Retail stores gather a lot of raw data during their active hours. Data may seem like they hold no meaning – like they are just byproducts of carrying out various operations. In reality, raw data contain critical insights into business performance. Extracting meaning out of random, unstructured data requires the use of formulas. Correlating and deducing vital information from big data enables retailers to find optimization opportunities and forecasting.
Employing a mathematical equation to manually make sense of raw data using spreadsheet software or pen and paper is exhausting. Not only do those methods take up a lot of time, but they also open up room for errors to occur. Instead, you can leverage integrated algorithmic retailing. It is the use of Artificial Intelligence (AI) and Machine Learning (ML) algorithms to get insights paving the way for better retail management.
In this article, we discuss the many facets of algorithmic retailing and why it’s essential to have. Let’s get started.
The need for algorithmic retailing
Customer-centricity is the main focus of every modern retailer. Meeting the requirements of customers boosts retail prospects by improving sales and referrals. That said, there is tough competition in the market.
Pleasing customers calls for understanding their shopping behavior. Questions like “what will they buy next?” “What kind of products are they highly likely to show an interest in” must surface. The answers to such queries help you gauge customer preferences.
In this scenario, algorithmic retailing plays a pivotal role. The cognitive capabilities of AI and ML aid the prediction and planning of various operations. The algorithms of the technologies enable you to make strategic, informed retail business decisions. In fact, several businesses, from electronics to apparel stores, have begun employing algorithmic retailing to outperform competitors.
What can algorithmic retailing do for your store?
Algorithmic retailing turns the data you accumulate over time into your most valuable asset. With an advanced retail management software solution, you can effortlessly reap the benefits of AI and ML algorithms. Let’s dive into what that can do for your store.
A core challenge retailers face is stocking up enough goods that have demand. Having a surplus of inventory that customers are not interested in wastes capital. In turn, that takes a toll on customer satisfaction. Algorithmic retailing helps prevent this problem from arising. With its complex computerized mathematical formulae, algorithmic retailing predict future trends based on historical data. Ultimately, you learn what stocks to prioritize acquiring and what stocks to discontinue purchasing.
The purchase behavior of customers is dynamic. Many factors affect it, including the global economy and seasons. Noticing these patterns and changes can be difficult. But that’s not the case when you employ algorithmic retailing. Artificial Intelligence helps identify granular changes in customer behavior. Using that, you can deploy offers that customers will interact with.
Omnichannel customer engagement
Customers have a plethora of choices when it comes to how they want to purchase a product. There are many shopping channels, including social media, eCommerce, and brick-and-mortar stores. As they engage with your business on any of those channels, you can gain insights into their shopping journeys using algorithmic retailing. The AI algorithm also retargets your audience regarding incomplete transactions and abandoned carts via email, text, and in-app notifications.
In-store product arrangement
Where you choose to arrange specific products in your store impacts your sales. AI and ML-based algorithms determine what customers are likely to buy. With that predictive model, you can find lucrative areas in your store to position items. For example, the demand for umbrellas goes up. So placing them at the front of the store will yield more sales. That’s a broad example. Beyond that, algorithms will predict the exact demand for products, allowing you to place them in the store accordingly.
With advanced algorithms, you can convert everyday retail data into business-optimizing opportunities. Using AI and ML, you make better, strategic decisions that will curb costs, maximize productivity, improve customer satisfaction, and boost business prospects. The best way to leverage algorithmic retailing is with an enterprise retail management system like SmartPOS. It automates critical retail functions, is cloud-enabled, and is feature-packed. Reach out to us to know more about SmartPOS. Take your business to the next level today.