Retail’s Cognitive Future

The North Face mens jackets


Today’s retail industry looks much different than it did even ten years ago. Technology has rapidly advanced consumer expectations and industry business models. To rise above the noise, retailers are increasingly creating tailored offers to capture shoppers’ attention and market share.

One of the major enablers of this change has been the explosion of structured and unstructured data. 80 percent of data in the world—like videos, photos, audio files, or customer reviews—cannot be analyzed by traditional computing systems. Advances in social media and other platforms mean consumers are generating new unstructured data every second that indicates their likes, dislikes, and preferences, insights that retailers could not previously leverage until now.

With the help of machine based learning or cognitive computing, retailers can unlock the potential of this data to improve and personalize their customer experience. A recent IBM survey finds that 91 percent of retail industry executives familiar with cognitive computing believe it will play a disruptive role in the industry, and 94 percent are likely to invest in the technology in the near future.

Cognitive computing represents a new era in retail, where systems understand the world and reason in the same way that humans do: through senses, learning, and experience. The systems generate knowledge about the customer over time, bringing intimate knowledge from prior interactions to personalize the shopping experience.

This new cognitive computing era in retail is not an incremental change and signifies a fundamental shift in how computers interact with customers, store associates and the overall retail environment.

For example, through the Watson Developer Cloud, developers are prototyping and building cloud-based cognitive computing applications, many of which are being leveraged by a variety of startups in the retail space, from ecommerce to brick and mortar, to marketing insights and sales training.

The North Face recently incorporated Watson APIs into their latest online shopping experience by introducing a new, sophisticated shopping tool powered by cognitive computing. The tool, called XPS, delivers personalized advice on outerwear that enables customers to use natural language as they shop online. For example, a shopper could type: “I need a jacket for a Vermont ski trip.” They are then asked refining questions on factors such as gender, location, activity and time of year to generate a recommendation that meets their specific usage and climate needs.

Cognitive computing capabilities can also power open marketing automation and analytics that help companies provide personalized digital marketing strategies. This gives retail marketers the ability to better customize communication to individuals. For example, Alibris, an ecommerce bookseller, is working with cognitive computing systems so online shoppers can explore the writing style and specific traits of their top authors in order to discover new books and interests.

Watson also takes away the intimidation factor, one where customers feel they need to know specific enterprises’ jargon. For instance, VineSleuth’s Wine4.Me In-Store Advisor, simplifies “wine speak” and personalizes the in-store wine shopping experience by matching the retailer’s wine inventory data with shoppers’ personal flavor preferences to craft curated suggestions for shoppers. In this case, cognitive computing empowers shoppers all while delivering relevant data that retailers can use to better serve their customers.

Cognitive computing can also be used to improve the performance of brick and mortar locations by analyzing and understanding factors such as why certain locations perform better than others, which allows retailers to enhance their overall performance. The first chain to officially start using the technology is Slapfish, a Southern California-based seafood chain. Slapfish has recently rolled the technology out to all six of its locations.

The retailers that will emerge as leaders in this competitive industry are the ones that will harness customer data, creating contextually relevant strategies to reach buyers where they shop: at brick and mortar stores, on their laptops, phones, and tablets. By leveraging the powers of cognitive computing, retailers have a deeper understanding of their customer–allowing them to build a closer relationship between their brand and its buyers.

Keith Mercier is a Leader of Global Retail Transformation bringing IBM’s cognitive learning and natural language computing capability, Watson, to the world’s leading retailers in order to transforming how consumers engage and experience interacting with their favorite brands.

The IBM Watson Ecosystem is a new partner program providing Watson cognitive technology to businesses, access to IBM’s network and a community of entrepreneurial organizations working to solve their industry’s toughest challenges


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