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AI's role in driving sustainability in retail

By Mylo Portas on 15/08/19 10:03
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Mylo Portas

Sustainability in retail has been a hot topic for a number of years, but now more so than ever. With modern customers expecting more transparency from the brands they choose to shop from, retailers are under increasing pressure to hit sustainability targets, demonstrate ethical responsibility and reduce their negative impact on the environment.

Why? Because customers care. In fact, a whopping 93% of global consumers expect the brands they use to support social and environmental issues.

So, how can retail businesses take that step towards becoming more environmentally-friendly? What can they do to meet the growing expectations of their customers? Smaller changes, such as paperless receipts and the phasing out of plastic bags, are becoming more and more commonplace, but there is more that can (and should) be done.

One area of critical importance when it comes to sustainable practices in retail is the supply chain. With thousands of SKUs and hundreds of stores, maintaining an efficient and eco-friendly supply chain in retail is one of the biggest challenges facing brands looking to take steps to reduce their retail carbon footprint.

Thankfully, like in most cases, the answer to this problem is hidden in a business’ vast amounts of data. When that data, whatever shape it’s in or wherever it’s stored, is leveraged by artificial intelligence (AI), it can be used to draw predictive insights that can help retailers streamline their supply chains and take steps towards meeting their sustainability targets. Let’s take a look at two specific areas in which AI can be an important asset when it comes to tackling sustainability issues in retail…

Waste reduction

While data has traditionally been used to look back at past performance, the predictive powers of AI and machine learning mean that it can be used to significantly improve how you forecast and anticipate demand. More accurate forecasting leads to more intelligent merchandising, buying and manufacturing decisions – having just the right amount of stock, in the right styles and sizes, in the right locations can significantly reduce the amount of excess products you’re holding and minimise unnecessary wastage.

Not only does this equate to significant financial savings, it reduces the amount of extra material, products or unsold garments being produced that would otherwise go to waste. Let’s leave this rather infamous example of Burberry burning over £19 million worth of unsold garments here...

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Logistics optimisation

AI can play a key role in optimising life in the warehouse, which in turn has a positive knock-on effect on your logistics operations, both in terms of moving goods between distribution centres and delivering to customers. Better forecasting means more efficient processes throughout the supply chain; you can anticipate and cater for demand by having the right products at the front of the pick-face at the right time, ready and waiting to be loaded onto your delivery trucks. 

With a more accurate view of what needs to go to where (and when!), space on your logistics fleet can be maximised, reducing the number of unnecessary journeys and maximising truck capacity. What’s more, you can use AI’s insights to plan the most efficient, eco-friendly delivery routes to customers, as well as streamline journeys between distribution centres. The environmental impact of fewer, half-empty trucks on the roads speaks for itself, and is just one of many ways AI can positively impact your retail supply chain.

Building a sustainable competitive advantage in retail isn’t easy, but can be achieved by taking a data and AI-first approach to your supply chain and operations functions. To find out how you could leverage the technology to great effect in your own business, request your bespoke report to discover how much AI could be worth to you.

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