Cognitive to Play Key Role in Matrix Commerce

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Fall 2015 will forever be known as the time when cognitive came to retail. More simply put in 2015 retail big data got a brain, and from a business perspective retail big data without a brain is more like a big nothing.

Since 2012 I’ve been slowly defining and developing the concept of Matrix Commerce (aka ‘Matrix Retail’) and there’s clearly a need and a role for cognitive in operationalizing the Matrix Commerce vision and turning it into a business reality. The application of cognitive tools to facilitate knowledge workers’ ability to effectively manage the myriad day to day challenges and rapidly exploding sources of relevant retail data is a turning point in this evolution.

Over the last several weeks, IBM have made a number of announcements related to what they’re calling Cognitive Commerce and these are summarized below:

IBM’s Watson Forecasts Trends and Products for Holiday Season New Cognitive App Uncovers Consumer Preferences Behind Most Talked About Gifts – IBM today launched the IBM Watson Trend App, a new way for shoppers to understand the reasons behind the top trends of the holiday season and also predict the hottest products before they sell out. The app is available via a free download at the Apple App Store.

IBM Plans to Acquire The Weather Company’s Product and Technology Businesses; Extends Power of Watson to the Internet of Things
The Weather Company’s data platform hosts the fourth-most used mobile app in the U.S.; Cloud-based service handles 26 billion requests a day IBM ramps up new Watson IoT unit with powerful cloud platform for cognitive business. Here’s a video interview on this announcement with IBM Senior Vice President John Kelly.

IBM Delivers Online Merchants New Cognitive Capabilities That Turn Commerce Insights into More Powerful Customer Experiences
IBM today announced new commerce capabilities that help online merchants easily gain the insights needed to evaluate category and product performance and make quick and effective merchandising decisions. Leveraging cognitive capabilities from Watson Analytics, IBM Commerce Insights allows practitioners to gain a real-time view into customer behavior and market factors that are impacting their business, proactively identify opportunities and roadblocks and take informed actions to increase sales and business performance.

In this post I’m not going to review each of these announcements in detail, but all represent business relevant applications of cognitive computing that will be required for the effective management of matrix retail over the next five years.

Not only is cognitive computing an important tool for knowledge workers such as Online Merchandisers to leverage their capabilities and surface trends for action, the ability to for example compare past weather data to actual internet shopping usage could be a game changer. Think specifically about the impact of bad weather on shopping behavior and the ability to quickly utilize this data and target regions with specific online promotions based on the weather. Not only can this target products needed or used in the current prevailing weather conditions in a consumers environment, it could also be used to tie more directed promotional activity to specific IP addresses in a given region based current and forecasted seasonal weather patterns.

Additionally by tapping into larger weather trends such as the current lack of cold and wintry weather in the Northeast, more rapid corrective action could be taken to develop promotions for seasonal products which could target consumers and drive slightly discounted sales earlier in the seasonal cycle to avoid the bargain basement glut and massive markdowns likely coming at the end of such a poor seasonal selling period.

And although not explicitly called out in these current announcements, the ability to apply cognitive to other Matrix Commerce attributes is also on the horizon. The management, analysis and decisions for retail action based on regional or national social media activity as well as the ability to more dynamically monitor, analyze and price products to effectively win sales are two other steps we wouldn’t be surprised to see emerging in the near future.

My question and call to action for retailers today is that it seems there’s little doubt cognitive computing is now coming to retail, so when it does come will you be ready? Even though some may still say that the above announcements only represent baby steps in the direction of cognitive commerce, and maybe these are just baby steps, but clearly they are steps in the right direction.

Jeff Ashcroft