As we mark the one year anniversary of the UK’s Covid-19 lockdown, it would be an understatement to say that the retail industry has been disrupted and transformed over the past 12 months. Since the pandemic began, seismic shockwaves have rippled across the sector, with businesses forced to react to an unpredictable situation whilst taking into account ever-changing customer behaviors.
Alongside this, there have been multiple lockdowns, in which non-essential retailers have been forced to close their stores. The last year has transformed the sector as we knew it, with 2020 causing the biggest retail shake-up in recent memory.
But whilst vaccine roll-outs halt the spread of the virus, and retailers prepare to re-open in the coming months, the coronavirus retail trends show no sign of disappearing. Indeed, it looks like they’re very much here to stay and evolve.
Here, we take a closer look at some of the trends to emerge from the pandemic and the ways in which AI-powered decision making can help retail businesses turn disruption into opportunity.
- Does AI actually provide ROI? (opens in new tab)
Convenience is key
There has been a convenience store revival in the UK, driven mainly by young Britons who reason that they have everything they need and will continue to utilize more local stores as we emerge from the pandemic.
Younger consumers in the UK – particularly those between 18-34 – are choosing to shop locally more often now than they did in the past, as revealed by PayPoint’s research. During the UK’s first lockdown, 56 percent opted to use their local convenience store for the first time, for a variety of reasons, including “everyday food and drink purchases to parcel pick-ups and drop-offs, utility bill top-ups...and much more.”
As this continues, agility (or a lack of) in stock and inventory positioning for retailers will be a key determining factor between the winners and losers.
AI enables businesses to optimize their stock and inventory, by using huge amounts of granular demand signals to accurately forecast customer behavior and demand. AI uses this to make faster and smarter decisions in a variety of areas, including pricing and allocation to change direction based on localized demand. For example, AI can allocate the perfect amount of a particular product line to a specific store to take advantage of regional demand.
This ensures that the retailer’s store becomes synonymous with having the right products in stock to keep customers happy.
Success for subscription services
With many people gaining a more stable and predictable routine whilst stuck at home during 2020, more Britons invested in regular subscription services. Research from Barclaycard Payments reported that spending on such services increased by nearly 40 percent year-on-year at the height of the first lockdown, and it is clear that brands are cottoning on to this trend.
Pret a Manger notably launched a new subscription service in the second half of 2020, offering customers unlimited coffee for £20 a month, in a bid to drive loyalty at a time when a high percentage of its usual clientele were still working from home.
This is where an AI-powered view of customer data becomes crucial, enabling retailers to serve the right customer with the right message at the right time. With AI leveraging multiple data points from different parts of the business, from e-Commerce data to warehouse data, businesses can identify those who are more likely to subscribe and look after them with tailored offers and personalized communications.
AI can not only help drive new customer acquisition, but can also use the same intelligent data to increase purchase frequency amongst existing customers and boost the average order value.
- AI: The need for transparency in the cybersecurity industry (opens in new tab)
Grocery shopping goes digital
Online grocery shopping was one of the key winners from the pandemic, with 77 percent of people now doing at least some of their grocery shopping online, compared to 61 percent in 2019, according to a Waitrose report.
As more shoppers rely on online grocery shopping to avoid the Coronavirus risks of in-person stores, the leading supermarket chains have been placed under increasing pressure to fulfil demand. The big players are, naturally, absorbing up the majority of this new online demand. Whilst this means bigger revenue; it also means bigger costs.
AI offers these businesses a significant opportunity to optimize their digital channels and supply options. By using AI to rapidly and accurately leverage customer and supply chain data, businesses can optimize their channel mix and thus better serve customers and cope with new demand pressures.
AI can empower retailers to weather any turbulent and uncertain market changes.
The evolution of the store
The phenomenal growth of e-Commerce over the past year has accelerated the nascent evolution of the role played by high-street shops. Retailers are increasingly using stores differently and meeting the omnichannel customer where they want to be met: the store as a hub for online shopping.
Rather than solely a source of in-person shopping, stores are becoming a key element in the e-Commerce journey. Next is a great example of this, with its annual reports reaffirming its commitment to keeping “loss making stores” open to help support delivery-to-store and ship-from-store processes.
AI is the perfect assistant for this service. AI can create a smarter view of customer data and more accurate forecasting to keep an agile stock inventory, pushing products around the store estate to be one step ahead of customers.
At some point in the future, the physical stores as we know them will change and become hubs for the consumer services that e-Commerce offers. With this service perfectly primed for AI optimization, businesses should capitalize on this opportunity sooner rather than later, and reap the rewards of investing in AI today.
As we emerge into a post-Covid economy, the retail sector is at a critical turning point. The businesses who take the right action and follow the right approach now will be the ones who go on to win in the future. AI makes decisions smarter and faster, supercharging teams. Businesses doing this are making great decisions at winning. At Peak, we call this Decision Intelligence.
- AI in the smart retail era (opens in new tab)
Tom Summerfield, Retail Director, Peak (opens in new tab)