As international retail giants continue to infiltrate the Australian sector, they bring with them myriad new technologies, from Amazon’s AI-driven recommendation engine to Zara’s focus on CX through fitting room technology and AR.
Among these technologies, machine learning and the internet of things in particular are shaping up to fundamentally shift Australia’s retail sector, writes Ridhav Mahajan.
Customer experience (CX) is moving rapidly from being a unique selling point to becoming a given for retailers. Customers expect more from their shopping experiences and it’s up to retailers to deliver. Machine learning and the internet of things (IoT) have the potential to play a huge role here, especially when it comes to improved CX, market segmentation and mass personalisation.
Machine learning lets retailers automatically recommend the right products on a micro level for their customers based on purchase history and other customer data. In fact, as retailers grow in size and move online, personalised product recommendations are becoming the norm. Machine learning simplifies this process, allowing stores to have authentic interactions with their customers and improving customer experience as a result.
In addition to improved CX, machine learning and artificial intelligence (AI) can help retailers accurately and appropriately segment their markets—meaning marketing and point-of-sale efforts are more targeted and actually secure results.
By analysing customer traffic patterns instore, retailers can identify the best placement for high-margin products. Data analysis and machine learning can also be used to optimise shelf placement by co-locating products that are frequently bought together.
It’s all about revenue
The growth of IoT in retail is rapidly expanding because of its revenue raising opportunities. In its simplest form, IoT means adding internet connectivity to everyday objects. This ranges from fridges that let their owners know when they’re running low on milk to watches that measure how many steps are needed for their user to hit their daily goal.
By analysing data from customers’ connected devices, retailers can focus on providing a better experience and expand revenue streams. For example, by combining historical and real-time data generated by customers’ online, app and instore shopping experiences, retailers will be able to gain a granular understanding of their customers, which is vital when considering how best to reach both existing and potential shoppers.
In terms of back-office activities such as managing and controlling supply chains and stock control, implementing IoT solutions will ensure greater efficiency and smarter operations from the factory to the shop floor. Retailers now have the opportunity to leverage technology across their businesses, using RFID tags and sensors to track goods on the move
Using machine learning also helps mitigate supply chain risk. By combining demand forecasting with supplier production plans, retailers can predict shortages or surpluses and react accordingly by establishing alternative supply sources or adjusting prices.
Businesses are turning to IoT technologies to simplify and enhance the store experience, reduce operating costs and create new revenue streams. The IoT is here and ready to disrupt Australia’s retail sector from all different directions.
As competition increases, implementing technologies such as machine learning and IoT will be the key to gaining and maintaining a competitive advantage. Businesses that opt out of embracing these innovative technologies run the risk of being left behind as more competitors enter the sector—tempting once-loyal customers away with the promise of more customised and relevant offerings.
Ridhav Mahajan is solutions architect ANZ at MapR Technologies.
Sign up to the RetailBiz newsletter.