Making Data Simple: Data in the Retail Industry - Part Two
In part two of our discussion about data in the retail industry, we continue to explore how the massive disruption in the retail industry over the past several years. Data, machine learning and AI are set to change the industry yet again. Join Patrick Pitre, Analytics Client Architect IBM Cloud, and Renee Livsey, Director, Technical Sales, IBM Cloud, to learn about emerging technology trends in the industry and how retail may be ahead in the data game. Listen to the first part of this two-part podcast here.
00.00 Listen to Part one of Making Data Simple: Data in the Retail Industry
Al Martin: Welcome to part two of our podcast on data and retail with Renee Livsey and Patrick Pitre. The link to part one is part of our show notes. Here we go, enjoy.
To me that would tell me that if I go back to my quadrants — I'm thinking out loud here — that would be the third quadrant. You are saying that a lot of the clients have mastered that piece and are moving in, and I would say back to the ML or the machine learning. They're actually pushing the envelope of machine learning and have already passed visualization on the large part. Is that an accurate statement, then?
Patrick Pitre: I think that the piece that's missing in the visualization space, and that we're having a lot of conversation around still is the self-service piece. So, a lot of retailers have mastered the standard report and dashboard for visualization. But where they are still struggling is being able to give a business analyst, or a merchant, or a store manager that ability to go and build their own visualization on the fly in a self-service manner to meet whatever business question that they have. There are still a lot of retailers that are struggling to get that piece correct.
Al Martin: Yeah, that makes sense to me. Now I get it. So, let me ask you a follow-on question in regards to that. How many times do you meet with retailers and you end up — or these retailers have a chief data officer that you're working with? Would you say it's 50 percent right now? Twenty five percent? Is there a lot more than 50 percent?
Renee Livsey: I think it's probably 75. Patrick, I don't know what you think.
Patrick Pitre: Yeah, it's a rare occasion that a retailer isn't either — have a named chief data officer, or they don't have a roll within their organization that's playing a chief data officer role.
Al Martin: That's much higher than I thought then. Much, much higher than I thought. I visit a lot of clients, I don't see it near that high. But, I’m talking every client under the sun, not just retailers.
Renee Livsey: Right.
Al Martin: So that makes a huge difference. When I'm talking with retailers I'm usually looking at three things. One is, usually they're doing something with marketing. Secondly, it's something with personalization. And, thirdly, it's probably improving customer service.
And there's analytics, there's machine learning, and there's AI in every one of those. But, one thing around the machine learning — let's talk about that a little bit. I am spending some time there. In fact, we've got a great demo that we do around machine learning, because it really is taking data — hence the name — you know, I'm responsible for hybrid data management. It's taking hybrid data management, aggregating this data, making sense of it, so when a customer logs in, by example, they give their attributes, they hit the model, the model leverages the data and a dynamic ad is spit out that's tailored to that client.
We know we've got a great demo that we do that just puts the whole hybrid data management portfolio together to help illustrate that. Are those kinds the same scenarios, Patrick or Renee, that you guys are doing in terms of machine learning? Where are you spending your time on machine learning?
Patrick Pitre: Yeah, so personalization is just probably 90 percent of my machine learning conversations. The other scenario that I would add is the ability to take a machine learning model and understand what the assortment should be. So, we're starting to have much more — or many more conversations around assortment, planning and leveraging machine learning in that space. So, I know what products that I need to put together to create an assortment that's going to resonate with my customers.
Al Martin: All right, fair enough. So, I know you guys also both attended that National Retail Federation conference this year. I've never been. I guess the first question is, what is it like? And what's the future going to behold? I would think that they go into a lot of futures and try to astound the attendees. What are we in for?
Renee Livsey: You know, it's a great show. I mean I think, you know — it's a non-vendor, non-IBM show. It's really all about the retailers, certainly all of our competitors. We're there on the floor, but you can really go in and see what your customers are doing, how they're trying to innovate, what they're trying to do with order fulfillment, with merchandising, with supply chain. You know, with all different areas of their business. You can go into different tracks, and, you know, see what they're doing. And, then they have speakers where they come in and talk about what they've done with innovation. What they've done — I actually spent some time listening to QVC speak. And they use IBM technology. They use our Watson Customer Engagement software.
