Introducing Microsoft Cloud for Retail
If 2020 taught us anything, it was that no business is resilient to everything. 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 10-year evolutionary leap toward digital” in retailing. That’s quite a leap. And as a retail industry, we need to approach the new world we are living in with a digital-first mindset. At Microsoft we call this enabling intelligent retail—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. Today at NRF 2021, we are introducing the private preview of Microsoft Cloud for Retail.
Aligned to these areas of focus, here are four trends Covid-19 accelerated in 2020, that we expect to see stick in 2021.
Trend #1: Data explosion and monetization
As I write this, 40 petabytes of retail data will be generated. For perspective, if you recorded a one-petabyte song, you’d need 2,000 years to listen to it. That data has enormous value, but because it is 90 percent unstructured it’s challenging to separate signal from noise. Today we’re helping retailers unlock the power of that data. That can range from predictive analytics that makes intelligent recommendations to customers, to connecting with shoppers within a store or web site, to attacking fraud and shrinkage. We believe your data is one of your most valuable assets—like your inventory and your stores. And if understood and thought of strategically your data can open entirely new businesses, revenue streams, and consumer differentiation. For example, DICK’S Sporting Goods recently partnered with Microsoft PromoteIQ so brands could increase visibility on DICK’S website and engage with shoppers in a more meaningful and personalized way. In the first full month live, they exceeded their previous ad provider revenue by over 30 percent year-over-year.
Trend #2: Partnerships and ecosystems will help us win together
Strong partnerships can put wind in the sails of any retailer. One study I’ve seen showed that such partnerships can add 10 to 15 percent to topline revenue performance by helping retailers meet customers where they are, regardless of retail channel. Partnerships also help retailers add value to existing customer relationships and can 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—it’s been an incredible journey.
Take Columbia Sportswear who has been able to quickly pivot in-store purchasing experiences with Dynamics 365 Commerce to deliver safe and secure buying experiences for both their customers and store agents. Today, we’re announcing B2B e-Commerce capabilities for Dynamics 365 Commerce. Building on top of our rich and intelligent B2C capabilities, retailers will be able to deliver streamlined and intuitive purchasing experiences for both consumer and business partners on a single connected platform. Look left to right in this industry and retailers of all shapes and sizes in so many countries across the globe are partnering with Microsoft.
Trend #3: Sustainability and e-commerce is still top of 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 percent 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 percent of textiles (t-shirts and the like) wind up in landfills. We’re seeing major retailers step up to help solve that. Walmart 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.
Trend #4. Loyalty, what’s that?
The pandemic has rattled people to their cores. As a result, customers have changed their shopping patterns, with 75 percent of U.S. consumers reporting new shopping behaviors, such as changing brands or retailers. Globally, 50 percent of consumers have tried new brands. Consumers are also buying more online and gravitating toward 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. 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 program members. Every customer is different, and customer insights allows Chipotle to personalize and market to them as a unique individual. With Customer Insights, we’ve been able to grow our customer base by 30 percent and convert more guests into loyalty program members.
And look at what’s happening with curbside pickup. With a 218 percent increase to curbside, 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 their go-to tool for everything from virtual store walks to enabling the company to go live with curbside pickup within 48 hours. Similarly, Chedraui, who sees its physical stores and associates as the face of its company, uses the new task publishing feature in Teams to drive consistent and quality customer touchpoints, for example via store displays in their over 300 stores. With the right tools in frontline workers’ hands, they become part of the retailer’s competitive advantage in reshaping the new normal, whether enabling curbside pick-up or better transparency.
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. 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. 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, we will enable retailers to realize the true value of their data by enriching core business processes and turning data into actionable insights.
This retail-specific cloud service will center around driving accelerated time to value by unlocking the power of Microsoft Azure, Microsoft Power Platform, Microsoft 365, Microsoft Dynamics 365, and Microsoft Advertising. 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 organizations to proactively be ready for what’s next.
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.
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