How to Crush Your Competition With Analytics
Holiday shopping is over, but retailers in all categories are always looking for ways to beat the competition for customers. In recent years, internet technology has given a growing number of large and small businesses, like Etsy’s crafty shop owners, the ability to enter the retail market. Ultimately, this puts pressure on retailers to innovate fast. Yet innovation isn't only about getting things done fast and efficiently; it’s also about digging deeper to derive data-driven insights to make better decisions and stand out.
Now the cloud, combined with cognitive technologies, is giving retailers the power to outsmart their competitors in a market that’s expanding every day. Besides greater scalability and cost savings, one of the most powerful benefits for retailers moving operations to the cloud is the ability to use cognitive computing analytics to make sense of patterns in vast amounts of unstructured data. This allows for better business decisions. Retailers have access to more data about their customers’ needs, habits and interests than ever before, yet many struggle to collect and manage that data, and even more have challenges analyzing it to improve their operations. With the right cloud and cognitive approach, organizations can put their data to work finding unexpected customer insights that deliver business-changing results.
The cloud serves as a platform for cognitive capabilities that allow retailers to gain a deeper understanding of customer behaviors. This involves tapping analytics and IoT tools to identify patterns in mobile, web and in-store data. Cognitive services can comprehend both structured data, such as customers’ browsing histories, and unstructured data, such as images, videos and bodies of text, to recognize patterns. In time, the platform can build the capacity to understand and reason much like humans do — through senses, learning and experience. With such insight, retailers can then develop customer programs, marketing, merchandising and pricing strategies to attract more business.
For an even more heightened competitive advantage, retailers can use cognitive cloud solutions to easily tap valuable data from third-party sources like weather forecasts or social media to better predict customer behavior and future trends. For example, valuable weather data can be incorporated into business and marketing plans to predict product demand and better time marketing outreach — e.g., putting firewood on sale before a big snow storm is expected. In addition, a variety of social media insight solutions allow retailers to farm social networks to gather what customers are saying about them and about their competitors. Some companies are even using IoT solutions to track movement of customers within stores and analyze how many people stop at displays to improve merchandising effectiveness.
The global retailer Lotte Group is applying Watson technologies to extract insights from structured and unstructured customer data collected through its various channels, deriving valuable learnings about customer preferences and product feedback. These capabilities allow Lotte to offer more tailored services to customers, consistent product information and expert advice tied to individual customers. For example, Lotte will use Watson to develop an in-store "Intelligent Shopping Adviser," which will give customers a virtual personal assistant to help with product recommendations, in-store location guidance and support for online pickup services.
The applications for cognitive computing in the retail sector are still in their early days, but the possibilities are unlimited and the benefits in the coming years will be transformative, from product development to distribution and logistics, buying and planning, operations, and, of course, marketing and sales.
Vish Ganapathy is vice president, chief technology officer, Global Consumer Industry at IBM.