Retailers, let's face the challenges
of innovation together

19
feb
2016
Elisabeth MENANT
Technological & Marketing Trends Analyst
2 minutes
Under Armour, the sports equipment retailer, continues to develop its coaching business with its customers by henceforth relying on Watson artificial intelligence developed by IBM.

The facts

Under Armour is now the second biggest retailer of sports equipment in the United States, after Nike. Specialized in smart textiles, the retailer has not overlooked its customers and is evolving into the role of a sports coach. To that end, in 2015 it bought out two start-ups specialized in fitness for 560 million dollars.

As 2016 unfolds, it is further reinforcing this “consulting” dimension with two flagship announcements. Firstly, an ecosystem accompanying the launch of its “Health Box”: connected scales, an activity sensor, a heart rate sensor, as well as a one-year subscription to Under Armour’s proprietary MyFitnessPal Premium application.
And secondly, its partnership with Watson, IBM’s artificial intelligence. Its “cognitive fitness” application will be integrated into its Health Box and will use Watson to compare results with those of other users in order to proffer sensible advice.

underarmour video

After “The North Face”, this is the second partnership IBM has announced with a retailer. For one year, Fluid (the start-up in which IBM has invested around the improvement of the user experience on e-commerce) and the outdoor clothes manufacturer have worked together to design the Expert Personal Shopper (XPS), a service integrated into the brand’s commercial website to assist visitors in their searches. Currently focusing on product recommendation, Fluid’s project manager is considering going further. “Will the user ski in Vail in March? Why not push more popular resorts?”

Among the other value proposals offered by the Watson technology, we could mention helping retailers to better manage their stocks. For instance, when a customer returns a broke mobile phone to the retailer, is it better for the retailer to repair the phone or to supply a new one and recycle the old one at the market price? With which of these two solutions will the retailer have more chance of retaining the customer? The Watson technology can scan the data and recommend the best option.

Interpretation

Under Armour has understood that digital technology can help broaden its business model and extend the customer relationship beyond the store. It is now its service-centric platform based on well-being that is showcased far more than the clothes or connected objects. The retailer is competing head-on with Nike, which has already taken this direction several years ago. Both these retailers are emblematic of this quaternary economy advocated by INSEE administrator Michèle Debonneuil, in which products are neither goods nor services but rather “new services that incorporate goods, the temporary provision of goods, people or combinations of goods and people”.

Here the use of Watson artificial intelligence is directed at the service rendered to the community of consumers. This is at the heart of the retailer’s customer relationship, as this allows it to listen to and henceforth interact individually and constantly with each of its users. AI here reinforces customers’ need for recognition and enrichment through the promise of receiving personalized advice.

The competition will be fierce between AI players (IBM – Watson but also Facebook – M., Google – TensorFlow, Amazon – Alexa on the American side, Duer – Baidu or DTPAI – Alibaba on the Asian side). They are all trying to position themselves as the personal assistant of consumers’ lives. And there are more and more scenarios. “Want to change your sofa? Your AI will scan your living room, identify the constraints, run more and more searches and confirm your preferences: colour, price, delivery method, etc. Artificial intelligence will automatically change the story on a founding principle of retail: recommendation.

Elisabeth MENANT
Technological & Marketing Trends Analyst
To explore with you the transformation of retail with a double approach both editorial and business
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