It took a pandemic for the retail industry to seriously invest in and further develop e-commerce and omnichannel strategies. Now, as companies begin to reap the benefits of some of these massive investments, a new techno-shock has arrived: artificial intelligence (AI).
Retail industry leaders know that AI is very much in the future, but it is difficult for senior retail executives at apparel and footwear companies to fully agree on how to use and leverage AI. .
This is one of the key takeaways from a recent study by First Insight. According to the survey, only 29% of retail executives are “very familiar” with AI, while 40% are “somewhat familiar” and 31% are “somewhat familiar.” I am reporting. Familiar. “
The survey of more than 160 executives also found a disconnect between CEOs and their teams when it comes to expectations for AI.
More than half of CEOs are primarily focused on technology’s potential to reduce costs and improve customer experience, so-called from a balance sheet perspective.
Reduce costs and build customer loyalty.
Just one-third said they would likely prioritize using AI for demand forecasting and inventory management. These capabilities have great potential in an industry where profit margins are low and return rates remain high. For example, AI technology can be used to test demand for new products before they go into production and risk failure.
Meanwhile, executive team members are twice as likely as leaders to prioritize “enhanced predictive analytics” such as forecasting demand and managing inventory.
This discrepancy is a red flag that recalls the mistakes many companies have made by not taking Amazon.com seriously and developing their own e-commerce platforms late or clumsily. It’s worth remembering that when Amazon started selling books online, Borders Books & Music was generating $1.6 billion in annual sales. Borders filed for bankruptcy in 2011. Retailers like Tower Records, Circuit City, and Radio Shack suffered similar fates.
The decline of the department store business is due in part to Amazon paving the way for brands to sell directly to customers online and through its own stores. Many department store chains have made the colossal mistake of investing in store expansion at the expense of product differentiation and e-commerce development. For most retail CEOs, AI is a complex new technology that needs to be managed. Investing in AI should be considered when you already have a lot on your plate. A strategic disconnect between executives and their teams exposes knowledge gaps that can hurt growth and profitability. This gap can be resolved through trial and error and agile learning environments.
CEOs and their teams need to transform their organizations into data-driven businesses that test and learn more, leveraging the vast potential of AI to win with innovation, not just lower costs. there is.
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