Retail Leader - May/June 2018 - S7

AI in Assortment Planning
Historically, planning a retail assortment
involved looking at the previous year's sales data
to see what performed well and what did not,
then factoring in new fads and trends to come
up with the right mix. The result would be a
combination of brand new items that followed
the latest fad, a few timeless perennials and
some of last year's mix for those customers who
were not quite ready for a change.
The problem is, the consumer population and
its tastes and habits are a constantly moving
target. The teens who shopped this retailer last
year may have gone off to college. Or, if the
target was working professionals, changes in the
job market may have impacted their spending
habits. Whatever the reason, historic data talks
about yesterday's customers.

This is particularly valuable for retailers. They
can determine how the same or similar items
are performing elsewhere, give them a ranking
and decide if they want to order them, how
many to order, how long to feature certain
items, what stores to offer them in and other
criteria.
As a measurement tool, online reviews are
particularly valuable. Unlike a focus group
or other study, they voluntarily come from
individuals who have actually purchased
a product. And consumers take them very
seriously:

If two similar products
have the same rating,
shoppers will purchase the
one with more reviews13.

AI-influenced algorithms can predict the most
relevant items to add to a retailer's inventory by
analyzing the product assortments of competing
retailers and brands, then comparing those
products to the demographics and shopping
history of that retailer's customers-in realtime. Some tools can even predict the ebb and
flow for each particular product over the next
30 days, including demand changes by both
percentage and item count.

97% of shoppers say
reviews influence their
buying decisions; 92%
hesitate to buy anything
if no customer has
reviewed it14.
73% of shoppers say
written reviews impress
them more than star or
number ratings15.

Machine learning can also be used to
"read" customer reviews on social media or
e-commerce sites. A machine learning algorithm
can be taught to categorize posts or look for text
patterns, and AI can even detect foul language
and fraudulent reviews.

Initiatives involving AI in assortment planning*
47%
21%

46%
26%
Currently part of
initiative
Plan to incorporate in
next 12 to 24 months

Merchandise management

Customer/consumer insights

* Figures are based on AI initiatives that are currently in the pipeline or are being planned in the next 12 to 24 months

13

7

 sychological Science study,
P
August 21, 2017

14

 an & Fuel Digital
F
Marketing Group

15

Deloitte

Source: 2018 EIQ Retail Innovation Survey



Table of Contents for the Digital Edition of Retail Leader - May/June 2018

Contents
Retail Leader - May/June 2018 - Cover1
Retail Leader - May/June 2018 - Cover2
Retail Leader - May/June 2018 - 3
Retail Leader - May/June 2018 - Contents
Retail Leader - May/June 2018 - 5
Retail Leader - May/June 2018 - 6
Retail Leader - May/June 2018 - 7
Retail Leader - May/June 2018 - 8
Retail Leader - May/June 2018 - 9
Retail Leader - May/June 2018 - 10
Retail Leader - May/June 2018 - 11
Retail Leader - May/June 2018 - 12
Retail Leader - May/June 2018 - 13
Retail Leader - May/June 2018 - 14
Retail Leader - May/June 2018 - 15
Retail Leader - May/June 2018 - 16
Retail Leader - May/June 2018 - 17
Retail Leader - May/June 2018 - 18
Retail Leader - May/June 2018 - S1
Retail Leader - May/June 2018 - S2
Retail Leader - May/June 2018 - S3
Retail Leader - May/June 2018 - S4
Retail Leader - May/June 2018 - S5
Retail Leader - May/June 2018 - S6
Retail Leader - May/June 2018 - S7
Retail Leader - May/June 2018 - S8
Retail Leader - May/June 2018 - 19
Retail Leader - May/June 2018 - 20
Retail Leader - May/June 2018 - 21
Retail Leader - May/June 2018 - 22
Retail Leader - May/June 2018 - 23
Retail Leader - May/June 2018 - 24
Retail Leader - May/June 2018 - 25
Retail Leader - May/June 2018 - 26
Retail Leader - May/June 2018 - 27
Retail Leader - May/June 2018 - 28
Retail Leader - May/June 2018 - 29
Retail Leader - May/June 2018 - 30
Retail Leader - May/June 2018 - 31
Retail Leader - May/June 2018 - 32
Retail Leader - May/June 2018 - 33
Retail Leader - May/June 2018 - 34
Retail Leader - May/June 2018 - 35
Retail Leader - May/June 2018 - 36
Retail Leader - May/June 2018 - 37
Retail Leader - May/June 2018 - 38
Retail Leader - May/June 2018 - 39
Retail Leader - May/June 2018 - 40
Retail Leader - May/June 2018 - 41
Retail Leader - May/June 2018 - 42
Retail Leader - May/June 2018 - Cover3
Retail Leader - May/June 2018 - Cover4
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