But, they talk about how they're able to take certain technology, and actually innovate and move forward. I think — like I said, it's astounding to me that what the store will look like — it's a lot more virtual. They're using a lot of AI and virtual reality. A lot — there was a lot of vendors there that had stuff there. And a lot of the customers were very interested in trying to figure out how they could incorporate that into more of a virtual store versus the traditional brick and mortar.
But, you know, I think it's very, very interesting, because it's all about our customers retail and how they are moving forward, and what they're trying to do. They can see what their competitors are doing. But they can also see in one place all of the different types of channel or partners that can actually give them (unintelligible). It's very, very interesting.
Fatima Sirhindi: I have a question regarding what you just said about the new way that stores will form. So, Amazon came out with Amazon Go which is the concept of a store that doesn't have any lines, and it detects who you are, you put stuff in your cart, you walk out and you pay for it. However I saw that the no-line concept didn’t work, because there were lines to go into the store, for a no-line store. So, do you think that's what we're more moving towards? Where you kind of just do your — you just walk into a store, you do your groceries, and you can just walk out, and it detects you? Or, do you see that not being so successful of a method? Or something else?
Renee Livsey: Well, I mean I think again it's all — you know, Patrick can certainly jump in here — but I think it's all about how they're marketing to the individual customer. I mean, I don't know if you ever used InstaCart. I've used InstaCart before where they deliver my groceries to my house.
If you have kind of a similar list every time you go to the grocery store, and you pop it — you know, if I'm traveling a lot I can get on right when I land I can boom, boom, boom and I can — two hours later somebody brings my groceries to my house. You know, so that's an experience. Well, yes, I went into a store for a while, but they've offered me this additional experience.
So, I feel like they're really trying to make — back to our very initial early discussion — meet the customer where we are. Some will want to go into the store. Some will want to do everything online. And then a lot of us I think are more mixed. And so I think they are going to continue to innovate, but it's all about that customer experience. You know, what is the experience from the time you walk in there?
So, that wasn't a great experience if they did have lines. If they weren't able to checkout. You know, you have a lot more self-checkout in a lot of places now than you've ever had before. Because a lot of people don't — they just kind of want to get the stuff and get out. So, it's interesting.
Patrick Pitre: I would add that the one big that I thing is going to be the hurdle to get over when it comes to checkouts and those types of things is the data security. So, one of the things that was very apparent with NRF was the need for retailers to be much more concerned about their data and protecting that data. So, there's actually a couple of bills in Congress that are a moving forward.
And there's a session that within NRF that I listen in and watched. And what was interesting to me was the whole discussion around the chip cards, and the need to drive both a chip and a pin. And when you start talking about mobile checkout, or just paying for it out of your phone and those types of things, you run the risk of a lot of fraud.
If we go down the route of the regulatory requirement to require both a chip and a card and a pin to complete a purchase there's a lot of technology that's going to have to change from a mobile payments perspective, it's going to enable that. And I think that's going to be the big hurdle to getting to truly line-less checkout.
Fatima Sirhindi: So, from that, my question would be, do you think that it might get so complicated where people just miss the simple process of walking in, and buying what they need and you just paying with your card and go. Or, will the technology eventually, like, allow us to be seamless? And then my other question is, also, what does that to do to the jobs? If you walk into your local Walmart you have your product experts in every aisle or so. But, if you have a system where you're just doing it online what does that do for those jobs? Or do they become security people?
Patrick Pitre: So, I think — I'll take your questions kind of one at a time. So, I think the technology is certainly capable of getting us to an aisle-less checker, or a checkout-less experience. I think the jobs aspect of it is an interesting one, right? So, what I think is more — what you'll see is that those people in a store are going to change from being, "I'm checking you out" and "I'm taking your cash, or your payment" to "I'm now product experts, and I'm going to help drive a different experience for you."
