The 2024 Australian Retail Outlook is out now. This must-read resource is packed with exclusive insights from Inside Retail’s survey of retailers about their performance, plans and predictions for the year ahead; trend analyses and advice from industry experts; and interviews with leading retailers, including Ikea, Lush, Outland Denim, Milligram, and many more, about their growth strategies in 2024 and beyond.
To give you a glimpse of what you can expect from this year’s report, we are sharing selected articles over the coming weeks. Be sure to download the 2024 Australian Retail Outlook to discover more.
Not only did the troubles of 2020-22 feel well and truly behind us, with retail and travel booming, but we got our first taste of ChatGPT and spent the holidays putting it to the test by writing greeting card messages, composing music and, more recently, creating new artwork.
Those who have been keeping up with the latest developments in technology sector have long known of the game-changing potential of artificial intelligence (AI) tools like ChatGPT, but rarely has it been so front-and-center in our lives.
AI has huge potential in the consumer and retail sector, with its ability to drive better business outcomes, including in customer experience, commercial effectiveness, operational efficiency, and cost optimisation.
Several retailers are already having success using AI chatbots with human-level responses to better serve customers by supporting omnichannel interactions or augmenting agents.
Within operations, AI can be applied to inventory functions by optimising product ranges based on customer preferences and available space, whereas the ordering and replenishment process can
be automated based on thresholds, lead/lag indicators and demand.
Data and machine learning can help generate more accurate forecasts of site performance, product demand or sales margin.
ChatGPT’s impressive comprehension capabilities stretch the imagination of what these technologies can achieve within the retail sector, especially as a realisation of the vision of automation being able to handle tasks that require human judgement.
Despite AI’s early success, however, many organisations are still unsure of how to leverage it to deliver business value and are seeking to build their understanding rapidly.
What executives think about AI
In March 2023, KPMG fielded a survey of 300 executives across multiple industries to gauge how receptive and prepared they were for the adoption of generative AI (the technology behind ChatGPT and
many other AI-powered tools).
Among survey respondents, 77 per cent told us they believe generative AI will have the biggest impact on their business over the next 3-5 years.
Among consumer and retail sector respondents, 66 per cent said their organisations were most likely to apply generative AI in analysing customer data and creating personalised recommendations; 64 per cent will use it for trend analysis/predictive analysis for inventory management; and 40 per cent envision it helping them set competitive prices.
Despite the known potential AI has for positively impacting the consumer and retail sector, only 23 per cent of surveyed consumer and retail organisations have appointed a central person or team to organise the response to the emergence of generative AI (as compared with 31 per cent of organisations across all sectors).
So, while many in leadership are keen, there isn’t much impetus to adopt the technology yet.
Nevertheless, the race to adopt AI in the retail sector has begun, and to make the most of this emerging technology, businesses need to start by laying the groundwork for the effective and productive use of AI.
A sample of AI use cases that could deliver value across customer service, supply chain, inventory, and buying and forecasting include:
Customer service
- Agent assist – bringing together all data on a customer to reduce call handling times
- Omnichannel support – complete customer journeys via each channel of communication
- Customer support and logistics – proactively monitoring carriers and notifying customers of delivery times with automated rescheduling or re-routing
- In-store monitoring – real-time monitoring of processes and shopping habits of customers to identify bottlenecks and generate process efficiencies
Supply chain
- Supply-chain resilience – forecast demand variability, monitor and predict potential disruptions, and
support warehousing, labour, and space management - Inbound/outbound freight optimisation – optimise transport routes (including returns), real-time in-transit inventory allocation
Inventory
- Space management – optimisation of range based on customer preferences and available space
- Real-time inventory management – visibility of re-stocking time frame to anticipate changes
- Automated ordering and replenishing – auto restocking based on thresholds, lead/lag indicators and
demand - Automated competitor price sourcing and matching – processing competitor pricing data and dynamic updating of prices
Buying and forecasting
- Demand forecasting – forecast site performance and product demand
- New product introduction – manage forecasts and planning of new products, analyse sales and non-sales related demographic data
How to jump-start your AI agenda
Across the organisation, AI can complement experienced retail team members by providing personalised
recommendations on next actions for customers based on predicted outcomes and transform the team-
scheduling process to focus on having the right team member in the right location at the right time.
To jump-start your AI agenda, there are four key actions you can consider now:
- Assemble and organise your data to get a robust foundation for AI now and into the future.
- Develop a responsible AI framework to govern your use cases and consider the ethical implications.
- Create a backlog of use cases to experiment and accelerate.
- Identify and acquire the right talent across business and technical roles.
By Brad Daffy, Partner, Powered Data & AI, KPMG Australia
This story first appeared in the 2024 Australian Retail Outlook.
