The future of AIOps in retail

With growing competition and demand for speed, efficiency and convenience, retailers are increasingly seeing AIOps as a must-have advantage.
Clinton White
By Clinton White, Client director, AppCentrix.
Johannesburg, 17 Apr 2023

As the world becomes increasingly digital, retail companies face an ever-increasing need to streamline their operations and maximise efficiency. Many are leveraging AIOps as a means to achieve this and stay ahead of the curve.

Retailers across the globe are faced with growing competition and an ongoing demand for speed, efficiency and convenience. In the age of e-commerce and digital transformation, traditional brick-and-mortar retailers must adapt, or risk being left behind.

This is where AIOps comes in − a set of technologies and processes that combine artificial intelligence (AI) and machine learning (ML) with traditional IT operations.

AIOps shows its worth by helping retailers create a more efficient, agile and cost-effective supply chain, better understand customer behaviour and drive revenue growth.

We’ve seen first-hand in South Africa the benefits that AIOps brings retail companies. ML and AI gives retailers the power to gain insights into their operations that were previously impossible to obtain. This helps them optimise their processes, reduce costs and increase profits.

Driving efficiency with AIOps

One of the key benefits of AIOps is the ability to automate routine tasks and streamline complex processes. For example, inventory management is a crucial aspect of retail operations that is time-consuming and costly if not managed effectively.

However, by using AIOps to analyse customer behaviour, predict demand and optimise stock levels, retailers can reduce waste and ensure products are available when and where they're needed.

AIOps has proven particularly effective in the realm of inventory management. By analysing vast amounts of data in real-time, AIOps platforms provide retailers with a granular view of their inventory levels, demand patterns and supply chain performance.

For AIOps to be effective, data needs to be accurate, complete and up to date.

This enables retailers to make better-informed decisions about how much inventory to keep on hand, where to allocate resources and how to price their products.

Walmart has successfully implemented AIOps to improve inventory management. The retail giant has leveraged AI and ML algorithms to analyse customer buying patterns, weather forecasts and historical sales data to optimise stock levels in real-time. By doing so, Walmart has reduced out-of-stock incidents by 16% and increased sales by 1.5%.

Another area where AIOps drives efficiency is in supply chain management. By using predictive analytics and real-time monitoring, retailers can gain greater visibility into their supply chain, identify potential bottlenecks and make data-driven decisions to optimise operations. This leads to faster delivery times, reduced costs, and ultimately, a better customer experience.

A great example of a company using AIOps for supply chain management is Adidas. The sportswear giant has implemented an AI-powered supply chain management system that uses real-time data to predict demand, optimise production schedules and improve delivery times. As a result, Adidas has reduced lead times by 95% and increased sales by 9%.

Customer behaviour insight with AIOps

In addition to driving efficiency, AIOps helps retailers gain a deeper understanding of their customers' behaviour and preferences. By analysing data from multiple sources, including social media, customer reviews and purchase history, retailers can build a more complete picture of their customers and use this information to create personalised experiences.

Sephora successfully uses AIOps to improve customer experience. The cosmetics retailer implemented an AI-powered chatbot that uses natural language processing to understand customers' inquiries and recommend personalised products.

The chatbot also uses facial recognition technology to recommend makeup products based on a customer's skin tone and facial features. As a result, Sephora has improved customer satisfaction and increased sales.

AIOps can help retailers better understand their customers through predictive analytics. By analysing data from multiple sources, retailers can predict customer behaviour and preferences, and use this information to create targeted marketing campaigns. This can lead to increased customer loyalty and higher profits.

Target uses predictive analytics successfully. The retailer has implemented an AI-powered recommendation engine that analyses customer data to make personalised product recommendations.

The engine analyses data from multiple sources, including purchase history, browsing behaviour and demographics, to create a personalised shopping experience for each customer. Target's recommendation engine uses ML algorithms to analyse large amounts of data, which allows it to continually improve its recommendations over time.

The recommendation engine has helped the retailer increase sales by 15% and has led to a 30% increase in click-through rates on targeted e-mails. By using AIOps to understand customer behaviour and preferences, Target has created a more personalised shopping experience that has resulted in increased customer loyalty and higher profits.

Ensuring data security with AIOps

As retailers increasingly rely on digital technologies and data-driven insights, data security is more critical than ever. Cyber attacks often result in significant financial losses, damage to reputation and loss of customer trust. However, AIOps can help retailers better protect themselves against cyber threats and ensure their data is secure.

AIOps uses ML algorithms to detect anomalies and potential threats in real-time. By monitoring network traffic, user behaviour and other data sources, AIOps identifies potential threats before they become major security incidents. This helps retailers respond quickly and effectively to security threats, reducing the risk of financial losses and reputational damage.

Nordstrom, for example, implemented an AI-powered security system that uses ML algorithms to monitor network traffic, user behaviour and other data sources to identify potential threats and alert security teams to act. As a result, Nordstrom has improved its overall security posture and protects itself against cyber threats.

Overcoming challenges to unlock potential

Of course, implementing AIOps is not without its challenges. One of the biggest challenges is data quality. For AIOps to be effective, data needs to be accurate, complete and up to date. This can be difficult, as data is often spread across multiple systems and of varying quality.

Another challenge is ensuring AIOps platforms are properly integrated into existing systems and workflows. This requires careful planning and coordination, as well as a deep understanding of the retailer's operations and processes.

It’s best to take a comprehensive approach to AIOps implementation to consider these challenges. AIOps is not a one-size-fits-all solution, as each retailer has unique needs and requirements.