The past century has seen retailers at the forefront of adopting many powerful new technologies, which were instrumental in increasing both sales and customer satisfaction. As significant as these past innovations were, recent developments suggest that we are at the beginning of a retailing renaissance that will see a big leap forward in merchants’ ability to understand consumers’ needs.
The innovations of the past century usually involved automating tasks as well as connecting people, businesses and institutions to each other, while also connecting data and information in much faster and more efficient ways.
For example, early adopters at the turn of the last century used tabulating machines to count faster, manage employees and serve customers better and generally understand information in new ways. Then came the bar code in the ’70s that revolutionized not only the checkout process, but also order tracking.
Fast-forward to the age of the Internet, which changed how consumers shop and the way retailers understand, sell to and service those customers. Today consumers are armed with smartphones and now have — in the palm of their hands — the ability to research any product and make purchases wherever and whenever they want.
These changes are profound because humans innovate, learn and grow through connection, and automation frees us up for higher-order tasks. But we’re approaching the limits of what automation and connection can deliver. While they will remain critical to the advancement of retailing, a new era of analytics and understanding has already begun.
The real power of analytics lies in better predicting what is likely to occur, and in helping decide what to do next. For example, a consumer electronics site can provide a discount for a particular brand of Blu-ray player for a customer who is purchasing an HDTV, based on the customer’s profile, past purchases, preferences and other information.
But we can do much more. Analytics can translate mountains of data into a real understanding of individual needs, the kind that is usually derived from the social interactions we have with those who know us. As we share with retailers our likes and dislikes, our hobbies and so forth, they will be able to provide a much better shopping experience.
One glimpse into this future is Watson, the computer that defeated the two most celebrated “Jeopardy!” champions earlier this year. To win at Jeopardy! one must be able to think like a human using natural language. This is a new kind of technology, one that can analyze and discern human meaning, creating a better understanding of the customer and delivering a better shopping experience by helping sales associates answer the most difficult customer questions in real time. For example, “What is the next contact we should make with this customer? When should we reach out to him? What should we say? And through what medium?”
And for the consumer, imagine a day when you could ask — in natural language — “What gift should I buy a techno-savvy 9-year-old boy?” And the response comes back with the top suggestions and what stores have them in stock. Gift giving just got smarter, thanks to customer analytics and a bit of technology wizardry.
The profound changes underway now will affect the way we make personal decisions and how companies make strategic and tactical ones. In retailing, the combination of analysis with understanding — and with connection and automation — will provide merchants with the best opportunity in many decades to forge deep and lasting bonds with their consumers.
Jill Puleri is VP and Global Retail Industry Leader, IBM Global Business Services. IBM is celebrating its Centennial Anniversary this year.