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03/26/2021

CSA Q&A: Accenture sees AI, automation as key to post-pandemic success

Dan Berthiaume
Senior Editor, Technology
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Manish Sharma
Manish Sharma

COVID-19 has created dramatic shifts in customer demand, but retailers can thrive amid the upheaval with cloud-based innovation.

Chain Store Age recently spoke with Manish Sharma, group CEO, Accenture Operations, about how retailers can satisfy customers and drive growth in an era of continuing uncertainty.

How has COVID-19 changed the retail landscape?
What’s transpired out of this period of unprecedented change is leaders’ expectations of what the operating model can achieve in the context of strategy, growth and the future of work. In retail, the pandemic has triggered digital acceleration and operational shifts, leading to a major increase in online shopping and e-commerce sales. 

With the country’s increased demand for fast online and curbside pickup orders, brick-and-mortar retailers have been given a new purpose – meeting the evolving needs of their customers through whatever means necessary.
 
Even in the current uncertainty, Accenture’s research found that 7% of retail organizations have been able to drive new sources of growth and value by doubling down on operational and digital maturity. These ‘future-ready’ organizations pivoted from incremental change to driving operational reinvention by rethinking how work actually gets done across technology, processes and people. 

Practically speaking, this might be finding new ways to fill orders, serve customers or develop products by enhancing the processes and the role of technology, data and people.
 
What can retailers do to make brick-and-mortar operations more digital-friendly?
In retail, our research found several key distinguishing characteristics among retail leaders. Rather than making existing operations more digital-friendly, they go big by changing how the work actually gets done across people, processes and technology. 

These retail organizations also enhance intuition with better, more diverse data; put a cloud infrastructure at the core, exploring new areas to scale and maximize value; scale automation and integrated solutions with leading practices, enabling the foundation for securing a better grasp on demand fluctuation; foster a specialized workforce and augment them with technology; and build complementary third-party relationships.

A good example of a company doing this well is Johnson & Johnson. The company has retooled its supply chain to adapt to fluctuating consumer and production demand patterns with an end-to-end digital ecosystem fueled by deep data science, analytics, and automation.
 
What can retailers do on the back end to adapt to the “new normal”?
Above all, retail leaders know that these types of changes are about maximizing talent in an era when people are critical to success. Leading retailers use rich data to align with demand patterns, augment people with technology, and employ agile workforce models supported by machine intelligence.
 
With AI adoption accelerating during the pandemic, this has given retailers a more precise view of demand patterns, such as consumption and production, and the ability to adapt to new information on the fly — for example, with supply chain disruptions and surges in demand surges. 
 
Accenture’s research estimates such operational shifts could allow retailers to make 20-30% reductions in inventory, especially as two-thirds of retailers reach AI maturity by 2023. When Accenture helped a grocery chain achieve a 15% boost in forecasting accuracy with machine learning, the client was able to reduce inventory by 30% and achieve a 33% gain in productivity
 
How will retail continue to evolve in the post-vaccine era?
With retailers accelerating digital and operational maturity, Accenture expects 28% of retail organizations to reach future-readiness by 2023—up from 7% today. While accelerated digital and operational maturity has led to three-fourths of retailers reporting strong business-technology collaboration, more work is needed to fully scale other innovative drivers of operating model maturity, such as augmenting talent with AI and automation at scale.
 
Among retailers, automation ranks as the top most critical factor to digitization of business processes. Retail has made impressive strides in automation – with the percentage growing five-fold over three year. But there is clearly much work left to do, especially as 91% of retailers expect to be at full scale in three years.