By Sunil Nair, CIO at GMG
Retailers across the Middle East look forward to busy shopping periods such as Ramadan and Eid with a mixture of excitement and trepidation. Although welcomed, the sudden uptick in volume demands, combined with the introduction of seasonal goods and changes in many employee working hours, often test the flexibility of retailers’ supply chains. If managed well, the margins can be lucrative. If not, retailers will find their bottom-line start to slip.
The digital transformation of the Middle East’s retail sector in the last 5-7 years has brought immense value in crafting more agile supply chains that can accommodate busy shopping periods. In one recent PwC study, retail CEOs in the region cited key issues around technological change including their ability to manage faster delivery times, support easier product returns, and balance stock volumes. The reality is that today’s digital tools can influence the entire sales journey from the warehouse to the till.
For this year’s Ramadan and Eid retail season, organizations will find it particularly advantageous to revisit their digital capabilities in four key domains.
- Using the cloud to manage data floods: One of the biggest challenges for retailers, especially those with a significant online footprint, is how to manage the flood of new data that comes in at peak shopping periods. Before cloud, retailers were forced to overprovision their data center resources to accommodate a few months of intense usage per year. The cost of extra disk drives, rack space, power, cooling and other support infrastructure needlessly ate into retailers’ margins. With cloud, however, retailers can scale their data storage capacity, processing power, and networking abilities many times over with the click of a mouse and at a fraction of the cost of on-premise infrastructure. Reversing to the default position is just as easy with no effect on operations.
- Deploying robotics to augment human capital: The use of robots in retail may not be new. Yet busy shopping seasons are a reminder of how they can resolve the mismatch of human resources to warehouse operations in periods of frenzied activities, and as schedules for human resources change. As autonomous robots have become more sophisticated, retails would do well to look beyond just productivity gains, but also how to apply new AI and sensor capabilities to reduce error rates, analyze fulfillment deliveries, and actually enhance employee value.
- Increasing speed in delivery: The “last mile” generally constitutes the biggest headache for eCommerce operators. Recent data suggests that last-mile delivery costs often account for more than 50% of the total cost of shipping and around 40% of the entire supply chain costs. Much of the concern over the last mile is directly related to the volume of goods shipped to consumers. After trials in the US and Europe, autonomous delivery robots may soon appear on a sidewalk near us. Several such projects were announced in Dubai last year, such as Careem and Kiwibot partnering to develop food and grocery delivery robots. Urban planning fundamentals in the region favor such innovations, with the large self-contained residential communities here well suited for autonomous deliveries.
- Getting more intelligence on the demand: How much inventory should you have at hand for any specific shopping season? For some companies, the answer may rely upon an imperfect mix of historical receipts, conjecture, and hope. The result would often miss the mark by some margin, leading to warehouses overflowing with merchandise months after the end of the shopping season. Today, a slew of artificial intelligence (AI) solutions is accessible in the market and are quick to deploy in managing stock decisions. Some analysts have projected that retailers will spend $7.3 billion on AI by 2022, compared with just $2 billion spent in 2018. These investments not only assist in warehouse stocking decisions, but can be used to inform customer experience management, analyze purchases per retail location, and forecast sales across product categories. AI has gone from a future consideration to a must-have capability in the retail supply chain.
Put it all together and we see that businesses in the region have a powerful combination of digital tools to make this year’s Ramadan shopping season more rewarding than ever—for their consumers and for their bottom line.
