Peak report shines a light on the state of the retail nation
It’s not all doom and gloom for the global retail market as new report from AI firm, Peak, reveals total sales, online and in-store, are at their highest ever point.
The AI Opportunity for Retail report identifies artificial intelligence (AI) as a key driver for this growth, with retailers using the technology growing an average of 30 per cent faster and recording a 50 per cent higher gross profit than those who aren’t.
AI, which is predicted to pump an additional £27 billion into the UK retail market each year, gives retailers the power to monitor and predict buyer behaviour in real-time. This gives a better understanding of the customer experience and increasing the chance of a sale, in addition to forecasting demand and reducing stock inventories by a considerable amount.
- AI drives business growth – On average, e-commerce companies using AI enjoyed an 18 per cent year-on-year sales growth in 2017, 30 per cent faster than companies who were not using AI (who grew at 14 per cent).
- AI increases profit margins – Among those companies, the median gross profit margin for companies that are using AI was 50 per cent higher than those who aren’t (48 per cent vs 32 per cent)
- AI improves inventories – The median number of stock days for companies that are using AI in the sample was 43 - a 9 per cent reduction on the 47 median stock days of companies not using AI.
Discussing the findings, Richard Potter, CEO of Peak which commissioned the AI Opportunity for Retail report, said:
“There’s been plenty of doom and gloom surrounding UK retail recently. The unfortunate plights of some well-known high street names have dominated headlines this year, and many established retailers now find themselves looking over their shoulder wondering if they might be next.
"AI is throwing a lifeline to those retailers looking to excel away from the pack, leaving their competitors trailing behind. There is no doubt that every brand will need this technology if they want to survive what is proving to be a difficult time for some retailers.”
Monthly retail sales reached new highs of £9 billion in December 2017, up 4 per cent year-on-year. Equally, retail sales in March 2018 hit £7 billion, an increase of 5 per cent year-on-year. E-commerce is leading the way as companies are growing twice as fast as other retailers, with an average increase in annual sales of 15 per cent vs 7 per cent retrospectively.
The research also looked at how specific sectors of retail can benefit from AI. It found that sub-sectors such as food and beverages retailers can reduce their inventories by £1.4 billion if they implement the technology, while the automotive sector could free up £4.7 billion.
“AI is the Fourth Industrial Revolution. For retailers, it’s not going unnoticed, but there is an element of education to come.” Potter continued. “When the CEO of a FTSE retailer came to us 18 months ago, he wanted our help in reducing the amount of stock the company was holding, to help them outperform their competitors. He had read about AI but didn’t fully understand the power it offers. Now, following the engagement with Peak, we have cracked that problem - they have dramatically reduced without impacting sales and are now dominating their sector.”
Peak enables retailers and other businesses to bring AI into the heart of their operations. Available on a monthly subscription basis, Peak’s services provides retailers with the technology, people and skills they need the become AI-driven.
“Consumer behaviour is constantly changing - from how we shop, to where, what time and why. These actions are giving retailers data, and lots of it. This can be harnessed to improve and adapt product offerings, marketing communications and supply chains like never before, all of which adds up to the huge boosts in revenue and profit performance we see from those who adopt AI technologies.” Potter concluded.
The AI Opportunity for Retail report can be downloaded here.
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