Satya Nadella, chief executive officer of Microsoft, is credited with turning around the tech giant. Under his watch, the share price has grown more than fivefold, and in April the company’s market cap passed $1 trillion after a strong third quarter boosted shares. Businesses are jumping on Microsoft’s Azure cloud, and the tech giant recently won a Defense Department deal that reportedly could be worth up to $10 billion.
Microsoft is creating tools and software that empowers retailers to develop their own technology. The company’s goal is to commoditize and demystify technology. Adopting tech tools and platforms is just the starting point, Nadella said. Retailers have to achieve tech intensity and become fast adopters of technology and build their own proprietary digital capabilities.
“You can’t be cool by association with a tech friend, you have to be cool on your own. Our mission is enabling you to have that tech curiosity. It’s not about growing your dependence on us,” Nadella said in a keynote speech on Sunday at the National Retail Federation’s “Big Show” at the Jacob K. Javits Convention Center, and subsequent exclusive interview with WWD. “The retail sector generates more data than any other industry, except manufacturing. The data generated by retailers is the demand signal for the world.”
Retailers have to wrap their arms around consumer data, learn to mine it, and use it to their advantage. “Their ability to understand on a continuous basis consumer behavior and the changes in consumer behavior [will lead] to personalization, better inventory management and merchandising,” Nadella said. “Everything you do will be driven by your ability to take that data signal you have, starting with consumer behavior and commercial intent and then optimizing it.”
Equipping sales associates, who play a role in customer acquisition and retention, with technology will allow them to focus more on customer experience and less on low value backroom tasks, Nadella said, adding, “Giving data to employees is the single most ROI-intensive thing you can do. It increases your conversion rate by 15 percent and your satisfaction rate by 10 percent.”
Personalized recommendations — Starbucks Deep Brew is an example — can enhance consumer satisfaction. The Microsoft Azure-based AI engine makes personalized food and beverage recommendations to 17.8 million customers on their phones. “The suggestions are based on signals like local store inventory, weather, time of day and community preferences,” Nadella said. “That’s a total of 2 million personalized recommendations every day.”
Brands will continue to grow in importance as consumers want shared experiences with brands. A new Canada Goose concept store in Toronto puts customer experience at the center of the retail journey by showcasing products in digitally led, simulated weather environments. The store carries no inventory, using Microsoft Dynamics 365 Commerce to display the full Canada Goose collection, take orders and have products delivered within hours.
“The technology is not the big issue, it’s finding the high return-on-investment use,” Nadella said. “Build your own tech intensity, and your own independence.”