The world of retail is constantly evolving, and retailers must keep up if they want to remain competitive. Retail goals have remained unchanged, but the challenge of accurately predicting product demand remains a significant obstacle. Retailers invest heavily in customer research but often need to catch up on the goldmine of valuable data they're sitting on. Consolidating and accessing this data can be difficult, given the multitude of disparate data sources, creating missed opportunities to make data-driven decisions. This blog post will explore the challenges retailers face in generating retail forecast demand and how to overcome them.
Today, the retail industry relies on point-of-sale (POS) systems and card payments to collect data that can provide meaningful insights into customer behaviour. However, collecting this data is only half the battle. To make accurate predictions about consumer demand, retailers must also find ways to consolidate it into one accessible source. That's where predictive analytics comes in.
By leveraging predictive analytics software, retailers can quickly analyse their historical sales data to gain better insight into trends in customer behaviour and accurately predict future purchasing patterns. Predictive analytics can also help forecast product demand so that supply management strategies are more reliable and efficient. This data-driven accuracy ensures that retailers are not overstocked or understocked at any given time. The retail industry is constantly changing, and retailers must be agile to meet the increasing demands of consumers. Predictive analytics can give them a competitive edge by allowing them to make informed decisions based on reliable data that accurately predict customer behaviour. By leveraging this data, retailers can stay ahead of the curve and better anticipate future customer needs.
With a deeper understanding of their customers, retailers can run highly targeted campaigns reaching the right demographic in the correct location and for each product. This data not only helps with engagement but can also have a lasting effect on sales performance. The benefits of accurately forecasting demand are twofold: retailers avoid overstocking and the associated distributor costs whilst committing to supply demands, which in turn allows for better supply chain optimisation. Accurate demand forecasting enables dynamic pricing strategies to protect against out-of-stocks and overstock, ultimately driving more sales. Dynamic pricing of products benefits customers by giving them a deal that is appropriate for them, while merchants benefit from higher customer satisfaction and increased sales.
Retailers must also learn to leverage Artificial Intelligence (AI) and machine learning (ML) technologies to predict demand more accurately. AI algorithms use predictive analytics to analyse vast amounts of data and predict outcomes, drawing conclusions that may have otherwise gone unnoticed and establishing patterns that lay hidden without applying a conscious lens. For instance, AI technology enables image recognition to be used in-store and out-of-store to better track trends within campaigns and amongst consumers. They can aid in identifying unavailable items and in predicting patterns of demand or changes in customer behaviour. Retailers can use these insights to predict future demand more accurately, develop more effective pricing strategies and optimise their supply chain by anticipating changes in product consumption.
Retailers must strive to create a demand-driven supply chain. This requires retailers to go beyond understanding what products their customers prefer and carefully anticipating the number of products to move through the supply chain to ensure that the customers’ needs are met while remaining efficient with inventory management. This detailed understanding of forecasting and sales patterns through analysing data can help a company improve demand forecasting accuracy, thus maximising its supply chain capabilities.
Retailers that master data consolidation and use AI and ML technologies have the potential to make considerable strides in predicting demand. With the increasing demand for data-powered insights and more accurate forecasting, retailers who optimise their analytics and use AI and ML accordingly will stay ahead of the pack. Retailers that take advantage of these tools can better meet customer needs by predicting future demand and maximising sales forecasts by indicating the number of products to move through the supply chain. By leveraging all the data available, retailers will have a competitive edge in the next generation of retail.
If you'd like to learn how Aptimyz is making it easier than ever to make data-driven decisions for retailers, schedule a live demo here.