New research from Blue Yonder, a JDA Company, in association with Microsoft has revealed that brick and mortar retailers are missing out on the opportunity to improve the customer experience and compete with online retailers by failing to automate their pricing and replenishment processes. Launched today, the research found that 96 percent of retailers rely on manual processes for their pricing and replenishment strategies, despite near universal recognition of the benefits that greater automation could bring.
The research, which was commissioned by Blue Yonder in association with Microsoft, surveyed 200 brick and mortar retailers from the UK, Germany, and the U.S. to understand how they are leveraging the latest technologies to achieve a competitive advantage and level the playing field with more agile online retailers. The research revealed that retailers are committed to their store footprint, with 90 percent reporting that they will either be increasing or maintaining their physical store presence, as well as innovation, on average investing 36 percent of their IT budgets in new technology such as artificial intelligence to meet the demands of customers and prepare for the future of retail.
For brick and mortar retailers to meet this demand while competing with, and leapfrogging, online retailers, they must take advantage of cutting-edge technology to optimize their core processes. According to the survey, 53 percent of retailers admit that there is room for improvement in their replenishment process, while 54 percent say the same for their pricing strategy. These core processes are critical to the success of retail operations, and while retailers overwhelmingly use manual intervention, they recognize that leveraging next generation technology to automate these processes would bring a wide ream of benefits to their business, with 58 percent of retailers reporting that automated replenishment would generate a better customer experience and 56 percent stating that automated pricing would result in improved profits.
Commenting on the findings, Uwe Weiss, CEO of Blue Yonder, said: “It is clear that retailers recognize the benefits that automation can bring to their businesses, but perhaps most significant is the agility it gives them to compete with their ecommerce rivals. Online retailers have been able to make small and regular adjustments to their pricing for years, instantly reacting to consumer demand and trends to keep their prices optimized and maximize sales, while brick and mortar retailers have been trying to manage with manually-operated, outdated and static pricing strategies. However, with automated pricing solutions, retailers finally have the flexibility and agility to optimize their prices in their physical estate, delivering a better experience for customers and enabling them to compete more effectively with their online rivals.”
ShiSh Shridhar, Microsoft Global Retail Industry Solutions Director, commented: “Cloud technologies and AI are powerful tools in helping retailers achieve a higher degree of automation in their pricing and replenishment approaches. Microsoft Azure and Azure AI are driving new levels of organizational productivity and intelligent data-driven experiences across the retail industry. The powerful combination of JDA’s Blue Yonder-powered applications with Azure empowers retailers to better compete in the marketplace.”
Relying on manual intervention to execute critical processes such as pricing and replenishment leaves retailers open to inaccuracies, like not having the right products available or priced at a sub-optimal level, resulting in lost sales. Intelligent technologies, such as automation and AI, can not only provide insight on pricing and forecast stock levels, they can deliver better replenishment and pricing decisions to retailers. AI solutions can analyse vast quantities of data to completely automate these processes and eliminate the burden of manual intervention, enabling retailers to devote more of their resources to improving the customer experience.
Uwe concluded: “Traditional retailers need to see themselves as disruptors, moving away from outdated processes that they have used for decades and looking for new technologies to transform their businesses. If brick and mortar retailers are to compete with their online rivals, they will need to radically adjust their approach to technology and data. Retailers need to begin thinking of data not only as one of their most important assets, but also as the key that can enable them to build better relationships with their customers, optimize their supply chains and pricing, and survive and thrive in a more competitive and challenging market.”