When computers are smarter than the retailer

Several studies show that the use of artificial intelligence alone will increase economic growth by three percent by 2035. In comparison, without the new technologies, we would only be looking at an annual growth rate of 1.4 percent. Cognitive computer systems aim to help people make better and more informed decisions based on data. Intelligent systems can draw their "knowledge" from a wide variety of sources. Watson, for example, the cognitive computer system from IBM, can not only process all data formats, Watson also understands language and can recognize images.A competitive edge that is almost impossible to catch up onThere are still very few retailers who are already using and experimenting with AI. However, the sooner companies start to gather their own experience, link and interpret data, the greater their competitive advantage will be. Take Amazon, for example: The company grew to its size by relying heavily on technology and automating many processes. Today, Amazon Echo is ensuring that AI could move into every household and become the central shopping assistant. The rapid progress suggests that the penetration of AI in retail will be significantly higher in five years' time than it is today. And then it will be difficult for reluctant retailers to catch up again.Relevant advertising through highly personalized customer approachCognitive computer systems such as IBM's Watson are able to combine data from a wide variety of sources to create a meaningful customer profile. For example, Watson can link existing internal data on customer history with the customer's publicly accessible social media profile and use data on the weather or local events to create a completely individualized offer in real time. For example, customers who regularly go on winter vacations in Kitzbühel are automatically offered the latest premium collection of winter sports fashion, while customers who like freeride contests on Facebook receive offers for snowboarding equipment - ideally linked to the latest snow powder forecasts. Marilies Rumpold-Preining, IBM Watson Customer Engagement Executive for Germany, Switzerland and Austria, explains: "Watson can simply process a wealth of data and is therefore able to make new correlations and generate new ideas that even an experienced marketer would not come up with so quickly." In addition, Watson can customize the customer approach not only in terms of content but also in terms of frequency and channel. Communication rules along the lines of: "If a customer has bought product A and B, they will then be offered product C because they should also like it" will then be a thing of the past.The future will replace many old business modelsIn summary, it is not a good idea for retailers to put off digitizing their business. Especially in retail, whose points of sale are increasingly converging, there are so many touchpoints with customers from which companies can learn more than in almost any other industry. Retailers who want to grow and still be successful in 10 years' time therefore need to invest in a digital infrastructure now and start looking at the issue in depth.Internet World FairMarilies Rumpold-Preining from IBM will speak on this topic at the Internet World Fair in Munich.