Today, the retail industry is facing a variety of challenges that are providing opportunities for the smartest of brands to stand out.
First challenge: Staffing shortage
Across all industries, the labor force is expected to continue to shrink by 5 million workers by 2022 and retail will be hit hardest. We are experiencing an unprecedented change in how work is being viewed as demand for employees grows.
With over 7.5 million people leaving retail jobs in 2021, retail now remains the only remaining industry in 2022 to continue to have a shrinking labor force.
Over 41% of retailers saying labor shortages are impacting their business and 21% of business owners saying they have lost customers due to staffing issues.
This means retailers must now find ways to not only attract more workers and retain employees but adapt to a new reality working with smaller teams.
Currently, retailers have been dealing with staffing shortages with three tried and true methods: improving wages, increasing benefits, and offering more flexibility. While these methods work as a temporary solution during economic downturns, they are becoming a costly option and don’t solve the supply issue at its core.
AI Solution: Automated staffing
Smart retailers have already begun to turn to technology such as self-checkout machines, store help kiosks, and store branded apps to reduce the number of staff needed on hand. We however will always need physical hands on deck for when these just aren’t enough.
AI innovations have reached the point where we no longer require complex custom hardware to do powerful real world analytics, in fact many work on existing security camera infrastructure such as Zensors.
Smart retailers have been using AI to keep customers happy:
1. Better optimize limited staff by understanding where staff is needed. By automatically recognizing spills, high concentrations of customers without staff nearby, or long lines at checkout, AI image recognition instantly notifies staff or implements changes that enables them to work most efficiently.
2. Identifying products that need to be re-stocked before they go empty.
3. Maximizing floor space by understanding where customers congregate.
4. Run wait time based checkout counter operations before customers wait becomes frustrating.
Second challenge: Changing Customer Expectations
With online shopping enabling customers to shop in the comfort of their PJs on the couch, shoppers are expecting more from brands than ever before. However, brick and mortar retail stores are struggling to measure shopper behavior to make data-driven business decisions.
Over 75% of buyers are preferring to buy from brands that provide a personalized and engaging in-store experience
AI Solution: Personalized in-store experiences
E-commerce is collecting information such as shopping preferences, past purchases, and browsing behavior, and using this information to tailor the shopping experience on their websites.In stores, AI collects data just like E-commerce and is able to generate the valuable insights.
Think being able to identify trends in categories of customers that head directly to loss leaders and being able to then build a customer journey of similar products they are likely to purchase along their route. Instead of a web shopping history, we’re now seeing retailers engaging in a physical shopping history that’s less privacy invasive for the better.
3. Problem: The Rise of E-Commerce
As online commerce shows no signs of slowing down, brick-and-mortar retailers are finding ways to enhance their online presence and remain competitive. Retailers have been overcoming some of the challenges by focusing on their strengths.
This includes focusing on categories where brick-and-mortar stores have an inherent advantage, like apparel and groceries, or on areas where e-commerce sales have not yet gained much traction, like home improvement. However, using these services as loss leaders to bring customers back to brick and mortar is not a permanent solution.
Online sales are projected to reach $533 billion by the end of 2022, with the top e-commerce companies (Amazon, Newegg and Walmart) accounting for a quarter of all sales. With 52% of shoppers saying that that more than half of their purchases are influenced by convenience, digital is an inevitability.
AI Solution: AI helps stores merge the online world with the physical
Shift to digital focused world does not mean that brick and mortar stores can't exist. In fact, it means the contrary. We’re bringing the online world more in tune with our physical world, and merging both together.
As we see more and more online retailers such as Amazon with Amazon Go bring their offerings to the physical world, it’s obvious that brick and mortar is here to stay, just more in tune with our online world.
Retailers have been leveraging physical stores to improve their e-commerce sales by using AI-powered technologies from live inventory management and pricing to the physical store analytics that Target performs.
We’re also seeing retailers use AI recognition to supplement recent innovations such as curbside pickup where cameras are being used to identify when cars arrive and where to drop off orders.
