AI Helping Retailers Secure Continued Success Amidst Ongoing Industry Challenges

By Gary Saarenvirta, Founder and CEO, Daisy Intelligence

With supply chain issues and the rising cost of living, 2022 brought significant challenges to retailers’ profitability. Though these challenges are expected to persist into this year, retailers racing towards artificial intelligence (AI) adoption are discovering a much-needed respite from these pain points.

AI - which simulates millions of item, price, demand, space, and assortment decisions - is helping leading retailers increase margins and retain customers amidst ongoing industry challenges.

Ultimately, AI technology will be the driving force behind retailers’ success in 2023 – securing their continued survival in this unstable inflationary period.

As aforementioned, the industry will continue to feel the impact of supply chain issues and inflation – resulting in a lack of product, difficulty filling shelves, and rising costs that will affect retailers’ bottom line.

These challenges will be most greatly felt when making promotion and pricing decisions. Products promoted in the past may no longer be viable due to a lack of availability or rising costs. We are already seeing our customers shift to promote staples – e.g., oil and rice - in larger sizes as the unit cost is now lower than the smaller options. With retailers trying to avoid passing price increases onto consumers, they will also be forced to become increasingly strategic about pricing - deciding where they can invest in products.

We’re in a moment of time where AI is the only solution to succeed in this difficult moment of business.

Furthermore, with the switch from in-store to online that occurred over the course of the pandemic, consumers will continue to grow ecommerce channels. This poses an additional challenge to retailers’ profitability as we know ecommerce is not profitable for brick-and-mortar retailers. In fact, the more they sell online the less profitable they are due to the costs incurred picking, packing, and delivering orders.

However, the upcoming recession will provide an opportunity for retailers to recoup customers. Consumers will be forced to become more conscious of spending habits - eating out less and buying more in store. With consumers increasingly relying on retailers to provide the right items at the right prices, retailers that invest in promotions and discounts will win in the recession.

Trends in AI Adoption

The retail industry has already displaced banks as the number one spender on AI – and the race to invest in the technology will only continue as we enter this year.

Retailers are facing more work than ever before – and with the cost required to source and hire new staff, tackling these challenges with more people is no longer feasible. Smarter decision-making with intelligent automation is key.

Our customers are already turning to automate more processes as opposed to hiring more staff. We’re in a moment of time where AI is the only solution for the growing workload. Every position is being stretched and retailers simply don’t have the resources they used to.

Being smart in the execution of merchandise plans is invaluable to achieving profitability in today’s retail environment. With AI providing impactful decisions for promotions all the way to assortment planning, it offers the guidance necessary to succeed in this difficult moment of business.


It goes without saying that being a retailer in today’s industry is tough—and with persisting industry challenges it becomes an increasingly daunting position. However, the outlook is not so grim.

Retailers already leveraging AI automation will discover increased customer traffic and margins – paving the way to their success this year; and with the bulk of retailers already investing or planning to invest in AI, many will soon realize similar success.

The State of the Retail Industry 2023

JAN 2023