The shift to omni-channel selling has created many challenges for retailers across their order management and fulfillment operations. Demand forecasts need to be accurate to ensure profitability — even in the face of unprecedented volatility. Consumers need real-time visibility to inventory. Products must be strategically allocated across channels, as well as located as close as possible to demand. Fulfillment promises need to be accurate and profitable.

How are retailers addressing these challenges? To answer that question, Blue Yonder recently commissioned Gatepoint Research to conduct a survey1 of senior retail decision-makers. Of the respondents, 41% were C-suite executives, 23% were directors, and 36% were senior or department managers. The views of these nearly 200 decision-makers may surprise you.

Legacy Systems Are Out, Advanced Technology Is In

It’s clear from the study that retail executives view advanced technology adoption as a key enabler of their success in today’s fast-moving, highly competitive omni-channel landscape. Nearly three-quarters (73%) of respondents are actively eliminating or replacing their legacy technology systems.

While the sheer number of retailers eliminating their legacy systems may be shocking, it’s understandable when you consider the realities of today’s omni-channel world. Older systems simply aren’t equipped to enable real-time inventory visibility, intelligent and autonomous allocation, profitable fulfillment and other core capabilities retailers need today.

The survey asked participants about the specific shortcomings of their existing order management and commerce solutions. These technology gaps are all related to new requirements that have emerged with the rise of omni-channel selling:

  • 41% said their current software doesn’t enable personalized shopper experiences
  • 39% reported they’re unable to accurately forecast inventory, labor and other resources
  • 35% noted that their legacy systems aren’t built to address disruptions and changing shopper needs

Retail executives pointed to other shortcomings of their legacy software, including a lack of performance and scalability (31%), as well as insufficient speed and resilience (31%).

On Retailers’ Wish Lists: More Accurate Inventory Planning

By adopting more advanced technology, what key capabilities are retailers focusing on? About half (49%) of survey respondents said they will leverage new solutions to improve their forecasting process for inventory and other omni-channel fulfillment resources.

It’s obvious that inventory is a specific pain point as retailers attempt to maximize availability and margins across channels. Seventy percent of participants say their chief inventory concern is minimizing out-ot-stocks, overstocks and markdowns. Retailers also want to expose inventory accurately to consumers (48%), understand how inventory location impacts fulfillment costs and the shopper experience (34%), and position inventory closer to consumers (34%).

The omni-channel environment means retailers need to have the right products in the right place at the right time, delivered via a profitable fulfillment strategy. This is challenging in the face of ongoing demand volatility — but it’s clear that retailers are placing their bets on advanced technology to help solve this problem.

Cloud Migration and AI Adoption Are Clear Priorities

In implementing advanced technology, over half of retailers (53%) are planning to migrate their software to the cloud. This makes sense, given the enormous omni-channel data volumes retailers must manage today — and the speed with which they need to respond. Cloud models reduce retailers’ costs of ownership, facilitate upgrades, increase speed and bandwidth, and enable them to quickly add new capabilities via composable microservices. Over a quarter of respondents (26%) plan to embrace a scalable microservices model in modernizing their capabilities.

Nearly half of retail executives (44%) plan to add, or increase their investments in, artificial intelligence (AI) and machine learning (ML). In answering a general question — “Which trends are impacting your commerce and order management strategy?” — an even greater number (47%) cited AL and ML.

Given that the size, scale and complexity of omni-channel selling exceeds human cognition and traditional planning approaches, this also makes sense. AI- and ML-enabled optimization engines enable retailers to quickly and autonomously manage disruptions, allocate and re-allocate inventory, make fulfillment promises that balance cost with service, and master other complex day-to-day challenges.

A subset of AI —generative AI — was also covered in the Blue Yonder-Gatepoint study. Generative artificial intelligence is capable of generating text, images and other content in response to predefined prompts.

Fifty-seven percent of participants said that generative AI will improve their customer engagement by enabling personalized product recommendations. Other specific capabilities retailers plan to support with generative AI include customer service/chatting (55%), advertising (50%), product availability (42%), and returns and exchanges (31%). It’s clear that retailers are excited about the possibilities of generative AI and see broad applications for it across their operations.

Retailers Agree: The Time to Act Is Now

When asked about the timing for their planned technology upgrades, almost two-thirds (57%) of retailers said they’re moving forward with their new initiatives in the next 12 months. A quarter already have advanced technology initiatives under way.

Retailers are clearly feeling a sense of urgency, and with good reason. Demand volatility, increasing competition, rising fulfillment costs and growing consumer expectations are here to stay.

Fortunately, Blue Yonder has responded to these pressures with innovative order management and commerce solutions, enabled by AI and ML, that are cloud-hosted, composable and ready to launch quickly. We’re helping the world’s leading retailers modernize their technology stacks, adopt new best practices, support end-to-end workflows, and enable new levels of speed and responsiveness via automated, data-driven decision-making.

Retailers that are embracing advanced technology are quickly gaining an advantage in the omni-channel landscape by dramatically improving service levels, at a lower cost. If you’re not already modernizing your technology stack, what are you waiting for? Reach out to Blue Yonder today — and get started on your own omni-channel success story.

1 The Commerce and Order Management Strategies survey was conducted between July and November 2023 by Gatepoint Research.