When you look at the demographics, and when you look at the millennial versus what they call the Generation Z — so Generation Z is 15 and younger now. The differences between the two generations, the millennial are really about experience and personalized experience. Generation Z is really about being involved in the product creation, and being able to give feedback on the products.
And, the commonality there is really more personalized experience. And so what I think you'll see is that the mundane aspects of shopping — the checking out, the payment, and those types of things — will become as automated as possible, because retailers are going to move to a much more personalized experience and leverage those resources to provide that experience as opposed to having them do things like security, things like checking out.
You know, retailers today already do facial recognition and video — watching the store from a security perspective. Most of the big box retailers, their security actually doesn't — they don't have a large security presence below. They have in a corporate command center watching from a video perspective and then they notify local police force to handle a problem…
Al Martin: To me, Patrick, I've got to believe that we're heading to a world where everybody assumes a higher-value position. That's in like every industry. But, for example, when we go back to retail, when I know what I want, I just want to get it online and ship to the house experience. That's me. But when I'm — if I'm dealing with some hardware, or a tool for the house, and I'm trying to figure out how to fix plumbing, or whatever the case may be, I want to go to a place where I've got somebody that's knowledgeable. They're not just going to sell me a pipe. But they're going to say, "All right this is what you need to do. Here's how you're going to do it." So it's going to be — to your earlier point — it's got to be about expertise as far as I can tell.
Renee Livsey: … improvement stores, you're definitely not seeing the repititity of that type of change. They're more — they are focused more on the customer experience. They're still — you still need those experts. You know, you need that plumber there that can help you when you go in and talk to them about what you need.
Al Martin: I don't know how it applies to me, because you're talking to a guy from a retail perspective. I come home, and there's like 10 pairs of pants sitting on the dining room table. And my wife is telling me, "Try them on." I don't even want to try them on, so I need some kind of AI that just gives me the one that I know I'm going to pick. Because then I got to try them all on, then she sends back nine of them. That's how my life works right now.
Fatima Sirhindi: But that goes back to customer experience, right? Because I work at like a watch store. And people come in, and I ask them everything about their lives, and what kind of person they are, and from that we have certain watches that we recommend for people. Like a lighter one for this, or this is your style. Or you like something traditional.
So, if you move that online, how would retailers provide that kind of experience? The one-on-one, and the personalization online? Like, would you — do you think they would just go virtual?
Renee Livsey: Oh, sorry. I was going to use Patrick's example. You could actually go in and look and say — online, you know, look at a gem and say I want a round cut, I want a ruby versus a sapphire, versus a diamond. I want — and you can kind of pick all that online. And then they send that information. Then you go in. That person that's waiting on you has the information you got from the watch store, you know, when you had that conversation.
They have a lot more information. So when they come in they're already aware of what the customer is looking for. What their preference are. And they can serve them — I would argue, a more efficiently. And then they, you know, they have a lot of data to go ahead and start with. Rather than, you know, start from the beginning.
But I think you're always going to have a mix of people of what they prefer. And going back to our demographic, it's also going to be about relationships. I have a 19-year-old daughter, and she rarely goes into stores. She buys almost everything online.
Patrick Pitre: And a watch is an interesting example. Because a watch is really becoming much more of a luxury item than a necessary. Because everybody carries a phone. And so when you start talking about niche retailing around luxury items like phones — not phones, excuse me — like watches and higher-end cars and those kind of things, you're right in the sense that there's still going to probably be a physical presence. Somebody's going to want to walk in to a store and touch and feel that product.
But that journey's going to start online first. I'm going to research what watch I want to wear, what looks good. It's probably going to start with what's the brand statement around that? Is it a Rolex, meaning that I'm going to have something on my arm that is steeped in tradition? Or, is it going to be more of a higher-end, you know, watch that's I saw on Tom Brady's arm, for example? Those kind of things. So, the journey's definitely going to start online, but I still think it'll have a brick and mortar presence.
