Innovating to drive the future of intelligent retail

January 9, 2020

The last several years have brought massive change – and opportunity – for the retail industry. Gone are the days when retailers chose when, where and what to sell; now consumers are in the driver’s seat, and retailers are being challenged to figure how to best engage with them. Additionally, they’re juggling pressures driven by industry trends such as the drive for more sustainability in retail, the proliferation of data, increased energy around “anywhere commerce,” the need to better equip store associates with technology and much more. But change often accelerates innovation, and because of this I believe that there’s never been a more exciting time to be a retailer at the intersection of retail and technology.

Microsoft continues to innovate side by side with retailers to help them embrace their biggest opportunities and enable intelligent retail by empowering businesses to take control of their own digital evolution. Our solutions enable retailers to transform across all parts of their business – from how they better understand their customers and empower employees, to putting the right technology in place to deliver an intelligent supply chain and ultimately reimagine their businesses. In the last year and a half, we’ve established ourselves as a trusted partner to some of the world’s largest retailers such as Walmart, Kroger and Walgreens Boots Association, among others. And we’ve empowered their transformation by providing the platforms on which to build innovation for all parts of their businesses.

We’ve learned a lot along the way both through our retail customers as well as our own physical retail presence about how technology can help this industry both embrace its biggest opportunities as well as tackle its biggest challenges. And today we’re sharing how our first-party innovations are helping to drive the future of intelligent retail across all parts of a retailer’s business.

Gaining a better understanding of your customers

If customers are the heart of the retail industry, data is the oxygen. Data has the potential to profoundly impact every single aspect of retailers’ businesses, including – and perhaps most importantly – how they respond to customer demands with differentiated and unique experiences.

We’re helping retailers surface actionable customer insights with data solutions like Azure Synapse Analytics, which helps retailers not only analyze vast amounts of data, but also apply machine learning to quickly surface insights that can drive immediate impact for their businesses, and Dynamics 365 Customer Insights, which helps maximize customer lifetime value by surfacing a 360-degree view of the customer to drive personalized engagements at scale. This means that even the most complex retailers, with thousands of suppliers in their end-to-end supply chain and millions of item-store combinations, can quickly make the decisions needed to not only run their businesses most efficiently but also delight customers in the process.

And with Dynamics 365 Connected Store, retailers like Marks & Spencer – which is piloting the solution in a store in London – can generate data within its physical stores that produces the same kind of actionable business insights as it gets from its digital storefronts. M&S is achieving this by analyzing data from smart devices such as video cameras and IoT sensors to provide real-time and predictive insights on everything from the current length of the checkout line to the traffic around endcap product displays to help associates make better decisions. We’re welcoming new retail customers into our Connected Store preview very day, so sign up here to request access.

One of the customer demands becoming more and more evident as retailers reason over their data is the desire for a seamless shopping experience regardless of where, when and how they choose to buy. We’ve invested in helping retailers bridge embrace this concept of commerce anywhere (aCommerce) with Dynamics 365 Commerce, the evolution of Dynamics 365 Retail and a true multi-channel solution that transforms the customer experience by unifying retailers’ back-office, in-store, call center and e-commerce experiences. One experience across all channels – that’s what customers are demanding today. The result? More personalized engagement with customers, employees who are better equipped to provide the best customer experience possible and deep insights to empower advanced decision making across every piece of a retailer’s business. I’m excited to announce that Dynamics 365 Commerce, currently in preview, with become generally available to our retail customers on Feb. 3.

 Empowering employees with the tools they need to better serve customers

Despite the rise of e-commerce over the past couple of decades, we know that most shopping – across generations even – still happens in person. Research from Forbes Insights shows us that 60 percent of consumers still prefer to shop in physical retail environments, and this number stays fairly consistent across generations. This means that first-line workers are still one of a retailer’s most valuable assets – many times, they are the first impression a shopper gets of your brand and they play a significant role in customer acquisition and retention.

Retail associates need modern tools and experiences in order to remain productive and deliver the best customer service possible while on the store floor. With Microsoft 365, the world’s productivity cloud, and new first-line capabilities coming to Microsoft Teams later this year, we are in a unique position to help this often-overlooked part of the workforce get their jobs done. Today I’m thrilled to announce that we’re adding even more productivity and collaboration value into Teams, including task targeting, publishing and reporting, new workforce management integrations to streamline shift management and a new Walkie Talkie feature. By building push-to-talk functionality into Teams, we’re helping our retail customers turn company-owned smartphones and tablets into a secure walkie talkie, extending the range of traditional walkie-talkie communication and streamlining licensing and provisioning for retailers’ IT staff.

Finally, as we extend modern tools and experiences across the first-line workforce, we know that we need to make it easy for IT to manage and help enable a secure and compliant experience for all employees. I’m excited to disclose enhanced identity and access management capabilities – such as shared device sign-out for Android and inbound provisioning from leading workforce management providers such as SAP SuccessFactors and Workday – that will make onboarding retail associates and operating shared devices more secure and scalable, something our retail customers have been asking us to add for some time now. And, later this quarter, retailers will be able to enable SMS sign-in to Microsoft 365 and custom applications for retail workers and empower their store managers with delegated user management capabilities, making it easier to reset passwords and manage workers’ identities without additional demand on IT staff.

