Artificial Intelligence (AI) is reshaping the retail industry in all aspects, including pricing intelligence, inventory forecasting, personalised customer engagement and supply chain efficiency.

Globally, the sector is experiencing a wave of investment and experimentation, with McKinsey estimating AI could unlock USD400 – 800 billion in value across the retail value chain. In South Africa, adoption is uneven, but the pressure is clear that retailers must modernise, or they risk falling behind fast-changing consumer behaviour and business operations. Pepkor Lifestyle is among the few retailers already applying AI at scale, turning strategy into measurable results.

For Pepkor Lifestyle, the conversation is no longer about if, but how. The business is actively testing, integrating and refining AI capabilities across various areas of its operations, from deeper customer insight to adaptive pricing and merchandise planning. The focus remains on empowering everyday decision-making with sharper, faster and more locally attuned intelligence.

As part of a group that operates at scale, Pepkor Lifestyle sees AI as a tool to sharpen instinct and build experience. Buying, planning and merchandising teams now work with models that learn from historical data, respond to real-time signals and shape forward-looking strategies. These systems are deeply attuned to the South African context, which is price sensitive and has regional preferences and shifting consumer behaviours.

Real returns from AI integration
The results are already significant. AI-powered markdown and price optimisation models, powered by Google Gemini, deliver higher sell-through and better stock clearance. Meanwhile, inventory forecasts using SAS Intelligent Planning and SAP Material Requirements Planning are creating leaner, more agile supply chains.. Stockouts and overstocking have declined. Shipping and container models powered by FarEye have streamlined distribution through optimised routing, load balancing and more innovative use of carriers.

In digital marketing, AI delivers both performance and efficiency. First-party stitched data from Pepkor Lifestyle’s customer data platform, Amperity, enables hyper-personalised ad targeting on Meta and Google, with predictive analytics and dynamic creative optimisations that respond in real-time to user intent. The impact is a clear increase in return on ad spend (ROAS), a lower cost per acquisition (CPA), improved click-through rates (CTRs) and reduced media wastage.

The most striking shift is in how AI has changed the scale and nature of brand communication. By utilising generative AI to create highly targeted ad variations and by optimising the digital media platforms being used, Pepkor Lifestyle has reduced its print media output by 24 million catalogues annually, resulting in a significant cost saving, while maintaining sales. These savings have been reinvested to support digital growth and enhance the customer experience.

AI as a strategic enabler
With better data models, the business now has a more nuanced view of customer journeys, including where, when and how shoppers interact across search and social platforms, as well as their in-store behaviour. This insight strengthens everything from in-store layout and promotions to marketing effectiveness.

The most significant opportunity lies in operational efficiency. AI can streamline distribution, reduce waste and improve product availability, without inflating costs. In a retail environment defined by thin margins and rising expectations, this shift matters.

The journey is still unfolding. AI integration is an iterative process, one that requires experimentation, investment and cultural openness. Pepkor Lifestyle’s approach is clear: test what works, scale what delivers value and anchor everything in the fundamentals of accessible, quality-led retail, with AI embedded across planning, engagement, logistics and marketing.

In a sector often defined by speed and price, AI offers a new edge for intelligence at scale, enabling growth, supporting sustainability and reinforcing Pepkor’s retail leadership.