Artificial intelligence is transforming how retailers prepare for Christmas, turning data into actionable insights for a sustainable celebration, writes Svante Gothe (pictured below) Head of Sustainability at Relex Solutions.
As retailers dive into the bustling Christmas season, a pressing challenge looms – spoilage and waste, particularly for fresh and short shelf-life products like Brussels sprouts. While it may be challenging to address spoilage and waste, there is a critical opportunity for retailers to apply Artificial Intelligence (AI) and Machine Learning (ML) to reduce waste and align with the increasing consumer demand for sustainability.
Retailers, grappling with inflation and economic uncertainty, are finding it increasingly difficult to accurately plan for the seasonal demand. The complexity is exacerbated during occasions like Christmas, where seasonal items such as sprouts have a finite shelf life and an even shorter consumer interest span.
According to the UK Environmental Agency, the UK generates 30% more waste around Christmas time, and this includes waste from Christmas food shopping and dinners. Infact, Business Waste estimates that 17 million Brussel sprouts go to waste each Christmas. However, there may be a shift as consumer consciousness rises — highlighting the potential for AI to help retailers predict the tipping point between consumer wastage and consumer consciousness.
Predictive power in supply chains
Beyond consumer habits, it is the retailers who are under pressure to curtail this waste at its origin — the supply chain. The integration of real-time analytics into the demand forecasting process can make businesses more agile in reacting to unexpected changes, making the system robust against sudden shifts in market dynamics.
The key to achieving this lies in harnessing the predictive prowess of AI and ML. By implementing AI-driven demand forecasting, retailers can capture the nuances of hundreds of demand drivers, translating complex consumer data into actionable insights. This means businesses have visibility into future demand, allowing for improved planning processes across merchandising, supply chain, and operations, ultimately leading to reduced waste.
The challenge, however, is not just in forecasting demand but also in ensuring that this information propels a collaborative effort across the entire supply chain. The decisions on how much to produce for items like Brussels sprouts happen months before Christmas, and so the coordination between retailers and producers is therefore vital. By sharing forecasts and planned orders well in advance, the entire supply network can adjust accordingly, reducing the risk of overproduction and subsequent waste.
Inventory planning
Another critical application of AI in this endeavour is inventory planning. By automating replenishment and allocation tasks in all nodes of the supply chain, AI ensures that the flow of goods is synchronised with real-time demand, reducing the chances of overstocking and the need for deep markdowns that often fail to clear excess inventory. Markdown and clearance optimisation also play a pivotal role in this sustainable orchestration. AI systems can dynamically adjust prices throughout the season, ensuring that products reach consumers before they lose their relevance, thus avoiding the post-Christmas slump that turns potential sales into waste.
Cutting waste for all retailers
The strength of an AI system in retail lies in its ability to be tailored to the specific needs of different business models and scales of operation, ensuring that every retailer, regardless of size, can reduce waste and improve sustainability. With Christmas spending expected to reach £88.3bn this year, and more people participating in the festivities, the opportunity to optimise the supply chain with AI is more significant than ever.
Simply put, the use of AI in retail planning is a strategic imperative in the fight against waste. As we move through the holiday season, the onus is on retailers to adopt these advanced tools and practices to optimise their supply chains and develop a more sustainable retail strategy. As retailers embrace this technology, we edge closer to a future where the holiday waste issue becomes a thing of the past, replaced by smart and data-driven approaches that balance consumer demand with environmental responsibility.
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