Can AI Negotiate Retail Merchandising Deals?
Retailers around the world are facing an unprecedented situation. The demand is either overwhelming or has fallen to zero. Merchandising is suddenly hit with an enormous amount of expectations. Depending on whether they are a food or apparel retailer, these demands involve keeping the shelves full or keeping their supply chains alive. In both cases they also need to deliver an added contribution to the bottom line.
The words “Never let a good crisis go to waste” ring more true than ever. Retailers should use this crisis to implement novel technologies, embrace innovation and come out stronger on the other end. Stepping in to fill the void, Pactum’s AI can negotiate low value, high volume supplier deals automatically. For most large retailers, these long tail deals have been neglected for years. This means a lot of value can be gleaned for both sides by renegotiating them. Pactum does exactly that, in an automated way. Pactum’s customer sends out an email with a request to renegotiate the current deal. The supplier clicks on a link and a chat-like interface opens. The system knows in-depth information about the supplier and is able to conduct the negotiation.
Will all of this make business less human? It is true that with consolidation and globalization business has become less personal. Conversely, AI Is making business more human again. We have seen cases where companies interact with their long tail suppliers just once in five years. The AI however, always has time for the supplier, is always informed with the latest data and is able to spend as much time as needed with the supplier to find the best deal for both sides. We have received feedback like ”The system was polite and it listened”. This shows that AI can bring humanity back to areas where human interactions are not “profitable” anymore.
Pactum is also a superior negotiator for non-strategic long tail deals compared to a human. How does this translate into real world value? The following examples illustrates this fundamental truth in a simple way. There are over 30 negotiable items or positive and negative levers in the retail industry. These include price, price gap, stores, payment terms, packaging, features, etc. The combinations between those negotiation parameters are so vast that people have a hard time grasping the most beneficial combinations for both parties. Yet this task is perfect for a machine. Thus Pactum can unlock hundreds of millions of dollars for large retailers while improving the deal for the supplier as well.
The bottom line: AI could make all the difference when it comes to critical margins that decide whether a business will buckle under the pressure of this pandemic or rebound with smart new strategies in place.
