How AI Drives Profitability in Retail

Artificial intelligence (AI) is often hailed as the driving force behind the next big revolution in the retail industry—it’s the buzzword of the year. As retailers look for ways to streamline operations, enhance customer experiences and boost profitability, AI is seen as a beacon of potential. However, finding meaningful AI is a challenge. Not all AI is the same. 

The Challenge of “Fake AI” in Retail

We’ve all seen it; the flashy AI solutions that promise to transform everything but fail to deliver tangible results. “Fake AI” is like grabbing something off the shelf, but the key to reaping the true benefits of AI lies in embedding it into every step of the retail workflow. AI can be a game-changer when it is fully integrated into the retail business model, such as with retail assortment planning and product allocation. Traditionally, these tasks were manual—baked in Excel and driven by spreadsheet formulas. However, AI can take these processes to new heights, reducing errors and providing actionable insights.

Embedding AI into Retail Operations & Planning

To achieve real value from AI, retailers need to move beyond buzzwords and embed AI into their everyday operational processes. For example, when developing an assortment plan, utilize AI to analyze past sales, customer preferences and even external factors such as weather or local events. This allows retailers to plan how to stock the right products in the right quantities at the right time, ensuring that each store’s inventory matches customer demand as closely as possible. The result? Increased sales, reduced markdowns and improved margins. AI turns what was once a guessing game into a data-driven, predictive science.

Optimizing Product Allocation with AI

Allocating the right products to the right locations is essential to ensure that products are available to customers without overstocking or understocking. When you look to allocate products to stores, AI can optimize this process by analyzing customer purchasing behavior, local demographics and regional trends. By incorporating AI into product allocation, retailers can ensure they are maximizing inventory efficiency and aligning stock with consumer demand. AI-powered algorithms can also predict when and where certain products are likely to sell out, allowing retailers to proactively replenish stock before it runs out. This type of precision reduces stockouts and ensures that customers are always able to find what they want when they visit a store or browse online.

A Proven ROI: AI Profitability in Retail

The power of AI in retail lies in its ability to drive profitability by making smarter, data-driven decisions—from product assortment and allocation to inventory management. It’s not just about throwing AI into a tool and hoping it works; it’s about embedding it deeply into every step of the retail process. 

Listen in as 7thonline CEO and founder, Max Ma, joins Adriana Kaegi from Style Culture TV to further discuss how AI drives profitability: https://www.msn.com/en-us/money/smallbusiness/how-ai-drives-profitability-in-retailtech/vi-AA1AsJGf?ocid=socialshare

With the right AI solution, brands and retailers can improve inventory productivity, resulting in higher sell-through, improved profit margins and enhanced customer experiences—leading to better margins, increased profitability and more sustainable growth. 7thonline has been providing industry-specific merchandise management solutions and inventory management solutions to the global retail industry since 1999, with meaningful AI capabilities embedded into every step of the retail process. 

To learn more about how AI can help brands and retailers drive revenue through smarter planning, book a demo or email us at info@7thonline.com.