73% of Retailers Believe Artificial Intelligence Can Add Significant Value to Their Demand Forecasting
Study reveals clear variation in business performance for retailers who have implemented new analytics technologies
LLamasoft, the leading provider of AI-powered supply chain analytics software to 750 of the world’s leading brands, published the results of a global retail supply chain study which revealed that 73% of retailers believe AI and Machine Learning can add significant value to their demand forecasting processes, and over half say it will improve 8 other critical supply chain capabilities(LLamasoft).
“However, accepting this is not enough: retailers must act to prepare for the unprecedented. This research demonstrates there are clear performance variations between retail winners who have leveraged predictive technologies and enterprise decision platforms to deliver faster and smarter responses to disruptions and new opportunities, and those that have not.”
The research also found that while 56% of overperforming retailers, also known as ‘retail winners’*, use technology to model contingency plans for severe supply chain interruptions, a mere 31% of retailers who are not overperforming do the same. Overall, 56% of retailers surveyed are struggling with the ability to respond to rapid shifts and the lack of flexibility has cost them during the disruptions such as COVID-19, with many seeing a huge drop in revenue as a result.
In addition, 73% of ‘retail winners’ have the foresight and ability to monitor capacity, which allows them to prepare for sudden shifts in demand and supply, compared to 35% of ‘other’ or ‘under-performing’ retailers. This is a clear indication that retail winners are outmaneuvering the competition by predicting and preparing for the future. However, without the ability to adapt to these sudden spikes and troughs with contingency planning, the forecasting would be of little use. Therefore, the two must be married together to produce a ‘retail winner’.
COVID-19 has further illustrated that, moving forward, retailers must rapidly adjust to the ‘never normal’ world we find ourselves in and they must act to consistently enable faster responses to succeed. There will always be market variations and disruptions, meaning that retailers must be able to forecast for these changes and adapt quickly. Ultimately, this is nothing new. While COVID-19 has accelerated certain changes, such as the move to e-commerce, retail habits were already shifting and the need to adapt was a pressing concern.