DATA | AI TECHNOLOGY
This might change how you think about price optimisation When it comes to price optimisation, the days of relying solely on seasonality and historical data are precisely that, history.
ore than half of retailers across the world are investing in Artificial Intelligence (AI) this year, and if
you’re reading this, you’re probably working for one of them. The dialogue around AI in retail is endless, and it isn’t just talk anymore, AI is here. Its presence, while new, is undeniable and is progressively changing retail forever. According to the National Retail Federation, the number of retailers investing in these technologies is expected to double over the next two or three years. That means if your competitors aren’t using AI already, they will be soon. A profoundly different way of doing business and reaching your customers is coming into focus and moving commerce forward faster than ever before. The days of guesswork and relying solely on seasonality and historical data are precisely that, history. The new approach is centered around exacting precision and accuracy that only AI and Machine Learning provide. These technologies, along with the Internet of Things (IoT) and compelling shopper data, are fueling a more robust customer experience, raising the bar for retailers, and when it comes to competing in retail, nothing is more significant than pricing. Pricing is a demand lever that retailers can use to create powerful and profitable demand. Your pricing should align with your approach to assortment optimisation, merchandising, and localisation. Pricing should also support how your business channels your brand and the way it is marketed and positioned. Positioning the right price with perfect timing and the appropriate medium or location is everything right now. We are now seeing technology move pricing forward in significant ways, but first, let’s talk about price optimisation.
The most advanced AI solutions not only make predictions and insights; they actively advance your price optimisation with accurate real-time data that drives more revenue and sustainability. +
BY JOANN MARTIN [JDA SOFTWARE]
while, these technologies align with the retailer’s business strategy. Already, 20 per cent of retailers are using AI to localise and personalise pricing for their customers. In summation, more intelligent pricing frees your teammembers' time, which can be allocated towards focusing on something more important, like the customer experience. AI and Machine Learning can bring your team members back to the human experience. When retailers tap into shopper data and deeper insights from AI and Machine Learning, they can act strategically and put more of a focus on their customer experience – across every channel. With consumer expectations continually evolving, our fast-moving marketplace and new technologies are creating a new kind of customer experience in-store and online. We still see a lot of fear around AI in the retail industry and what it means for jobs. In reality, technologies like Machine Learning and AI are supporting more businesses in keeping their stores profitable and their employees dedicated to initiatives that drive customer loyalty and more positive shopping experience. A higher level of innovation is necessary to maintain a competitive edge and keep pace with the disruption – are you ready?
Now, price optimisation is all about your data and where it’s coming from. Robust price optimisation applies forecasting in a variety of machine learning and optimisation sciences. Machine learning sets processes for logical product groups (assortments and product lines) across times (seasons, weeks, and months) and locations (price zones, online, and in-store touchpoints). And using AI, price optimisation regularly includes one important variable – what will happen next? Retailers who previously relied on historical demand to guide pricing are asking, “what’s next?” Now, in addition to how demand looked in the past, they’re using technologies that factor in hundreds of other variables. While buyer behaviors are more unpredictable in our on- demand economy than ever before, now retailers have access to vast reams of data. This data includes past sales patterns and customer footfall, along with external information like the weather, current events and public holidays. WHEN IT COMES TO PRICING AND DEMAND, RETAILERS AREN’T LOOKING BACKWARDS ANYMORE
AI and machine learning drill down to weather and events, and share patterns across social media and more to calculate the probability of demand levels for the future. With these technologies, retailers can mine actionable take-aways to navigate consumer preferences and create more exceptional shopping experiences. The most advanced AI solutions not only make predictions and insights; they actively advance your price optimisation with accurate real-time data that drives more revenue and sustainability. By using true AI and Machine Learning solutions, retailers are now adapting to dynamic pricing models that prevent excess stock, resulting in fewer products going unsold – in-store and online. AI retailers can charge full rate for the season and adopt pricing strategies towards the season end, or when any excess stock needs to be sold. It also reduces waste significantly. AI can predict customer demand and accurate pricing decisions across every product category and store – learning the complicated relationship between price fluctuations and demand. All the BETTER PRICING MEANS LESS WASTE AND HIGHER PROFITS
AI AND MACHINE LEARNING ARE REDEFINING PRICE OPTIMISATION Until recently, price optimisation was a
traditional mathematical analysis discerning how shoppers are engaging with different prices for products and services across every channel. Price optimisation calculates the rates that align with business goals, including maximising profits.
JDA Software offers the leading supply chain management (SCM) platform powered by artificial intelligence (AI) and machine learning (ML). JDA’s leading cloud solutions manage supply chains from end-to-end, spanning supply chain and retail planning, execution, and delivery. JDA’s proven solutions power an Autonomous Supply ChainTM for 4,000 of the world’s leading companies, including 75 of the top 100 retailers, 77 of the top 100 consumer goods companies, and 8 of the top 10 global 3PLs. For more information, visit jda.com
NOVEMBER 2019 | RETAILER 49www.retail.org.au
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