Metaverse Reality Check
Now that the marketing value of digital fashion and NFTs is clear, brands still need to distinguish between concrete opportunities from the hype ‘to generate sustainable revenue streams presented by growing consumer engagement with the Metaverse,’ the report states. According to bullish observers, says McKinsey, five years down the line, mass consumer adaptation of the virtual world will create the biggest opportunity for the fashion industry since the revolutionary e-commerce. They also predict that the hype around the metaverse will fade ‘as technologies fail to meet expectations or users prove reluctant to use virtual spaces as extensively as some business plans are counting on.’

Hyper Personalisation
According to the report, brands now have access to an array of personalisation tools and technologies. They can now upgrade and personalise their customer relationships. Now, top executives have an opportunity to harness Big Data and artificial intelligence to build long-term loyalty by providing one-to-one experiences. Consumers are now looking out for personalised products and brands. The report reveals, ‘Seventy-one per cent of global consumers want companies to deliver personalised communications and products and 76% are unhappy when this is not offered.’

Connected Stores
The inevitable rise of e-commerce has made retailers rethink their physical store strategies. ‘Fashion executives can address consumer pain points by using in-store mobile Apps to enhance the in-store experience and micro-fulfilment technologies to leverage the store for the quick-commerce era,’ says McKinsey. According to their report, though rules of physical stores are changing, they are far from dead. There’s an opportunity to reshape the overall retail mix.

End-to-end Upgrade
Various digital and analytics tools have transformed key parts of the fashion value chain, but they are often confined within the organisation. For a more efficient and profitable way of operating, brands should embark on an end-to-end value chain. They need a new digitised value that unites multiple internal processes and data sources. The report says, ‘When it comes to digitisation, 61% of fashion executives believe end-to-end process management is among the most important investment areas for their organisation between 2021 and 2025.’

Traceability First
To effectively reach deep into the supply chain to understand the lifecycle of a product, fashion brands need to combine traceability systems powered by traceability software and Big Data, according to McKinsey. Growing consumer awareness has resulted in fashion brands being held accountable for their environmental and social impact. According to the report, a common data language is essential for comparability, making it easier for suppliers and manufacturers to share data with multiple brands.

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AI can be applied seamlessly across physical and digital stores and AI in retail involves the use of automation and data analytics to deliver highly personalized shopping experiences to customers. By deploying AI-powered algorithms, retailers can track and capture in-store as well as virtual store data. AI will allow them to execute targeted in-store branding and marketing campaigns based on customers’ preferences, historical basket sizes, spending patterns, location, etc. Additionally, it will help them improve customer loyalty and retention with heightened personalization.

Let’s look at some of the most exciting applications of AI in retail:

* Contactless checkouts: Contactless checkouts make the buying journey shorter and easier for customers, thereby increasing in-store customer satisfaction. A contactless or cashier-less checkout combines the use of cameras, IoT sensors, and computer-vision systems to detect customer interactions, monitor the movement of products, and automatically detect prices. It helps reduce retailers’ operational costs and deliver enhanced shopping experiences to digitally-native consumers.

* Inventory management: Deploying AI in inventory management processes can optimize the supply chain, pricing, and promotional planning. Computer vision is deployed to track items on shelves and carry out a 360-degree inventory scan. Automating inventory management will provide retailers with out-of-stock notifications, boost the store layout, produce heat maps, and forecast the on-shelf time of a product. The benefit here is that AI assists the human workforce and helps bring back products on the shelves as soon as possible.

* Customer behaviour analysis: AI-powered retail analytics solutions captures real-time store data and track customer behaviour across offline and online channels. Using predictive analytics, retailers can build propensity models to conduct forecasting and predict customers’ purchase patterns. This will allow retailers to deliver relevant communication, and provide personalized discounts and offers to initiate a purchase. Brands can also deploy retail analytics in visual merchandising and store audits to identify operational gaps and improve in-store experiences.

* Auditing SKU placement and planograms: Traditionally, performing an audit of the retail shelf has been a manual and time-consuming process. Moreover, it was never fully accurate, and error rates were high. Therefore, the planogram management- which defines where products must be located and displayed in-store- has been an imperfect process. This is where automated image detection and object-detection technologies come in. Together they automate the process from checking prices to identifying products’ locations. The upshot here is that retailers get a unified view of their shelf conditions and make necessary amendments to in-store layout. Essentially, AI software will offer two critical KPIs to retailers: planogram compliance and on-floor availability.

Conclusion
Implementing AI/ML-powered technologies to streamline operations and cut operational overheads is a necessity in the age of labour shortages and e-commerce competition. AI is also critical to delivering personalized and immersive shopping experiences from shelf to checkout, track customers’ interactions and strengthen in-store branding.

— Sanjay Kumar

The post Why the Future of Retail is AI-powered first appeared on PHYGITAL RETAIL CONVENTION (PRC).