Al Martin: I also believe that when it starts online it kind of depends on the business that the retailer we're describing is in. Like, if you're an IKEA, it'd be great have a picture of your room, and be able to put your furniture — or their furniture around the room so you're able to choose that.
And then if you want to go in and talk to an expert, you certainly can. But pretty high margin when you're online and can make that decision, and look at your — how that piece of furniture fits within your own house. Right?
Fatima Sirhindi: They already do that Al.
Al Martin: Yeah, I know, that's why I made it as an example.
Fatima Sirhindi: I have one last question. I'm like hijacking your podcast, Al. But…
Al Martin: That's all right, hijack it.
Fatima Sirhindi: My last question is that, I know that Watson is integrated into New York fashion week. And they did a lot of analysis for the Grammy's as well. How do you think that having that information affects retailers? Like, is it bringing more attention to retailers? Are people saying the celebrities wearing this, and I want to be like that? Or like how would the impacting the retail industry and your clients?
Renee Livsey: Well last year at NRF, they didn't have it this year, but last year they had the gown. You know, the Badgley Mischka — I hope I said that right — gown. And what they used for that was for sentiment analysis. So, they were asking everyone who came into the floor and the IBM booth, how do you feel today? And the dress would change colors based on the people at the booth and what they said.
You responded to like four or five questions, and the dress would change. But I think you're going to see that more. I've worked with companies that are customers. Where we were looking at a heated jacket. And, you just saw the Olympics. Ralph Lauren just did that in the Olympic coats. I don't know if you knew that.
You know, they work with the ski teams and the, you know — cross country, and snowboard, etc. But, they want the ability to have a heated jacket for them. And my daughter played soccer, competitive soccer, throughout her life. And, you know, I told them I would've paid a mint for something like that, because I remember being in games in February, and I don't live in the coldest part of — Patrick will make fun of me for being from Wisconsin. But, you know, I would be in a sleeping bag. Had I had a heated item of clothes — because you could make your back warmer, you could make your sleeves warmer. You know, you could pick — and it was all based on your phone. And you can save your temperatures.
So, it's really controlled based on the person. So, I think we get — I think it's all back to that customer experience. I really think that that's a primary driver for most of our clothing-type retailers. I see them putting more and more of that into, you know, some intelligence into our clothing.
Patrick Pitre: I'm sorry. Al, go ahead.
Al Martin: Oh, I was just going to say, Renee, you live in Atlanta. You can get by without a coat.
Renee Livsey: No, no, no, no. I'm a wimp!
Fatima Sirhindi: I would say we'd appreciate that more in Canada.
Renee Livsey: Yeah, yeah, there you go.
Al Martin: Sorry, Patrick. I didn't mean to cut you off, go ahead.
Patrick Pitre: No, that's all right. So, I was going to say the other change that I think is coming in the retail, especially in the fashion, industry. And Tommy Hilfiger and IBM actually have a partnership that they announced at NRF this past January around being able to do pop-up stores during runways.
So, it used to be that you would have a fall or a spring fashion line that would come out. They'd do a runway about it, and then you would see that in the stores within a couple months. So, the spring runway would be done in the fall. And then you'd see those items in the spring, and those kind of things.
And what you're starting to see now is a much faster speed to market of unveiling a fashion, or a fashion line, and being able to buy that during the unveiling. And, you know, that's a big change for the fashion industry to go from, you know, runway to purchase in that amount of time.
Al Martin: All right, so I'm going to have to try to wrap this up a little bit. If we keep going on, we're going to start our own business here pretty quickly. So, if I'm a retailer listening right now, and I want to get a handle on data, handle on analytics, handle on ML, whatever. I want to put more value up to stack, so I can, you know, drive better business outcomes.
Just if, in summary, relative to all you've learned, your whole life, put down into 20 seconds here, what advice were you going to give this retailer? What advice can you give me?
Patrick Pitre: I would say do not underestimate the value of governance. And the ability to tie all of your data together. That would be my elevator pitch.
