Can we right-size inventory for hyperlocal shopping?

A boiling hot summer across Europe provided the needed incentive to get shoppers buying up the latest seasonal fashion, whether to stay cool or for holidays away. Warmer weather is also a favoured time for those turning their hand to DIY, and those selling garden and home improvement products and services. Seasonal weather patterns are somewhat predictable, but other factors aren’t. Retailers now operate in increasingly fragmented demand landscapes, where shopper behaviours online and in store are changing.

The way consumers value everything from electronics to seasonal goods to essential items has changed dramatically over the past 18+ months. Shoppers are becoming more price-sensitive and thoughtful about their retail spending by searching for offers and discounted items and switching brands to save money. Then there’s unexpected demand and hyperlocal consumer trends and surges which are near impossible to factor into demand forecasting. Having said that, retailers and partners they work with can together right-size stock and inventory.’

Can we right-size with AI?

Given this trend, the only way for retailers to be confident with inventory decisions – or to know how a promotion should be structured to get people in the door and inventory out – is to tap into artificial intelligence (AI).

AI platforms can now run algorithms that account for consumer spending variables, including supply availability, demand drivers and households’ financial health. These AI platforms can also see how trends are unfolding in near-real time both within the four walls of shops and warehouses and in the world at large. Thus, AI can direct retailers to make better inventory allocation and pricing decisions. That said, AI does have its limitations, namely data.

AI can only work with the information it has available at the time a request is made. So, if an AI platform is being asked to assess current market demand and consumer pricing tolerance, but it can’t see current store or warehouse inventory levels – or any trends unfolding outside a retailer’s four walls – then its recommendations are going to be made from a narrow vantage point. That’s why the key to breaking this shortage-overage cycle starts with breaking out of this barcode-reliant retail operations model.

By David Lancefield, Director of Software Solutions, EMEA, Zebra Technologies

Read the full article in the November edition of RetailME.