Challenges

Traditionally retailers have stocked their stores with the same products based on the season or featuring the current product lineup with only limited variations. Different store locations, however, have different customers, different weather, different display capacity and inventory capacity resulting in very different needs. The result of one-size approach is “stock outs” on hot items and markdowns on others, both costing the retailer hard-won profits. Customer satisfaction and loyalty are also greatly impacted when shoppers cannot find items in the store that they came to see and buy.

Opportunity

AI is ideal for optimizing assortment for retailers. AI models can look at a variety of factors including past sales, store display space, local trends, online behavior, predicted weather patterns, and more to determine which products would be the best fit for a given store location. This AI based optimization prevents stockouts by sending more inventory to stores where products are most needed and minimizes markdowns by making sure that products are on display where they can be sold at full price. AI models can even reroute inventory between stores to ensure that retailers can take advantage of local trends.