The Catalysts Behind Retail’s AI Revolution in 2023 and Beyond

In my recent conversations with clients, a remarkable shift in attitudes towards technology and the environment caught my attention.? This got me thinking, and after some back-and-forths with clients and the buzz about using AI for pricing, I felt a strong itch to write this article. This whole shift in how AI is shaking up retail pricing in 2023 is like a perfect storm, with several factors coming together.

First, there's the historical fact: In 2014 Google acquired DeepMind, but only formally embraced it in 2016. This marked a pivotal moment, hinting at the immense potential of AI in various industries.

Econometrics, a field that dates back to 1933, primarily concerned itself with understanding the relationship between price changes and demand shifts. However, many other factors influence sales, and traditional methods failed to account for these complexities. Early AI in pricing was slow, offered recommendations without tapping into expertise, and struggled to handle complex data dependencies, such as the impact of price changes on related products.

So why is the AI revolution in pricing happening now??

The first crucial factor is the surge in GPU computing power, made accessible by cloud providers like Oracle, Amazon, and Google. This transition to GPUs was primarily driven by developments in blockchain technology, which, interestingly, made computing more affordable. The affordability of AI-related calculations significantly improved in the retail sector, which was previously deemed too expensive.

Second: Another factor contributing to the AI revolution is the growing confidence in algorithms over human decision-making. In recent years we have seen algorithms improve by leaps and bounds, and the global expansion of AI technologies, such as OpenAI and chatGPT, has boosted public confidence in their capabilities.

The third and perhaps most crucial factor is the desperate need for retailers to boost their gross margin. This demand for solutions has opened the door to AI in pricing. Retailers are now more willing than ever to explore and adopt innovative technologies to optimize their pricing strategies. In the past, convincing a retailer to try AI-based pricing solutions was a Herculean task. Now, I’m confident -? it has become a necessity.

As we know, retailers are, traditionally, part of the "Late Majority," meaning they adopt innovations only when they become widely accepted and tested by others. However, with the changing landscape, we are witnessing a new breed of retail professionals, in the 酩悦·轩尼诗-路易·威登集团 family and other prominent brands, who are more open to innovation and willing to try new approaches.

In this context, AI's popularization and affordability, global adoption of machine learning, and changing personnel in retail are all converging to create a unique moment in 2023. The CIOs in retail are starting to recognize the potential of AI and the importance of embracing change.

To note, companies founded before 2016 in the pricing software space might have different AI and ML capabilities than newer companies. Therefore, I strongly advise when choosing pricing software, consider the company's founding year an essential factor. Companies founded after 2016 are often native to AI and ML, making them better equipped to handle the evolving demands of the retail industry.

In summary, the stars have aligned in 2023 for AI to revolutionize retail pricing. The late majority in retail is slowly but surely joining the ranks of innovators, recognizing the value of AI in pricing. This transformation is not just a technological advancement; it's a shift in mindset and a willingness to embrace change for the better.