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Did you know that 91 percent of retail executives familiar with cognitive computing believe it will play a disruptive role in their organization? Even more significant: 94 percent intend to invest in it, according to the IBM Institute for Business Value’s recent report, “Thinking like a customer.” Is your business in that faction?
The retail industry is one that I follow closely, so as a follow-up to my last article on digital business, I wanted to consider how digital business is impacting the retail industry today. With customer expectations always expanding and the volume of business data doubling every 1.2 years, retailers will need to quickly adopt technologies that can help them take full advantage of their available data.
The rapid digital transformation of the retail industry
A few years ago, I was helping a retailer in the US develop an e-commerce strategy. At that time, the emphasis was on getting their product catalog online, and they still had a long way to go to before they could provide online shopping. Leveraging multiple customer points of engagement was merely in the concept stage.
It’s amazing how quickly things have changed. Now retail organizations must embrace an omnichannel strategy—and that’s just a basic capability. If you really want to differentiate your company from competitors, you have to leverage the power of digital business and cognitive insight to offer a more personalized customer experience.
Retail: Meet cognitive
Cognitive computing systems use artificial intelligence (AI) and the powerful combination of enterprise (on-premises) data as well as data in the cloud to build knowledge as they go. Retail companies today need to link cognitive capabilities with richer and more disparate sources of information on their customers. Some data already resides within the retailer’s existing IT infrastructure where they’ve captured and honed customer data for many years. Other data will be acquired by tapping new sources owned by the retailer as well as ecosystem partners using Internet of Things devices.
With more data to work with and more capable systems to analyze it, the retail industry can radically evolve to respond to customer demands.
What does cognitive opportunity in retail look like?
Imagine the power of combining customer data with weather data, as an example. A retailer looking to reap the benefits of cognitive computing could combine consumer behavior information and data from The Weather Company with its enterprise-based data on product buying trends, purchase rates and shopper history to do a better job of managing and monitoring supply chains. This would help the retailer to achieve optimal inventory levels while avoiding costly out-of-stock conditions. Solutions like IBM Watson Commerce Insights or the IBM Watson Order Optimizer in the IBM Cloud can provide these kinds of powerful data to retailers and help them deliver omnichannel experiences.
Or consider the impact of mobile payments on the retail industry. I was recently traveling in China and observed that today people are almost exclusively using smartphones for e-checkout and click-and-collect services through providers such as WeChat and Alipay. From taxis to small family-owned restaurants, businesses in the highly mobile-enabled Chinese society have made mobile payments the norm. This is just one example of the many changes that are happening in retail. Today, more than ever, it is critical for retailers that want to stay competitive to sense and react to these key industry disruptors.
The capabilities described in both examples above require connections to data and ecosystem partners from within the retailer’s IT environment. Retailers need to work with partners who are reachable through cloud-based services, so both hybrid cloud and cognitive computing will play a role in revolutionizing the retail industry.
To learn more about succeeding in the retail industry with cognitive, check out the Institute for Business Value report “Ready to engage with tomorrow’s shopper?”
Finding expert help for your business
Our global team at IBM Systems Lab Services is helping clients to design, build and deliver these cutting-edge solutions for the cognitive era, using their proven expertise and the best of IBM technology. Contact us today to see if we can help with your organization’s digital transformation.