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Cognitive Computing Provides Retailers With A Map For Success

IBM

By Karl Cama, IBM

Technology -- whether it’s smartphones enabling consumers to check prices as they roam a retail store's aisles or e-commerce fueling online buying -- has upended the retail industry's traditional business model and changed consumers expectations.

As a result, the retail industry finds itself faced with significant disruption, driven by a number of external forces that make connecting with today’s consumer, driving revenue and shareholder value, and protecting consumer privacy more challenging than ever.

It's not that retailers ignored the dynamic transformation in the marketplace.

Over the past few years, they have attempted to mitigate many of the disruptive forces by using analytics to discover how to better reach today’s new, empowered consumers, generate higher revenues and, in general, gain a much broader perspective of shifting marketplace requirements.

But, as the mountain of data continues to grow, retail executives have discovered that existing analytics capabilities are not sufficient to gain the necessary insights to fully meet ever-growing and ever-changing consumer desires.

Cognitive computing, tailored for the retail industry, can help.

Retail executives believe cognitive computing will play a disruptive role in the retail industry, according to the 2015 IBM Institute for Business Value (IBV) study. They are also poised to embrace this groundbreaking technology and invest in cognitive capabilities.

Our new IBV study, "Your Cognitive Future in the Retail Industry," announced today, built upon last year's study findings. Among retailers familiar with cognitive technology, 91 percent believe it will play a disruptive role in the industry and 94 percent are likely to invest in the technology in the near future.

We'll be discussing those findings as the worldwide retail industry gathers in New York City at the NRF Show next week.

The days are over when retailers can silo or target promotions to mass audiences based upon age, gender and income. These days, there is only one channel that counts: the consumer. And consumers expect retailers to be relevant and responsive.

Cognitive computing can help retailers discover previously unseen patterns hidden in their data. These patterns can help retailers differentiate themselves and individualize a purchase. By truly understanding their customers’ preferences, brands, colors and life events, retailers are able to deliver products, services and communications at exactly the right time, place and medium.

Customers want to control the entire buying process, discovering and purchasing what, when and where they want to.

As customers assume ever greater ownership over their personal retail journey, retailers need to ensure better customer engagement on all channels.

Customers have lots of choice in what they want to buy. They're no longer constrained by location or time-of-day while making retail transactions. They want:

  • Price consistency across all retail channels
  • Consistent assortment across channels
  • If they're in a store, they expect an out-of-stock item shipped to their homes
  • The ability to track their order's status
  • The ability to return online purchases to brick-and-mortar stores.

Customers use numerous self-help technologies in their interaction with retailers. They use price checkers, mobile apps and payments, access information kiosks and take advantage of self-checkout payment lanes.

We found that retailers must excel at engaging with customers, discover new ideas and make effective decisions. Our research also indicates that among retail leaders,

  • 58 percent believe that retailers that focus only on brick-and-mortar stores will not survive for long.
  • More than 80 percent of agree that having mobile apps is key advantage over their competition.

Cognitive computing also exponentially expands the power and impact of traditional computing and allows organizations to scale and accelerate human expertise.

Enabling consumers to capture meaningful insights and make more effective decisions opens up fresh opportunities for the retail industry.

Retailers are already developing a vision for the use of cognitive computing, identifying specific applications for cognitive, and creating a roadmap to begin their cognitive journey. Cognitive computing has arrived in the retail industry -- and its potential to transform the industry is enormous.

Karl Cama is the Chief Technology Officer for IBM Retail.

To learn more about the new era of business, visit ibm.com/outthink