Renee Livsey: Yeah, and I think along those lines, that I would echo that as well. I mean, we just seen the value of really going in to talk to our people about the data. And, sometimes, they have data that they don't realize how valuable it is. But, also following that — this is the data method first, right? Following that up, with those discussions with the business users about what their imparitives are, what's important to them. And you will unleash a lot of opportunities to really leverage that data to innovate, to grow your business, to serve your customers.
Al Martin: So, where can the audience get more information, either about you guys or — sorry I thought I heard something. Where can the audience get more information about you guys, or and or, you know, the data-first method, and or IBM and retailing?
Renee Livsey: We actually have a retail innovation guide that's available on our IBM website. We have retail and we call consumer — CPG, Consumer Packaged Goods, and retail are part of our consumer industry. We have actually industry data. We have use cases. We have some information on some wins that we've had. And what have our customers have done with the data to innovate. So they can find that out on www.ibm.com and I think we're both on LinkedIn and Twitter.
Al Martin: All right, we'll put that — is that the same LinkedIn, Twitter — Patrick? Is that best place to get you as well?
Patrick Pitre: Absolutely. You can also find me on Quora.
Al Martin: Okay, we will put those in the show notes. So, as I'm wrapping up, one more comment. So, as I hit your name Renee, I was taking up to Twitter and I see you sky diving. Right? And I have to say, in the picture of you coming off the plane, and you look very calm.
Renee Livsey: I really was. I thought I would back out, but I did it as a fundraiser for a organization that was close to my heart. And I have a friend who has a daughter who benefits from their services. So, I raised some money, and I did a tandem drop jump in May of last year — they year before last. It's been almost two years. And I jumped out of a plane, and it was very peaceful. It was a tandem dive from 14,000 feet. I was very, very calm.
I've got a little bit of an adventurer in me. I like to try things like that once. I really enjoyed it, and it was for a great cause. So…
Al Martin: It almost looked like you just didn't expect it.
Renee Livsey: Well, you know the guy's behind me, so if you decide you don't want to jump, it doesn't matter, your tandem guy's pushing you out. So I had an ex-Marine that was my tandem diver, and he was a great partner, and talked me through it all.
Al Martin: So, Patrick, you're a Marine right?
Patrick Pitre: Correct, I am.
Al Martin: You weren't the tandem person?
Patrick Pitre: I was not. No, I spent my life fixing airplanes, not jumping out of them.
Al Martin: Yeah, I got a friend that's a pilot. He says, I have no idea why you'd jump out of a perfectly good airplane. I think you said that before the podcast. Look, I did, I jumped out of an airplane as well. How high were you Renee?
Renee Livsey: 14,000.
Al Martin: 14,000, so that's a pretty good free-fall then.
Renee Livsey: Yeah, it was beautiful. It was a nice day, it was very clear. May in Atlanta's pretty nice temperature and so you could see very far away. It was really peaceful.
Al Martin: So my experience, it was a static line. And I thought, that's going to be easy, right? So then I — but then I was told that I had to climb out on the struts while the plane was moving. So I climb out, and once you get out, they say you can't come back in. So, you look out, and you're just flapping in the wind. So, I had to jump. So that was a first, earth shattering piece of it. I did let go, so that was good. Or, I'd have been hanging on there forever. And, then, once I let go, then you have to pull — well it has a static line, and ultimately the line pull of your chute comes up. But, then you're in the middle of nowhere and you got to figure out how to get down. So then you go through a second panic, right? At least I did. So, I don’t know. It was fun though. It's something everyone should do at least once. I did it more than once. But at least once.
Hey, thank you guys.You guys have been great today. I got a ton of information, Patrick. I got a ton of information, Renee. Anything you'd close with or did we hit it out of the park here?
Renee Livsey: If there's anything we can do to help anyone, please reach out to us.
Al Martin: Alright, you guys are awesome. Thanks for your time today. And, I'll talk to everybody later. Thank you.