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Jill Standish (left) and Courtney Spitz


Merchandising Upgraded: Why AI is breathing new life into the heart of retail

The dynamic in retail has shifted. Retailers today operate in an integrated marketplace – one in which the consumer has greater choice than ever before, as well as all the power.

At the same time, consumers are increasingly difficult to please. They are quick to switch brand allegiance, they expect their personal tastes to be anticipated and catered to – as they are on streaming sites like Spotify and Netflix – and many will only do business with those that share their personal values and concerns.

Satisfying today’s consumers is therefore incredibly difficult, especially for physical stores that lack the agility of their online-only rivals.

So how should retailers respond? For many, it could be time to take a fresh look at one of the cornerstones of any retail business – its merchandising. And, as industry leaders are finding, one of the most effective ways of doing this is to adopt AI technologies.

In our view, AI creates three key advantages for a brand’s merchandising strategy.

Analytics: The next frontier of insight
To understand which products will delight your customers, driving insight through consumer data is essential. AI can help here by enabling retailers to analyze untapped data sources – competitors’ discount offers, for example, or the complete purchasing histories of every customer.

By crawling online shopping sites, AI can tell retailers what’s popular in different countries. From social media, it can unearth the microtrends that will soon go mainstream.

Leading retailers are already combining internal with publicly available external data to identify trends in real time and predict their arcs and longevity using machine learning. They can design customer choice models that predict what consumers prefer to purchase when given…