail Insights, told Williams, “Marketing is another part where AI could really transform retail. Imagine a computer system that can pull the right copy assets and images and create its own email campaign that it can send to millions of customers based on the customer’s own engagement, behavior and purchases for a true one-to-one relationship with the retailer.”


Addressing Labor Shortages. Shakedd observes, “The further we get into 2023, the harder it’s becoming to fill retail jobs.” Artificial intelligence and automation can help with this dilemma. Wu Yili, Chief Executive Officer at SandStar, explains, “Artificial intelligence plays a significant role in automating many tasks that were once done by humans. This allows workers to spend less time on mundane tasks and more time devoted to customer service. Overall, this process increases efficiency and helps to improve the customer experience. The presence of computers in the retail industry has allowed businesses to handle more complex tasks, such as customer problem-solving. These advances improve productivity, overall profit, environmental outcomes, and increased sales.”[5]


Supply Chain Optimization. Moez Ali, Product Director for Artificial Intelligence at antuit.ai, writes, “One of the key ways in which AI is disrupting the retail and CPG sectors is through supply chain optimization. By analyzing large amounts of data, AI algorithms can identify patterns and trends that can help companies streamline their supply chain processes. This can include everything from forecasting demand and optimizing inventory levels to predicting transportation delays and identifying bottlenecks in the supply chain.”[6] As Ali notes, there are numerous ways that AI can help optimize supply chain operations.


At Enterra Solutions®, we combine cognitive solutions in the Enterra Systems of Intelligence™ — a cutting-edge approach that combines the power of a human-like reasoning and trusted generative AI with glass-box machine learning and real-world optimization to drive intelligent decision-making and fuel business growth. The System of Intelligence involves a set of integrated cross-enterprise business applications that break down traditional organizational siloes between marketing, sales, supply chain, and planning functions. This unique capability acts as an autonomous “brain” within an organization, enabling real-world optimization and decision-making across the value chain at market speed, with the subtle judgment and expertise of an organization’s best subject matter expert or data scientist. The system persists the accumulated business logic, ways of working, and practices of an organization in a proprietary-for-the-client generative AI package that leverages optimization and insights across business functions, geographies, and lines of business.


Concluding Thoughts


Yili concludes, “Retail businesses need to prioritize profit and productivity to remain competitive in today’s global market. It’s necessary to act quickly and effectively to ensure success and to stay ahead of competitors. Artificial intelligence can provide support for retail operations, increasing profits and optimizing business processes.” Williams agrees. He insists, “Artificial intelligence has the power to change retail — intelligently.” The ISP.PAGE staff adds, “Cognitive computing holds immense potential for the retail industry. By unlocking deep customer insights and enhancing engagement, this technology can help retailers stay competitive in an increasingly digital and customer-centric world. As cognitive computing continues to evolve and mature, it is set to become an indispensable tool for retailers seeking to understand and serve their customers better.” As with most emerging technologies, how AI can be beneficially used in the retail sector will only be made clear once it becomes a ubiquitous tool. As Chakravarty observes, “People have all these preconceived notions of what AI is like, and it’s going to be nothing like what people think.”


[1] Helen Atkinson, “The Gap Between Retail Winners and Losers Will Widen This Coming Peak Season,” SupplyChainBrain, 24 August 2023.
[2] Staff, “Cognitive Computing in Retail: The Key to Unlocking Customer Insights and Enhancing Engagement,” ISP.PAGE, 12 September 2023.
[3] Anat Shakedd, “How AI and Automation Are Making Their Way Into Retail,” SupplyChainBrain, 7 July 2023.
[4] Geoff Williams, “How artificial intelligence will change retail,” National Retail Federation, 28 June 2023.
[5] Wu Yili, “Here’s how artificial intelligence can benefit the retail sector,” World Economic Forum, 6 January 2023.
[6] Moez Ali, “How Artificial Intelligence is disrupting Retail and CPG company,” Medium, 23 December 2022.

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