Low December sales take the shine off UK’s Golden Quarter for retailers – artificial intelligence and machine learning will be critical to turning around performance.
The latest figures from the British Retail Consortium covering the period from October to December 2017, including the Christmas season, show that high street spending in the run up to Christmas increased at the slowest rate since 2012, after rising prices saw shoppers choosing to spend on essential items such as food. Uwe Weiss, CEO at Blue Yonder, which provides artificial intelligence solutions for retail, suggests that to combat these challenging trading conditions, retailers must invest in innovative technology that can help them operate efficiently and profitably.
Uwe said: “While the grocery sector performed very well, seeing food sales increase by 2.6 per cent on a like-for-like basis and 4.2 per cent on a total basis, the non-food sector of the market is really struggling. Sales slumped dramatically, with sales of non-food items declining 3.7 per cent on a total basis and 4.4 per cent on a like-for-like basis, the worst performance since 2012. As we see several mainstays of the British retail market, such as Debenhams and Marks & Spencer, report another poor set of financial results, it is clear that retailers must look for new ways of working and doing business if they are to stop this decline.
“We all know that a number of factors have been putting significant strain on the UK retail market, including Brexit, the depreciation in the value of sterling, rising inflation and stagnant wage growth. However, two things will be critical for retailers to ensure that they remain profitable throughout this difficult period: maximising efficiency and maintaining customer loyalty. Retailers simply cannot afford to waste stock, whether that is food that spoils before it can be sold, or branded goods that are out of season or out of date before they reach the shelves. If consumers cannot see some of their favourite products on the shelves, there is a risk that they turn to their rivals, and that customer loyalty can be hard to win back,” he commented.
The need to keep products on their shelves, balanced with maintaining a profitable and efficient business, is a common challenge for retailers. This is where technology can give retailers a competitive edge, insulate them against the UK’s economic downturn and retain their customer base. Retailers have access to vast reams of data, including their own internal data such as past sales patterns and customer footfall, and external information such as public holidays and the weather.
Uwe continued: “When this data is combined with advanced AI technology, stock replenishment optimisation solutions can then accurately predict customer demand and automate stock level decisions, across thousands of product categories and hundreds of stores. By using the data at their disposal to optimise their stock levels, retailers can ensure that they are not left with stock that they cannot sell, a burden on their balance sheet, and that they can maximise the profitability of these products, helping their bottom line.”