Hot Content Series: AI in Retail - or: Sh** in, Sh** out
Big Data, Real Time, Predictive and Machine Learning - it is clear that the list of prominent buzzwords must also include AI now. AI is revolutionary. Everyone wants it.
But what does artificial intelligence actually mean, where are the areas of application in retail, and why is high data quality essential as a prerequisite?
AI is a big topic for the future at many management levels, because it is not only shaping the business environment, but also, it has the potential to fundamentally change entire industries. And although it feels like a new phenomenon, the topic has been discussed in expert circles for over 60 years. The only difference today: the ability to collect, store and evaluate extremely large amounts of data, as well as better processor performance, make the use of AI possible at all.
AI deals with the automation of intelligent behavior of computer systems, with the aim of making decisions at some point faster, more precisely and more reliably than humans. AI simulates human intelligence processes such as solving, arguing and assessing problems. AI applications can learn over time and thus enable computers to make autonomous decisions that increase efficiency and quality in the company.
AI in Retail
A current STATISTA study shows that AI applications are already being used in a variety of ways in retail companies. For example, customer service and customer communication can be made more efficient by using chatbots.
Marketing managers also see great potential in the planning and management of marketing campaigns in the areas of hyper-personalization and individualization, as well as branding. In this way, promotions can be performed that target customers in real-time with personalized offers.
Dynamic pricing or the use of recommender systems, which, based on shopping cart analyses, make product recommendations for customers in order to optimize the customer experience, are no longer uncommon in eCommerce.
Intelligent algorithms for more efficient planning and control are also used in other departments, such as logistics and purchasing. A study by the management consultancy firm McKinsey makes it clear what optimization potential there is for retail companies in the use of artificial intelligence in the planning of requirements and inventory control. Thanks to improved forecast accuracy, retailers can reliably identify which products are being sold, when and where and, according to McKinsey, can reduce inventory levels by between 20% to 50%. Losses in sales due to out-of-stock quotas can be reduced by up to 65% at the same time.
Data is the Fuel for AI
However, it is not the willingness to invest that is decisive for the success of technologies such as AI, but rather the availability and quality of the database, because “intelligence” ultimately depends less on the algorithm itself than on the broadest possible data basis. The algorithms used can only “learn” and in this way deliver better results in the form of meaningful analyses and recommendations for action if they gain knowledge from the most comprehensive, up-to-date and highest-quality amount of data possible.
And this is precisely where the challenge lies: there is not necessarily a lack of data - Big Data is no longer just a trend but a reality, but access to it is often restricted, as it is often in isolated company-internal silos and is therefore not centrally available. There are more and more data sources and systems in which relevant data can be found. These range from CRM tools to marketing and ERP solutions to warehouse management. The trick is to guarantee the "Single Point of Truth", a cross-channel, comprehensive and well-maintained database to make all analysis-relevant information available: because the output of Artificial Intelligence is only as good as the input. Therefore, a high willingness to invest in the database can be expected in the future.
With a central database, minubo creates the basic prerequisites for successful AI applications, because only in this way can smart technologies develop their full benefits and thus earn the trust of users.
minubo makes you #AIready.
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