In today’s consumer market, every company needs to be a tech company, and retailers are no exception. Giants like Amazon, Walmart, and Alibaba are racing to redefine the retail experience. They’re quickly proving that advancements in both brick-and-mortar and ecommerce capabilities are needed. The problem is, many retailers haven’t implemented the technology necessary to compete. I hear a lot of buzzwords in the tech startup field, but the term that seems to be thrown around most frequently of late is “artificial intelligence.”

According to the American Marketing Association, this year the retail industry will reach a total $459 billion for online sales and $3.6 trillion for retail. With Amazon dominating ecommerce growth, retailers need to remember the importance of the brick-and-mortar experience. I believe that pure-play ecommerce is no longer a safe business to be in. With the proliferation and accumulation of customer data, many retailers face a major dilemma. There is simply too much information available and not enough technology to turn it into meaningful insights.

AI can handle the flood of data

That’s where artificial intelligence comes in. AI relies on a continual process of technological learning that improves with experience. Combining increased data with layer upon layer of algorithms allows the technology to simplify the data and continually build upon its knowledge.

Retail complexities are now too great for humans to handle alone. Meanwhile, machines are getting better at extracting insights from complex datasets. Brick-and-mortar retailers can harness AI to streamline decision-making, automate routine tasks, and radically improve something retailers have been doing for years. The key is to leverage analytics to improve business decisions and internal operations while deepening customer relationships.

Change or die

Walmart, Amazon, and Alibaba are killing off retailers that are too afraid to innovate. For smaller retailers, updating their management processes is their best chance of long-term survival. AI platforms allow retailers to govern price changes, fix stock-outs, decide on the timing and cost of promotions, and make merchandising decisions that lead to more sales. AI is also fixing and preventing problems like “cherry picking” and cannibalization of other items, abandoned baskets, and more. Some of the struggling retailers are as antiquated as they look, but if they implement AI now, they can get it up and running in time to compete over the holidays.



Take, for example, a store that sees a spike in demand for a sweater at certain times of the year. The store manager might think they know this intuitively and rely on their “gut instinct” in ordering additional inventory. The problem is the shipment might not arrive in time and the order could be too large or too small to meet demand. Each of these miscalculations leads to problems, including overstock, empty shelves, waste, or the costs of returning unused inventory to the supplier. We’ve seen the improvements AI can deliver most recently through Amazon’s acquisition of Whole Foods. Only a few weeks after the acquisition, Amazon was able to slash prices on almost all of Whole Foods’ produce and products while still meeting margins.

Better info, less waste

Retailers using AI-powered analytics are ahead of the game with their ability to do the following:

Forecast: Using information from a variety of sources, including unstructured third-party data (social media posts, weather forecasts, and local economic trends) the system can predict when a product will see a spike in sales or demand in the near future. This allows retailers to more accurately identify trends and prepare ahead of time.

Avoid surprises: The system analyzes past data to determine how much additional inventory should be ordered and when the order should be placed. This allows retailers to avoid the problem of having too much or too little product.

Keep up on necessary orders: The system either (1) alerts the manager to place the order or (2) places the order automatically. This keeps the manager up to date and organized.

AI helps satisfy all parties. Customers are happy because they can purchase the product they want when they want it. The manager is happy because the store accommodates demand without having to deal with an overstock situation. And the organization is happy because it can increase revenue without incurring the costs of unsold inventory.

Considering advancements in technology and increasing demands from consumers, there is no way a business can keep up without help from AI. Implementation of artificial intelligence is especially important during this “do or die” moment when Amazon and Walmart are monopolizing the industry. Simply put, retailers need to integrate AI and machine learning into their systems if they want to survive past this holiday season.

Kerry Liu is the CEO of Rubikloud, a retail intelligence platform.