Retailing is a sector where major changes are taking place in customer behaviour, bricks-and-mortar stores are being transformed and the role of the sales assistant is also evolving.

#NRF2016 – Retail trade betting on cognitive science

It is hard to remain unaware of the convergence now taking place between the physical and digital worlds. Data, the peripheral devices that gather ever more of it, people and processes are all becoming intertwined. And data analysis is becoming ever more important for improving customer engagement and boosting the overall value chain. The way the sector is moving today, retailers now have little choice but to seek new ways of stimulating growth, anticipating demand and differentiating their products and services in a market where it is infinitely preferable to be ahead of the game.

Steve Laughlin, General Manager of Global Consumer Industry at IBM, whose job consists of finding IT solutions for retailing, consumer products and wholesale distribution, says that “one of our IBM studies reveals that 91% of all retail leaders who are familiar with cognitive computing believe it will play a disruptive role in the industry.”

This trend towards the application of cognitive science was confirmed at the Retail’s Big Show 2016 event run by the US National Retail Federation (NRF), the largest retail trade fair in the world, which brought together leading sector players and innovative technology providers in New York City on January 17 - 20.

Applying cognitive science to stay relevant and win market share

The unprecedented amount of data that consumers are generating through digital channels nowadays is opening up new opportunities for retailers. This will be accentuated by the phenomenal growth in the use of connected objects, whose number is, according to IT consultancy Gartner, likely to reach close to 21 billion by 2020. In order to succeed in the cognitive computing era, retailers will need to adapt, inter alia by using advanced methods of analysis to build sophisticated customer profiles, which will in turn enable them to take better decisions. A major theme at the NRF 2016 event, cognitive analysis solutions help to build up a picture of customers’ current lifestyles and predict their future needs. They enable a brand to draw up differentiation strategies across products, prices and services and offer innovative customer experiences. These models can also be quickly re-worked.

Cognitive science applications can also play the role of ‘personal shopper’, answer frequently asked questions about products and draw on information sourced from the social networks so as to make recommendations based on a shopper’s previous purchases, his/her interests and known needs. In this way, cognitive systems can enable a brand to offer a tailored in-store experience to individual customers and generate stronger customer engagement.

Changes in customer behaviour, store layout and the role of the salesperson

Tying in with cognitive capabilities in the pursuit of a more personalised customer experience, there is a second major trend towards solutions such as RFID technology, which help merchants to get a real-time, in-store feel for customers’ desires and aspirations. Underlining that retailers can nowadays get to know their customers better through a judicious combination of data and cognitive analysis, Steve Laughlin told the Retail’s BIG Show audience that “there’s only one channel; the consumer is the channel.” Bricks-and-mortar stores therefore need to become smarter, social and connected – packed with all kinds of connected objects. Smaller in size, and based on a flexible, modular design, the modern store can become a substantial differentiator with a range of purposes and goals, including providing entertainment and testing new things out.

In this context, the role and status of the sales assistant is being elevated to that of ‘concierge’, Laughlin told the audience, arguing that the ‘in-store concierge’ should be a brand’s secret weapon,  embodying and projecting the brand promises. Nowadays the salesperson-concierge should have all the necessary tools at hand to educate the customer on the brand’s values, acting as a real brand ambassador, and equipped with a fund of basic knowledge about the customer that will help to create a personalised relationship. Given that 69% of the retailers polled in an IBM Research survey agree that their customers now expect a personalised shopping experience, this is clearly a vital aspect of the business nowadays.

However, while the emergence of companies such as Austin, Texas-based enterprise Cloud computing software startup CognitiveScale certainly demonstrates that there is demand from retailers for such cutting-edge solutions, concerns have also been raised over whether the current legal framework is adequate to protect the privacy of customers and prospective customers, who are sometimes unaware that their data is being used for commercial purposes.


By Charlène Voltat