Quantum marketing comes to retail

Main visual : Quantum marketing comes to retail

Back in 1994, Don Peppers and Martha Rogers published their influential and highly successful book, ‘The One to One Future’.

Technology, they argued, had made market segments of individuals a realistic prospect. By tailoring messages and offers at this level of granularity, marketing fat could be trimmed off, with massive, positive repercussions for budgets and effectiveness.

They were right. The late 90s was about the time when CRM solutions really got going. Salesforce, the eventual winner – but not the first CRM solution to market – was founded in 1999.

UK groceries retailer Tesco introduced customer loyalty cards in 1995, showing the huge potential for off-line data analytics to understand customers’ habits and needs at a detailed level and making it possible to deliver tailored offers.

Tesco's then-chairman, Lord MacLaurin, apparently said, "What scares me about this is that you know more about my customers after three months than I know after 30 years."

There were limits to progress here, with the brick wall in one-to-one marketing being the speed at which data could be crunched. As the number of variables of product, price, and place for most shoppers easily runs into quintillions, it was simply not possible to calculate the absolute optimum offer package for each customer, and certainly not in real-time.

Fast forward to today’s online shopping customer recommendations or Spotify playlists.

The basis for these is: ‘This customer seemed to like what you just looked at – so you might also be interested in the other thing she purchased/listened to’. That’s a manageable real-time calculation. It’s also very basic and hit or miss.

But with today’s collision of physical and digital shopping, the complexity involved in what Fujitsu calls ‘Connected Retail’ that links customers’ journeys across channels, is only going to increase.

Cross-referencing every possible permutation until you have the optimized match for any customer, in real-time, is just not going to happen using today’s technology.

Quantum invisibility in retail

That, at least, seems to be the mindset in the retail sector right now, according to a new report we just published. Survey data underpinning the report finds that retailers, in particular, appear to be relatively underwhelmed by the prospect of quantum computing.

This is surprising, as quantum computing actually does hold out the prospect of handling data sets on the scale needed by retailers and the ability to compute optimal outcomes for individual customers.

Because it calculates options simultaneously, not sequentially like digital computers, it can crack the nut of one-to-one marketing in real-time as well.

Despite this, the technology seems to be relatively invisible to retail decision-makers, with only 56% of our sample aware of it, compared with 75% in manufacturing and an average for all sectors of 66%.

It’s the same picture when it comes to understanding what the technology can do, with 40% of the survey’s respondents in retail admitting to “limited understanding”, against an average of just 14.5% and a low figure in this category of only 5%, in life sciences.

Retailers are also relatively laid back about the potential disruption posed by quantum computing. Only 39% agree it could transform their own organization, a laissez-faire attitude only beaten by the decision-makers in the life sciences sector.

Retailers – with one eye probably constantly turned to the existential threat to their livelihood posed by Amazon – are also the least concerned of any sector by the threat that a competitor might jump ahead of them by adopting quantum computing.

No doubt retailers have a lot on their minds right now. Many large retail companies run their businesses on decades-old processes that have accumulated layer upon layer of complexity through localized and departmental projects, M&A activity and the evolution of the partner and supplier ecosystem.

On top of that, these processes are often underpinned by a fragmented landscape of IT systems.

When you also consider that becoming omnichannel-capable has probably been top of the priority list for some years, it is perhaps no surprise that many retail business leaders believe they have more immediate fish to fry.

While optimization itself does not seem to ignite retailers’ enthusiasm beyond the average for the entire sample, it certainly does when applied to the supply chain, where you might imagine optimization to be a real game-changer for them.

Here, we see a much higher proportion of retailers agreeing that optimization would transform their business giving them either a much stronger competitive position or even market leadership, nearly eight out of ten (78%): equal top with the transport industry.

Quantum-inspired computing

I’ve been talking until now as if quantum computers were something you could go out and buy and use today. That, however, is far from the case.

True quantum computing is reckoned to be about 10, maybe 15 years away still, held back by engineering challenges that, to take just one of many impractical factors, require today’s experimental systems to operate at temperatures colder than outer space!

Fujitsu’s quantum-inspired Digital Annealer, on the other hand, is already being used in manufacturing, financial services, and life sciences, among other areas, for ‘combinatorial optimization’ calculations that are transforming processes and operations in those domains.

These sectors were quick to check out quantum computing and – once it became clear they couldn’t rely on quick quantum solutions any time soon – equally quick to investigate and start using Fujitsu’s Digital Annealer optimization services.

This is not yet true in retailing.

We’ve already seen that the sector has been slow off the blocks to assess true quantum computing and, when we asked in our survey about current awareness of the Digital Annealer business optimization solution, retailers were the least likely to have heard of it.

However, once we outlined the disruptive potential of this new technology, this situation flipped, with retailers now becoming the most enthusiastic of any segment about the prospect of digital annealing optimization services.

Our take on this is that retailers instinctively understand that getting to grips with the human-centric retail concept, facilitated by Connected Retail – where stores can identify customers on arrival and present them with a more personal service – is going to need a new level of computing capability.

Once they realize that the Digital Annealer opens up new possibilities for personalization and targeted marketing, elements that involve a lot of data, they are extremely keen to learn more about it.

Using Fujitsu’s quantum-inspired Digital Annealer, marketing agencies and retail companies can create a new form of real-time ‘quantum marketing’ for audiences of one.

They can accurately and instantly deliver personalized content to existing and prospective customers through engaging and targeted web content, thereby influencing their purchase decisions.