Find the original article published in Total Retail here.
For many retailers, profit margins are thin and getting thinner — a concern all organizations must weigh in 2025 with price pressures, potential tariffs, and an uncertain economic outlook posing new challenges.
The U.S. grocery business, for example, is operating at its lowest profit margin (1.6 percent) since before the pandemic, according to FMI | The Food Industry Association. Department stores and general merchandise retailers face dwindling profit margins, too. More than ever, retailers seek efficiency in operations through technology that optimizes decisions around merchandising, pricing, assortments and promotions.
Artificial intelligence solutions are new and innovative tools that can lift a retailer’s performance and refine decision-making, but as with any powerful technology, do top-level executives have visibility into the high-level strategic data they need?
The stakes are high: A lack of visibility at the highest levels of a company can cause millions of dollars in losses. For example, one leading retailer learned that C-level executives had zero visibility into purchase orders and inventory on order, leading to millions of dollars in open-to-buy overruns. However, after implementing unified solutions that provide executive visibility in real time, the retailer has already seen a more than 6 percent increase in gross margin improvement and a 2 percent uptick in sales.
Because retail processes are complex and business decisions require granularity, systems need more intelligence, which is where AI and generative AI can help. Unified systems, leveraging AI technology, eliminate disconnected systems, reduce manual workflows, and provide enhanced visibility within financial planning, assortment planning, pricing, order management, allocation, and replenishment.
Retailers, no matter if they’re grocers or fashion boutiques, will operate more efficiently and improve profit margins by eliminating siloed data and processes. Companies can unify disparate systems into one streamlined solution that reveals recommended actions and insights available in real time to drive company growth.
Steps Toward Total Visibility
Retailers that want to implement more C-level visibility can start by identifying where they have silos. Are certain departments or job functions running isolated systems with data outputs going nowhere else inside the company? Finding those data gaps is vital.
Secondly, identify who owns the data. For example, a grocer working with a high-profile consumer brand may be relying on that supplier’s data, as well as data sources such as syndicated data panels that help a retailer identify market changes alongside its shopping basket insights. Retailers need to pull all the sources of data from the owners and pool the results into one centralized location.
After that, retail teams across the organization, including C-level executives, need to formulate a plan that properly leverages the technology and asks the right questions. To offer a simple example: A merchandising team can’t just say, “increase our profit margins.” Without more detail, the results may be a plan to increase product prices by 30 points, exploding margins immediately, but putting a retailer out of business in three months.
Expert teams must identify the right business questions to ask and then put the technology to work to harness, streamline and find the best answers to business challenges. With a unified system in place, the organization can then track sales, revenue, margin return on investment, inventory, demand, price elasticity, and more.
Visibility Drives Growth
Retail leaders often lack visibility into the technology solutions powering their organizations. Too often, executives don’t even know what technology solutions are being piloted.
What’s more, visibility is only the first step. Ultimately, retailers want to have solutions visible to top-level executives but also fully integrated and running as one homogenized system throughout the organization. Until then, adding complete visibility into how modern merchandising solutions work together is an important first step to drive sales and boost profits.
David Barach
David Barach, senior vice president of solutions strategy at Digital Wave Technology, leverages deep expertise in analytical solutions such as inventory optimization, demand forecasting, planning, allocation, price optimization. With a background shaped by leadership roles at top retailers and solution providers, Barach plays a critical role in enhancing Digital Wave Technology’s offerings. He recently held leadership positions at Zebra Technologies and Antuit.ai (acquired by Zebra), SAS Institute, DemandTec (now IBM), and ProfitLogic (now Oracle).