Covid-19 increases complexity in fashion retail: our investment aifora shows solutions
Text: by Ralf Kalscheur
Self-learning algorithms from startup Aifora are helping stationary fashion retailers automate their price and inventory management- solving a problem that has been exacerbated in the Corona Pandemic.
How can you imagine a mountain of 300 million garments and shoes? According to a current calculation by the Textile Trade Association (BTE), this is the amount of unsold fashion items that stationary fashion retailers are left sitting on as a result of the second corona-induced shutdown. As never before, companies are dependent on efficiently selling off new collections and managing price markdowns (reductions) as profitably as possible during the periods when their stores are open in order to secure liquidity. Consulting firms such as McKinsey & Company or Gartner agree that retailers who want to survive in this volatile market in the future can no longer do without intelligent retail automation.
The startup Aifora, which CEO Thomas Jesewski founded together with CTO David Krings in 2018, aims to offer traditional businesses access to intelligent automation solutions. For this purpose, Aifora maintains a cloud-based Big Data platform on which retailers provide transaction and item master data via an interface to their ERP system. “With the help of self-learning algorithms, we calculate the optimal cost price in real time for each product and product design, such as different colors and sizes,” Jesewski says. In addition, the “artificial intelligence” recommends strategies for dynamic price management and item-specific markdowns, marrying internal criteria such as location and on-site inventory with external factors such as weather data, events, and the competitive situation in the immediate environment. “The retailer provides the algorithm with individual business rules,” says CTO Krings. “He retains control at all times.” How high may markdowns be? How long should the sell-off period last? What inventory level should be targeted? Increasing the level of automation pays off: Aifora promises three to six percent more sales, two to eight percent more revenue and a reduction in working capital of five to 25 percent. The license fees are based on the size of the company or the turnover and the business benefit that is measurably achieved with the help of Aifora.
One of Aifora’s first customers in 2018 was Reno. The footwear retailer wanted to test a tool for intelligent price markdowns. “The markdown optimization was implemented in just four weeks – including the connection to our SAP systems,” explains Felix Finger, who was responsible for IT, logistics and e-commerce at Reno as managing partner at the time and is currently interim CFO at Aifora. The startup has expanded its product portfolio to include software modules for intelligent inventory control and management. Meanwhile, Aifora’s AI-based price and inventory management tools are used by major fashion retailers across Germany.
Source: Creditreform 02/2021