All In on AI: Why 95% of Retailers Already Use This Game-Changing Technology
Retailers have gotten the message: Optimize or die.
That’s a clear takeaway from a new national survey on artificial intelligence. The survey, conducted by Blue Yonder, found that the vast majority of retail executives:
- Considered themselves very knowledgeable about AI (85%).
- Had no hesitations about applying AI to their business operations (85%).
- Were using AI in at least one application related to supply chain or order management (95%).
- Had made it a priority to adopt AI for omnichannel execution over the next five years (96%).
These results underscore a crucial point: Retailers that don’t embrace AI will almost certainly fall behind. The top 10% of retailers already create 70% of the sector’s profit, McKinsey & Company has found. Their share seems certain to grow. It’s industry giants that (in the words of the Harvard Business Review) “operate at the leading edge” of AI and analytics.
To survive, businesses need to move forward with AI — and do it fast.
Srinivas Pujari is Blue Yonder’s corporate vice president for product management commerce and data science. Before joining Blue Yonder, he spent two decades working for prominent retailers. He sees how quickly AI is transforming retail.
AI has become a huge topic of discussion since the public launch of generative AI tools such as ChatGPT. But, Pujari noted, retailers were leveraging predictive AI and machine learning (ML) long before ChatGPT became a household term.
In 2016, the McKinsey Global Institute touted ML’s power. Retailers that used advanced data analytics saw operating margins increase up to 19%. By 2021, the Gartner Group could lay out 23 use cases for AI in retail.
Retailers’ understanding of AI is “more advanced than it was a few years ago,” Pujari said. Still, the pace of innovation has accelerated. Businesses slow to embrace the changes will fall behind.
Big Boosts From AI
You don’t need a crystal ball to see the effect AI can have on your business. Retailers around the world have seen huge boosts from leveraging AI.
Pujari mentioned several companies that have recently worked with Blue Yonder:
- Bonprix: This top fashion retailer operates in 30 countries. But it had tied its pricing and promotion to rigid price-conversion tables. The company needed to modernize its processes to optimize prices across so many countries. So Bonprix turned to an automated pricing solution powered by AI/ML. The company saw double-digit sales growth and increased profit per item sold.
- Constellation Brands: With $8 billion in annual revenue, this international producer of beer, wine and spirits has a portfolio that includes Corona, Modelo, Robert Mondavi, Svedka vodka and Casa Noble tequila, among many others. But Constellation relied on historical data in a fast-changing market. The company realized it needed forward-looking data. By adopting predictive analytics, Constellation boosted sales up to 6% in various categories.
- The Source: This company is Canada’s largest tech retailer. But carrying a large, diverse product portfolio brings challenges, especially in forecasting demand. The Source embraced AI to refine inventory and order forecasting. The results? The company reduced inventory investment by 19% in just two years. It also saw sell-through as high as 98%.
- DM: Germany’s largest drugstore chain needed to make sure its distribution centers had the right products. So DM embraced AI for demand forecasting and saw immediate gains. Its precise demand predictions improved inventory accuracy, delivery times and staff planning.
Blue Yonder’s Pujari concluded: “It all comes down to keeping your promises to your customers. AI makes predictive analytics incredibly powerful. AI can take in all sorts of variables and then show you — in real time — the impact these factors will have.”
Download the 2023 AI Adoption Survey Report
Download the full survey results to see how your company stacks up and learn how Blue Yonder’s AI-infused solutions can help you make and deliver promises to your customers.
Schedule an AI Consultation with Blue Yonder
Our commerce experts can help you pinpoint how AI can improve the accuracy and efficiency of your order life cycle to increase revenues, decrease costs, and create loyal customers. Contact us today!