Infusing more intelligence into the supply chain

A retailer’s supply chain can play a major role in customer satisfaction – outdated supply chain processes can mean delays, unfulfilled orders and more. By connecting devices and collecting data, retailers can analyze that information to create new insights and ultimately a truly intelligent supply chain that enables them to provide the best service possible to customers. This is the Internet of Things (IoT), and as IoT becomes more mainstream it continues to be a huge driver of data for retailers today. In fact, our IoT Signals for Retail study found that 92 percent of retailers have adopted IoT and are using it in various stages of trials and deployments, with the most common IoT scenarios being driving store analytics (57 percent), supply chain optimization (48 percent) and security and loss prevention (46 percent and 45 percent, respectively).

We’re making building and deploying IoT applications in retail environments easier than ever with new Azure IoT Central solution templates that help retailers simplify IoT deployments to start driving immediate impact. Today, the Azure IoT Central Micro Fulfilment Center template joins five existing retail-focused templates – including for scenarios across connected logistics, digital distribution centers, in-store analytics and smart inventory management – to help retailers more easily optimize their fulfilment processes through a managed service that includes everything a retailer needs to get started today.

Reimagining retail business models and customer experiences

The success of today’s retailers’ physical store environments rests on their ability to disrupt themselves and their own status quo by pushing into new business models and providing new experiences and formats that engage customers and keep them coming back for more.

We understand this better than most technology vendors, because we’re continuing to move through this same transformation journey with our own Microsoft retail stores. Over the past several years, we’ve digitally transformed and extended our physical retail store strategy from an exclusively consumer storefront to a commerce engine that connects with all customers – from commercial enterprises to small businesses and consumers. Partnering with enterprise sales, we’re offering new experiences in and through our stores targeted toward our enterprise customers such as J. Crew, Office Depot and Marks & Spencer. Our stores are also at the forefront of adopting new Microsoft technology across cloud, predictive analytics, machine learning, cognitive services and more to solve our most complex challenges – and we’re learning from those experiences to ultimately pass those lessons along to our customers. And of course, that’s a two-way street – we’re also learning from our retail customers to inform how we manage and operate our stores too, which is indicative of the true partnerships we strive to establish with every retailer we work with.

While reimagining retail can lead to the kind of business transformation we’ve seen in our own store, it can take different forms as well, such as how retailers are tapping into new revenue streams and digitizing their own physical stores to drive new customer and employee experiences.

Microsoft PromoteIQ is an end-to-end commerce marketing platform enabling retailers to create a new critical growth engine for their businesses through at-scale vendor marketing programs. With Microsoft PromoteIQ, retailers can empower their brand partners with powerful marketing technology to natively promote products to in-market shoppers, reaching them at the right time to increase digital sales – all supported by a deep analytics suite to deliver impactful audience insights. And now, thanks to the integration with Microsoft Advertising, we can offer our retailer partners a powerful new source of incremental demand for their programs. Take Home Depot, for example. While you may expect the world’s largest home improvement retailer to do most of its business in person, HomeDepot.com is the fifth largest e-commerce site in the U.S. Consequently, the company needed a solution to help it maximize the nearly 170 million visitors per month its site was seeing by integrating an end-to-end commerce marketing platform with capabilities to manage and scale its vendor-funded digital marketing. Since deploying PromoteIQ, Home Depot has seen very positive results, including double-digit sales growth for promoted products through this program.

Of course, reaching customers at the right time is only half the equation; a retailer must also be able to deliver on what that customer is looking for. In fact, 80 percent of shoppers will abandon a site that produces poor search results. And that’s why we’re investing in this critical piece of digital commerce – product search. Microsoft Bing for Commerce is an intelligent artificial intelligence-driven solution for product search, personalization and product recommendations that gives retailers the power to meet today’s shopper expectations and grow revenue through more relevant and customized results that drive conversion. We’re also enabling our retailers to meet customers where and how they want to shop through visual search innovation included in Bing for Commerce, to help capture sales from new, emerging shopping behaviors.

Connect with us at NRF

Microsoft will have a significant presence at NRF once again this year, headlined by our own CEO Satya Nadella’s keynote session to open the show. You won’t want to miss hearing his perspective on business and cultural transformation, and how our retail customers are putting our technology into action to reimagine their businesses. And if you’re attending the show, make sure you stop by our Microsoft booth (#4501) to see how we’re bringing intelligent retail to life across all parts of a retailer’s business and how you can achieve the same – we’re offering complementary envisioning workshops, where retailers will have an opportunity to work directly with us to create a shared vision and digital road map to unlock a future of endless possibilities.

You’re also invited to attend one of our sessions on the show floor – I’m leading a Big Ideas session where I’ll share my thoughts on the increasing importance of sustainability to the industry and how technology can help accelerate retailers’ sustainability visions. In addition, my colleagues Alysa Taylor, corporate vice president for Microsoft Business Applications and Global Industry, and Emma Williams, corporate vice president of Microsoft Office Vertical Solutions, and I will participate in the FQ Lounge at NRF along with many other “women rocking retail” for panel discussions about diversity and inclusion in the retail industry (we’re proud to be a sponsor of this space as well). And of course, visit Microsoft’s NRF page to keep up to date on the latest developments.

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