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When Sapiens Go Shopping: Customer Cognition at the Speed of Thought


Published by Winsight Grocery Business, April 22, 2022


Life on earth developed over millions of years, rising from the primordial soup: single-cell organisms giving way to more complex life, and eventually that life rose from the sea to inhabit the land. For nearly 2 million years, multiple human-like species coexisted, none gaining any lasting advantage. But then, as Yuval Harari, in his history-spanning book “Sapiens” explains, around 70,000 years ago a genetic mutation occurred, triggering a cognitive revolution that enabled Homo sapiens to quickly advance beyond all other species.


That cognitive spark changed the world, enabling imagination, conceptual thinking, expanded language and more, giving this new sapient species the ability to rule the world. That first spark of cognitive intelligence, in a relative blink of an eye, raised Homo sapiens to a new plane of existence.


For the better part of the past century, retailers have been driven by a near singular instinct: sell more products. And just as early life evolved based on the surrounding environment, so too did retail. Category management, product assortment and pricing optimization, product-based management reporting, and myriad other traits evolved to help each retail species in the cutthroat battle for survival. Recently—again, in a relative blink of an eye—a mutation has appeared, technology sparking another cognitive revolution and this time creating a new species of retailers elevated to a higher plane of existence: customer cognitive retailers.


Customer cognitive retailers use artificial intelligence (AI) and machine learning feeding off big data to create extensive shopper profiles and provide deeper insights and understanding than were ever possible before. In classic Darwinian evolution, this new species of retailer has developed sophisticated new tools as they battle for market supremacy, far beyond the club of mass promotion and blunderbuss of printed circulars. Strategic hyperpersonalization, including individualized pricing, are the new weapons of choice as customer cognizant retailers maximize share of wallet and grow customer lifetime value.


This new data-driven environment demands speed and agility in addition to raw intelligence, especially when the value of data begins to erode the moment it is created. When marketing success requires being contextually relevant as shoppers are online via their smartphones 24/7, marketing must be in real time. Customer cognition at the speed of thought.


And there is one more environmental influence impacting the evolution of customer cognitive retail. We are at the inflection point on the exponential growth curve of computer processing power, where faster change becomes increasingly noticeable. It is this faster, cheaper processing power fueling the expanding use of AI and machine learning—the primary tools of customer cognition.


Noted professor Thomas Davenport co-authored an Harvard Business Review article a while back titled "Why Companies That Wait to Adopt AI May Never Catch Up." The premise that Davenport put forth reflects the new retail environment: AI capabilities are so powerful that early adopters may open up such a performance gap with their slower competitors that the followers may never catch up.


Imagine machine learning, a subset of AI technology, unleashed on big customer data. The model ferreting out that a certain group of shoppers are at risk of defecting from the retailer next week. Or the model discovering why, of all new shoppers coming into a retailer to shop for the first time, only a small portion of them return again and go on to become regular customers. Or the model understanding at an individual customer level which products to promote at specific prices to maximize share of wallet and lifetime value.


This, and far more, is what customer cognitive retailers are working on as they emerge into a post-pandemic world. A world demanding real-time digital engagement with shoppers seeking the latest information and avoiding germ-laden paper ads. A world where digital success requires contextual relevancy and irrelevant mass promotion seen as spam.


Gary Hawkins is an author, speaker and the CEO of CART (the Center for Advancing Retail & Technology). His virtual library can be found at retailmindsteps.com, and he can be reached at ghawkins@retailmindsteps.com.

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