Microsoft previews retail cloud platform

  • January 26, 2021
  • Steve Rogerson

At this month’s virtual NRF show, Microsoft introduced a private preview of Microsoft Cloud for Retail.

“If 2020 taught us anything, it was that no business is resilient to everything,” said Shelley Bransten, Microsoft corporate vice president. “But those that had laid their digital tracks early were better positioned to recover and, in some cases, even speed ahead. In fact, one retail expert said that we had witnessed a ten-year evolutionary leap towards digital in retailing. That’s quite a leap.”

She said the retail industry needed to approach the new world with a digital-first mindset.

“At Microsoft, we call this enabling intelligent retail,” she said, “using digital solutions to help better know your customers, to empower your employees in new ways, deliver an agile and resilient supply chain to meet your customers where they are, and ultimately to help you reimagine the future of your retail business.”

She said there were four trends Covid-19 accelerated in 2020 that she expected to see stick in 2021.

The first trend was data explosion and monetisation.

“As I write this, 40 petabytes of retail data will be generated,” she said in a blog post. “For perspective, if you recorded a one-petabyte song, you’d need 2000 years to listen to it.”

Those data, she said, had enormous value, but because they were 90 per cent unstructured it was difficult to separate signal from noise.

“Today we’re helping retailers unlock the power of those data,” she said.

This can range from predictive analytics that make intelligent recommendations to customers, to connecting with shoppers within a store or web site, to attacking fraud and shrinkage.

“If understood and thought of strategically, your data can open entirely new businesses, revenue streams and consumer differentiation,” she said.

For example, Dick’s Sporting Goods recently partnered with Microsoft PromoteIQ so brands could increase visibility on Dick’s web site and engage with shoppers in a more meaningful and personalised way. In the first full month live, it exceeded its previous ad provider revenue by over 30 per cent year-over-year.

The second trend is that partnerships and ecosystems can help win together.

“Strong partnerships can put wind in the sails of any retailer,” said Bransten. “One study I’ve seen showed that such partnerships can add ten to fifteen per cent to top-line revenue performance by helping retailers meet customers where they are, regardless of retail channel.”

Partnerships, she said, also helped retailers add value to existing customer relationships and could give retailers access to new skillsets.

“It’s been a true privilege for us to partner with many of you on your digital journeys, from FedEx who we’re partnering with to transform the end-to-end commerce experience, to retailers like Musgrave and Woolworths Australia who introduced a new scan-and-go concept to meet consumer demand for contactless experiences when stores reopened,” she said. “It’s been an incredible journey.”

For example, Columbia Sportswear has been able to pivot quickly in-store purchasing experiences with Dynamics 365 Commerce to deliver safe and secure buying experiences for its customers and store agents.

Microsoft is announcing B2B e-commerce capabilities for Dynamics 365 Commerce. Building on top of its B2C capabilities, retailers should be able to deliver streamlined and intuitive purchasing experiences for consumer and business partners on a single connected platform.

The third trend is that sustainability and ecommerce are still top of the mind for consumers and brands.

Interest in shopping for brands that are committed to sustainability has moved from the fringe to a key customer motivator. Some 67 per cent of customers, according to one survey, consider sustainability practices when making purchases.

“This was a growing trend pre-pandemic, and at last year’s NRF I noted that 85 per cent of textiles – T-shirts and the like – wind up in landfills,” she said. “We’re seeing major retailers step up to help solve that.”

Walmart, for example, has committed to achieving zero emissions by 2040. H&M aims to get materials that are sustainably sourced or recycled by 2030.

“Here at Microsoft, we’re working to go carbon negative by 2030 and replenish more water than we consume the same year,” she said.

The fourth trend is loyalty.

Due to the pandemic, customers have changed their shopping patterns, with 75 per cent of US consumers reporting new shopping behaviour, such as changing brands or retailers. Globally, half of consumers have tried new brands. Consumers are also buying more online and gravitating towards contactless pickup of purchases. Retailers who invest in digital technology are showing themselves to be better equipped to deal with this shift and stay connected with existing customers while also attracting new ones.

“We’re seeing the impact of these trends across retail,” said Bransten. “My kids and I are big fans of Chipotle, but we needed to find a way to order their burrito bowls for contactless delivery. Using Microsoft Dynamics 365 Customer Insights, Chipotle has been able to better understand customer preferences, how they change over time, and convert more guests into loyalty programme members.”

“And look at what’s happening with kerbside pickup,” she said. “With a 218 per cent increase to kerbside, Microsoft Teams is there to empower retail’s front line.”

From Office Depot to Mexican grocery store chain Chedraui, retailers are adapting to the new normal by deploying Microsoft Teams across their entire employee base, from top-floor to shop-floor teams.

For Office Depot, Teams has become its go-to tool for everything from virtual store walks to enabling the company to go live with kerbside pickup within 48 hours. Similarly, Chedraui, which sees its physical stores and associates as the face of its company, uses the task publishing feature in Teams to drive consistent and quality customer touch points, for example via store displays in its more than 300 stores.

“Meanwhile, customer loyalty is won or lost in the micro-moments of ensuring the retailer has that exact item when that empowered consumer is looking for it,” she said.

Microsoft Azure is delivering 200 million purchase forecasts a day to Walgreens, ensuring the right items are in stock at the right time. It’s a move that shifts what used to be a back-office operation, inventory forecasting, and accuracy to the forefront of modern retailing.

“With all of these advances, I’m optimistic about the future of retail in 2021 and beyond,” said Bransten. “In fact, we are so deeply committed to the retail opportunity and the role technology can play that we are introducing the private preview of Microsoft Cloud for Retail.”

Microsoft Cloud for Retail aims to connect experiences across the end-to-end shopper journey with integrated and intelligent capabilities. By bringing together disparate data sources across the retail value chain, it can let retailers realise the true value of their data by enriching core business processes and turning data into actionable insights.

This retail-specific cloud service will centre on driving accelerated time to value by unlocking Microsoft Azure, Power Platform, 365, Dynamics 365 and Microsoft Advertising. These are all brought together by a common data model and built on a platform of security and compliance.

“Our rich partner ecosystem will extend the value of the platform with retail-specific solutions to address the industry’s most urgent challenges, and future-proofing retail organisations to proactively be ready for what’s next,” she said. “We’re designing Microsoft Cloud for Retail to give you the flexibility to adopt the capabilities you need to address your most pressing business needs, be it better knowing your customers, empowering your employees, creating an intelligent supply chain, or reimagining your business model.”