In the age of Amazon domination, competing retail interests need to get smarter and do so quickly. Such was the message at a recent Cowen panel discussion that highlighted how artificial intelligence and its more studious cousin, artificial intelligence / deep learning / machine learning, operate to build and maintain a retail business. The discussion featured three advanced technology providers, each of whom operated at varying stages of the retail cycle.

Artificial intelligence, deep learning, user tracking are all a mix a Cowen panel said is needed to battle Amazon

Beyond social media check-ins: Artificial intelligence, deep learning, user tracking

At the top of the list is Foursquare, a firm that is popularly considered for its social media platform that allows people to communicate their location to an audience waiting with bated breath. Foursquare is more than an application that breaks news when John Q. Rando in Peoria, Illinois checks in at Applebee’s, there is a technology underneath the application that provides useful intelligence.

Foursquare allows prying eyes to see actual store visits and their related travels in the area to analyze traffic patterns. Based on such analysis, Conor Moran, Enterprise Sales Director at Foursquare, told the Cowen audience that retail brand loyalty is alive and well.

He pointed to retail customers whose store had been closed who actually traveled farther to remain loyal. By mapping consumer traffic patterns, retailers can design a better mousetrap based on demographics and targeting based on the desire for a bargain. Closing stores is a strategic decision to which Foursquare data analytics offers insight.

A Cowen moderator works to understand the business model of Foursquare and its underlying technology

Cowen on Amazon fight – The difference between machine learning and artificial intelligence / deep learning

Gathering geo-targeting information from traffic patterns is one thing, but machine learning and artificial intelligence / deep learning – distinct disciplines – is where intelligent technology is helping make recommendations, conduct visual searches and speaking with humans.This is where Andy Pandharikar, CEO of COMMERCE.AI, takes over.

Intelligent computer systems can be used in a retail setting to compete against Amazon, the apparently indestructible force from the West.

He distinguishes between linear machine learning used in online personalization, demand forecasting, price optimization – prices change at Walmart two to three million times per day.

These machine learning applications stand in contrast to a more enlightened form of computer thinking.

Cowen – Amazon hurting you? Go deep with deep learning and artificial intelligence, says software executive

Deep learning and artificial intelligence still utilizes a formulaic approach but can gather and communicate information in different ways.

This more advanced field includes subsections such as natural language understanding, computer vision for image recognition, as well as knowledge representation, defined as providing structure to knowledge and “creativity.” Pandharikar did not specifically elaborate or provide details how this new level of technology is “creative” in that it can connect unrelated dots, but he did point out it could paint a picture or make a movie, with the actual “creativity” in the story telling and human involvement not specified.

The computer is becoming the human salesperson in that they can understand language, provide recommendations and do everything but make decisions — a point at which the technology has currently reached its limit, Pandhariker points out. Reason and decision making “is not there yet,” he said. “If someone is claiming (AI) makes full decisions, (that is incorrect) there is human involvement.”

Rohan Deuskar, CEO & Co-Founder of Stylitics, was also part of the customer experience solution, providing illustrations of how retail companies are using technology to complement the in-store experience. Custom fitting through picture selection was the example given relative to how the technology is used online to provide a “store-like” experience.

These types of applications are attempting to fight Amazon on their chosen battlefield, offering retailers the opportunity to battle and compete with Amazon online.

What none of the participants addressed, however, was the convenience factor of having Amazon in your life and providing that one-stop solution for all life’s necessities. In announcing its takeover of Whole Foods today, the acquirer Amazon stock is up near 3% on the day, trading at a Price / Earnings ratio of 185, up from 183 just a few days ago. In the retail / Amazon fight, Wall Street has picked a winner. The question is can new technology help retailers to at least survive the battle and even prosper?

For now shorts are licking their wounds.

Ihor Dusaniwsky, head of research at financial analytics firm S3 Partners notes the following in a new report on the topic of WFM short-sellers:

WFM short interest is $1.19 billion after its price shot up to $41.99 after the acquisition was announced, and WFM continues to be largest short in the U.S. Food and Staples Retailing sector.

Short sellers were already down $153 million in year-to-date mark to market P/L before the announcement, they incurred an additional $250 million in losses on today’s 27% price move.

Shorts are now down $404 million year-to-date, or down 36.3%, on an average yearly short position of $1.1 billion.

Short sellers had already increased their Food & Staples Retail Sector exposure in response to AMZN’s online expansion plans and while WFM short sellers have been eviscerated by this deal, shorts sellers in other U.S. and international food & staples retailers have had a profitable day with most of the sector reeling from the potential competition of the Amazon/Whole Foods partnership.

Worldwide short interest in the entire Food & Staples Retail sector is $26.0 billion, with $12.1 billion specifically in the Food Retail sub-sector.

Even if the shorts are right. this is not an easy game.