A customer enters a department store, identifies herself via an infrared or other device, and immediately sales staff in the shoe department are alerted that one of their best customers has arrived. By the time she reaches the department, the staff has pulled a dozen pairs of the latest styles for her to try on. She makes her selection, swipes her credit card in a handheld device carried around by the sales people and leaves the store, all within a painless 30 minutes.

It’s a scenario that could soon happen if Microsoft Corp. and its new partners realize their goals. The Redmond, Wash.-based software giant plans to unveil a proposal on Monday called the Smarter Retailing Initiative, or SRI, that it claims will help retailers improve customer service and make shopping more exciting without sending costs through the roof.

The initiative will be launched at the National Retail Federation’s Annual Convention & Expo here. Microsoft is not introducing any products, but it believes its existing Windows software and .Net servers provide the platforms to enable retailers to better communicate with their customers.

“We think there is a convergence of things happening out in the marketplace today that is going to provide retailers not only an opportunity to better serve their customers and their employees, but if they do that, to drive a lot of shareholder value,” said Brian J. Scott, general manager of Microsoft’s retail and hospitality industry solutions group, in an interview with WWD. “The ability to interact with the consumer in a nontraditional way is going to provide a great opportunity for retailers to provide better service, which is something I think they are all striving for.”

The technologies he cited range from the cellular phones and personal digital assistants that have become de rigueur accessories for many Americans to the radio frequency identification systems that eventually could allow retailers to pinpoint the position of a single garment in a store or even alert store managers to the arrival of a major spender.

The problem for retailers is integrating all these new technologies into their stores in a way that allows them to be used quickly and easily.

Scott said that Microsoft will be joined at NRF by a lineup of more than 20 software and hardware companies that sell products targeted at retailers, which plan to focus on Microsoft platforms to allow their programs to work together. Those companies include Accenture, BearingPoint Inc., BlueCube Software, Cap Gemini Ernst & Young, Cisco Systems Inc., CRS Retail Systems Inc., Dell, Fujitsu Transaction Solutions Inc., HP, Infosys Technologies Ltd., Intel Corp., JDA Software Group Inc., Manhattan Associates Inc., NCR Corp., STS Systems Inc., an NSB Company, ProClarity Corp., Retalix Ltd., Trax Retail Solutions and Wipro Ltd.

This story first appeared in the January 9, 2004 issue of WWD. Subscribe Today.

Microsoft’s pitch is that retailers that purchase its servers will have an easier time of integrating the many technologies that are making a mark on the retail market.

The company created its retail and hospitality division 18 months ago, over that time boosting the number of people focused on those industries to 120 from 11 and investing in excess of $10 million on adding retail functions to its commercial software programs.

Microsoft’s personal computer operating system, Windows, effectively dominates the PC market around the world. Officials at the firm assert that it can flex its enormous market clout to help standardize server platforms across major retailers, which today rely on a wide variety of computers, off-the-shelf computer programs and the proprietary legacy systems that many stores developed in-house.

“With the technology that exists today and what’s emerging, there’s a great opportunity to have a more unique relationship with customers without breaking the bank,” Scott said. “From our perspective, Microsoft is kind of uniquely positioned” because of its extensive direct communications with consumers through its various software and entertainment projects, which range from Windows to the Xbox game system to the MSN.com Web site.

A Microsoft white paper, called “Smarter Retailing: Innovation at the Edge of the Retail Enterprise,” said that the initiative includes three components. They are:

  • Smarter shopping, focused on making it easier for consumers to find what they want in a store.
  • Smarter selling, aimed at helping store-level employees track more data about their customers and use that to sell them more items.
  • Smarter operations, to better use the technology in place to help run other store systems, ranging from inventory management to simple things such as operating air conditioners.

While cutting-edge technologies tend to be adopted first in retail by such sectors as food stores and drugstores, Microsoft believes SRI also will be rapidly taken up by fashion and luxury good retailers, Scott said, “because of the sophistication and relative wealth of their customers and [because] that population is more time-pressed.”

Scott sketched out two theoretical examples of how retailers could use technology to improve their sales.

One was to equip sales staff with camera phones to enable them to communicate with employees at other stores, so that if a store was out of a particular size and color of a garment that a shopper sought, an associate could help her locate the garment at another nearby location — and provide photographic confirmation of the garment’s availability.

Another was to assign RFID tags to shoppers who signed up for preferred customer programs. It’s the shoe shopper scenario, which Scott described: “Someone comes into a store, identifies themselves via an infrared or RFID device, which notifies the manager in women’s shoes that one of her top clients is entering the store. She’s a size seven, and by the time she gets to the department there’s a manager there with the latest and greatest array of size seven shoes.”

While some people have voiced concerns about the potential of RFID tags to be an infringement on personal privacy, Scott suggested that if consumers saw they would gain some tangible benefit by using the tags — such as better service or their own checkout lanes — they would be willing to use them.

Microsoft officials also argue that using their equipment, which will be designed with these various retail initiatives in mind, will make it easier for retailers to install these new technologies without disrupting operations.

The white paper noted that while many companies today tend to roll out major groundbreaking technologies in large waves, in many cases it is less disruptive to roll out incremental new technologies in small bits.

“A core principal of the SRI architecture is that it should allow a retailer to implement flexible architecture that allows the retailer to gradually implement new capabilities in a more componentized fashion than previous architecture models have enabled,” the white paper said.

Overall, Scott said, the program’s main benefit would be to make more information available to retail floor-level employees, resulting in better customer service.

“Consumers in the marketplace today are becoming more digitally enabled,” he said. “Industry research shows that those trends of consumers becoming digitally enabled are going to become more and more prevalent.”