Cognitive computing: IBM's 'secret weapon' in transforming experience
By Steve Laughlin
Earlier this year our research indicated that, globally, only a small percentage of retailers were meeting consumer experience expectations. Those expectations include elements of convenience, understanding the customer's context, providing the right content, and consistency of experience.
We predicted retailers who want to thrive would connect data, devices, people and processes to be more relevant and responsive to consumers. Eight months later, our prediction is coming to fruition. Interestingly, and faster than we anticipated, cognitive computing systems are becoming the secret weapon helping companies transform their consumers' shopping experience.
This technology can understand the world the way humans do—through senses, learning and experience. Cognitive can reason by generating hypotheses and can continuously learn from previous interactions, gaining value and knowledge over time, automatically and at scale.
In fact, retailers already know they must embrace cognitive computing to better engage with shoppers, differentiate their offerings and adopt a culture of innovation. In a 2016 study by IBM's Institute of Business Value (IBV), 91 percent of retail leaders familiar with cognitive computing believe it will play a disruptive role in the industry, and 94 percent of those executives intend on investing in cognitive capabilities moving forward.
Macy's is harnessing the power of cognitive computing to improve the in-store shopping experience. The retailer recently launched an in-store, personalized shopping application powered by IBM Watson, to create a more interactive in-store experience at scale. The digital companion, accessed via a mobile browser, enables shoppers to interact with the app in natural language and provides customized information unique to their specific store including product assortment, services and facilities. For example, a customer could type a combination of brand and product inquiry such as "INC dress" and will receive the relevant response and location of that product in the store.
New connected devices and mobile phones provide retailers like Macy's with new ways to reach customers and streams of customer data that they can analyze and use to understand those shoppers. Cognitive technology can analyze and identify patterns from structured information like purchase history, as well as unstructured data, such as call center feedback and social media. This provides retailers with more informed, actionable insights in order to localize stores' assortments, promotions and layouts. Macy's is one great example of a mature retailer adopting an innovative, agile mindset.
All retail and consumer product companies must learn to experiment quickly—being a fast follower in today's environment may very well be fatal. Over the past several months our research team have compiled a glimpse into the retail of the future to help our clients consider where they might focus their experimentation and learning. The study explores recent industry trends and pain points, and then takes the conversation a step further by discussing the implications for our retailers. Some topics explored in the study are:
- How do retailers move from merely reacting to shoppers to giving them ?
- What does the revitalized store look like?
- How can science inform the art of merchandising?
- How will IoT play a role in retail, particularly in optimizing supply chains and fulfilling on demand?
- How can cognitive computing elevate all functions of a retail enterprise to prepare for trends both now and moving forward?
Retail and consumer products companies must move from "What do I sell?" to "What problem can I solve for my customers?" The design-thinking philosophy of understanding consumers is at the heart of this shift. Innovative companies are using big data, analytics and cognitive capabilities to unlock deep insights and differentiate themselves from competitors, start-ups and up-starts.
If you want to be prepared for the retail of the future, read the study and start planning for tomorrow, today. Really, tomorrow might be too late!
Steve Laughlin is general manager for Global Consumer Industries, IBM.
Topics: Consumer Behavior, Customer Experience, Customer Service, eCommerce, Marketing, Merchandising, Omnichannel / Multichannel, Online Retailing, Psychology, Retail - General, Technology, Trends / Statistics
Companies: IBM Corporation