Study: Only 33% of retailers optimize their inventory with advanced analytics
Only 39% of retailers identified improved analytics as a top priority.
Most retailers (67%) are not leveraging advanced analytics to improve their planning decisions and optimize inventory, according to the 2018 Integrated Planning and Inventory Management Survey released by BRP Consulting, Boston, Mass., and only 39% of retailers identified improved analytics as a top priority.
“Analytics serve as an important tool in assisting retailers to find and interpret meaningful patterns in customer and inventory data to support decision-making,” says Robert Cuthbertson, vice president. “Insight into customer demand, product adjacencies, price sensitivity, reaction to promotions, demographics and more are key to drive merchandise plans and actions that maximize profitability. This is especially critical in an omni-channel environment, as understanding the preferences of disparate customer groups across different channels becomes more complicated.”
“The technology for AI tools has advanced dramatically in the past five years. Innovative new technologies can even predict where customers will be in the next hour or next day based on historical patterns,” says Ken Morris, principal. “AI is also helping retailers make better decisions on which store should fulfill an online order. While traditional logic would select the product from the closest store to the consumer, with machine learning techniques, retailers can assess the value of inventory in each store to make smarter fulfillment decisions. For example, if they can identify/predict that the item in inventory at the closest store will likely sell at full price, but the same item at a different store location will likely result in overstock and markdowns, the retailer can ship from the further store and maximize total profits.”
According to the survey, retailers’ current and planned usage of advanced analytics by planning area includes:
- Merchandise planning. 33% of retailers currently use advanced analytics for merchandise planning and another 48% plan to within three years.
- Assortment planning. 30% of retailers currently use advanced analytics for assortment planning and another 49% plan to within three years.
- Demand planning. 31% of retailers currently use advanced analytics for demand planning and another 54% plan to within three years.
- Product lifecycle management (PLM). 22% of retailers currently use advanced analytics for PLM and another 33% plan to within three years.