According to MarketsandMarkets, the global retail analytics market will likely more than double in size during 2015-2020, totaling about $5.1 billion at the end of the forecast period. The adoption of analytics solutions is increasing as more enterprises worldwide are realizing significant returns from using BI and analytics platforms and services. Of late, many retailers seem to be jumping on the AI bandwagon to improve their marketing efforts. Sailthru, a marketing technology company, published a study that included a survey with more than 200 retail marketers. Over the course of 2017, these retailers plan to leverage AI to expand their mobile and social media marketing strategies aside from improving customer journeys.
Analyzing data to improve retail sales is not new. What is new is the volume of data and sophisticated machine-learning algorithms to analyze it. Data science is the processing and analysis of large datasets -- structured or unstructured. Tweets from customers and prospects is an example of unstructured data. Most of the data-science algorithms have been used for years; many pre-date the first computer.
It is a whole new game in the consumer-packaged goods (CPG) and retail industry. The combination of digital technologies, new competitors with smarter business models and changing consumer behaviour is disrupting, disaggregating and dislocating the industry which once operated on a simple business model.
With so many variables it is extremely complex and time-consuming to determine competitive prices that add to the bottom line and also benefit the final consumer. With low-profit margins per unit, assigning the optimal price to a CPG is a matter of competitive advantage. A combined research by Nielsen, McKinsey, and GBA has revealed that'Pricing winners who adopted best practices in devising a pricing strategy were able to increase unit prices by 1.2 percentage points more than the category average. At the same time, they gained share by growing sales by almost a full percentage point ahead of their peers.' While some best practices are technology interventions, others are about partnerships.
Advances in artificial intelligence and deep learning have changed our lives. We are already using it even without realizing it: AI helps to power Google's search engine, Tesla's self-driving cars, Apple's voice assistant, and Amazon's shopping recommendations. The impact of artificial intelligence in retail and ecommerce is also growing. While ecommerce giants like Amazon, Walmart, and eBay have used these capabilities behind the scenes for years, ecommerce entrepreneurs can now also do the same. Algorithmic technology and AI can be incredibly helpful tools to grow sales and optimize various aspects of ecommerce operation, from pricing to demand planning.