Technological trends are changing the retail sector in a fast pace. Therefore, retailers that want to remain relevant in the future should be focussing on two developments at the moment: high productivity platforms and Artificial Intelligence. This became clear during a survey by IG&H.
Unlike developments such as Internet of Things or blockchain, both trends, as described by Gartner, have already reached a mature stage and are proving themselves rapidly. Both high productivity platforms and Artificial Intelligence are intervening in each link of the retail chain, giving them a new dimension. This is why IG&H believes that retailers who embrace these developments now greatly increase their chances of remaining a frontrunner in their market.
High productivity platforms; react more quickly to developments
A High Productivity Platform is also known as a ‘low-code platform’, which is used for software development. The technology is popular because applications can be created in a much shorter time and with lower costs.
Because new functionalities can be built more quickly, it becomes possible to test the effectiveness of certain developments in short sprints. This can, for example, be done using ‘rapid prototyping’. Retailers who adopt this trend are able to use it to test new propositions quickly in changing market conditions. Imagine, for example, a discount food producer which offers a temporary ‘luxe’ assortment during the holiday season. This technology offers countless applicable possibilities; from small mobile apps to large back-end systems. Because of this, high productivity platforms are suitable for both small/medium sized enterprises and multinationals.
The technology can be modelled in a visual setting, after which the platform will generate the code. Because applications can be developed rapidly, shortening the feedback loop, the time-to-market can be sped up by 70 percent when compared to standard packages. This is definitely of interest when the development of applications requires custom work. When compared with traditional solutions, the total cost of ownership can be reduced to one third, a recent study by Gartner discovered.
Increase efficiency with Artificial Intelligence
Data science is a collective of activities encompassing effective gathering and analysing of data in order to make decisions more efficiently and effectively. Different techniques or algorithms can be applied to support decision-making, such as machine learning. Deep learning, an Artificial Intelligence technique, is a follow-up of this and is based on neural networks. Both techniques are often focused on self-learning principles.
In the current retail landscape, we are mostly seeing utilizations making use of the first two forms. They can be put to use, for example, within category management. This technology can, unlike traditional work methodologies, predict sales through feeding the system numerous sources of data. This can lead to improved purchasing suggestions.
Our experience has taught us that this suggestion is accepted 90% of the time. That results in a higher rate of availability and less residual stock, in combination with a higher rate of efficiency in the department in question. In the fashion industry, algorithms are being used to predict trends both earlier and with more precision. Using machine learning, these personal offers are relayed to the client. Through this, higher conversion ratios are attained and replenishment purchasing can be performed more precisely. This results in lower residual stock. The urgency is confirmed by the prediction that 85% of retail transactions will be powered by artificial intelligence by 2020.
It is important to develop the correct skills and competencies in all levels of an organization. In many cases, a culture change is necessary wherein the suggestion of the correct KPIs is of the essence.
Eve of exponential technological developments
Incidentally, this technological dilemma is not limited to the retail sector. IG&H is also experiencing how important it is to continually change and grow in order to remain relevant as an advisory bureau. Because both we and our clients increasingly require additional expertise, such as data analytics, technological and organizational transformation, we have created market leading teams based on these competencies. In this manner we can offer the most value to clients and, together with our sectoral knowledge, form a unique combination with the digital transformation within retail.
The current and expected trends make us realize that we are on the brink of exponential technological development. In order to remain relevant and flexible as a retailer, it is crucial to make the correct choices now. Artificial intelligence… Low-code… Cloud… which technological trend will you bet on?
Written by: Iris Huisman (Analist Retail), Michiel van der Werf (Consultant Retail), Sjoerd Norden (Consultant Retail) and Bram Gilliam (Director Retail).