Change the game with an AI smart inventory system
John Spencer John Spencer
February 27 5 min

Change the game with an AI smart inventory system

The brick and mortar store is evolving, as it must, to keep pace with consumers’ changing expectations and online competition. In this blog, we’ll explore one such advance being adopted: the smart inventory system, and how it allows businesses to enhance their stock management.

The challenge of traditional retail

Traditional brick and mortar retail is facing a range of challenges today, including the rise of ecommerce and the conscious consumer. There's strong evidence that these trends are leading to store closures: according to one estimate, more than 9,000 stores in the U.S. shut their doors in 2019, up 60% from 2018.

However, reports of the physical store’s demise are greatly exaggerated. At the National Retail Federation (NRF) Big Show, held in New York City in January 2020, the focus was not on the death of brick and mortar, but instead on its transformation.

Getting the edge in stock management

In order to stay competitive and offer the level of service and availability customers demand, retailers need to optimize their processes as much as possible. Understocked shelves result in missed sales and dissatisfied customers. On the other hand, overstocks may have to be discounted in order to be sold, causing another dent in profits. The bottom line will also suffer if pricing and promotions are not executed correctly.

In today’s tough retail environment, businesses can no longer afford to drop the ball like this. Many retailers already deal with tight profit margins, and in the current difficult retail climate, their margin of error is tighter still.

Fortunately, AI-driven solutions can now harness in-store transactional data and other information to get a clear, real-time picture of the situation. This can be used to assist with stock management and notify and guide store associates toward the correct course of action. A smart inventory system can even judge the relative priority of different replenishment tasks and direct associates accordingly.

Predicting demand more accurately

A smart inventory system allows retailers to refine demand forecasting. Being able to accurately predict stock needs is another factor that helps to prevent understocks and overstocks. Thanks to the ability of AI systems to analyze complex, high-volume data and perform predictive analytics, businesses can now go beyond the relatively simple and often inaccurate demand-forecasting models they’ve had to rely on in the past.

This comes at a time when many retailers need to deal with larger amounts of product variation (more stock-keeping units or “SKUs”) and greater need for market-responsiveness than ever. Retailers can get insights fast and use them to act quickly, capitalizing on new opportunities or limiting losses.

For instance, stores can obtain more of a particular type of item in response to a sudden trend that seems to be emerging. On the other hand, if analytics indicate that demand will take a drastic dip, they can adjust their orders accordingly. These predictive capabilities give retailers the power to be proactive instead of reactive: taking the initiative to seize upcoming chances and prevent future issues instead of merely responding out of necessity.

Streamlining in-store fulfilment

The advent of in-store fulfilment is one way that brick and mortar retail has adapted to the rise of ecommerce and ensured that stores stay relevant in an increasingly digital world. In-store fulfilment isn’t new – it’s been happening for some years now. You may know it under another name: “Click and collect”, “BOPUS” (Buy Online, Pick Up In Store), or “BOPIS” (Buy Online, Pickup In Store).

It’s a term for when a customer can place an order via online shopping and later visit the store to collect it. Incentives to do this include not being home to take delivery, the convenience of a store’s location, the opportunity to avoid shipping charges, or the ability to quickly return an item (for instance a garment that doesn’t fit) during the same visit.

This popular service has been a hit with consumers, but it means more work for retail staff, who now have a new range of tasks associated with this fulfilment model. And, once again, this is where AI-powered systems come to the rescue.

By analyzing and optimizing your labor, inventory and in-store processes, new digital tools for stock management can orchestrate more efficient and effective in-store fulfilment. Instead of being overwhelmed by a range of responsibilities, or micro-managed to ensure tasks are completed, associates can now rely on a useful digital helper.

Our smart inventory system

At Element AI, we anticipated retailers’ demand for stock management tools that can give them the edge in a complex and challenging landscape. That’s why we developed Element AI Task Orchestrator.

Element AI Task Orchestrator dynamically optimizes store associates’ tasks in real time and increases the accuracy of stock demand forecasts. Our solution helps to improve on-shelf availability and reduce inventory distortion, so stores can operate at the top of their game.

With competition becoming ever fiercer out there, the extent to which retailers harness the technology available will increasingly define the difference between success and failure, in the coming months and years.