Microsoft Emphasizes Retail Shift to Cloud, IoT and Big Data Analytics

As many retailers are reporting declining in-store growth as consumers continue to conduct more of their shopping online, Microsoft last week emphasized how a growing number of its retail customers are deploying IoT-based sensors to capture data that can help improve operations and sales in stores.

The company was among almost every major IT player showcasing technology with that very same focus at last week's annual National Retail Federation (NRF) show, held in New York. At this year's gathering, there was a greater focus on the use of helping lift sales and control inventory by using beacons to deliver data that can give retailers the ability to replenish inventory more rapidly without overstocking, while also delivering promotional messages to customers on their phones based on their proximity to certain products.

"Every retailer knows they have products that go out of stock. But if you can quantify how long an item has been out of stock and convert that into dollar figure and then spread that across your whole store, they can react to it," said Marty Ramos, CTO of Microsoft's retail industry segment, during an interview at the company's booth at NRF. "So, we're seeing sensors that tell how much product we have on the shelf. We are doing that with shelf mats and a robot that roams by the shelf and just checks whether or not that shelf needs to be restocked. Analytics has this power where you can just pop back in these numbers. I love the fact that you can quantify these hidden metrics."

During a Microsoft-sponsored session at NRF, executives at Nordstrom Rack, Mars Drinks, Hickory Farms and Coca-Cola discussed how they're using some of the artificial intelligence (AI) and predictive analytics features offered with Azure Machine Learning and Azure IoT services.

Nordstrom Rack is in the midst of a pilot at 15 stores where it has deployed in-store beacons provided by Microsoft partner Footmark, which connects the beacons to Azure IoT. The beacons track customers that are running an app on their phones to provide promotional offers based on their proximity to certain products. Among the 15 stores that have deployed the beacons, a better-than-expected number of customers have opted to use the app, said Amy Sommerseth, Nordstorm Rack's senior director of service and experience. Sommerseth also discussed the retailer's ability to reduce waiting times at the checkout counter and better help customers find merchandise. She described the pilot as successful and the store plans to roll it out to its 260 stores this year.

Hickory Farms, whose business ranges from a pure online channel to seasonal pop-up locations in shopping malls, is deploying Microsoft's new Dynamics 365 to replace its legacy inventory management systems. The company plans to start rolling it out in April, initially to upgrade and automate back-office and inventory management, with the retail component slated to be operational by October in time for the peak holiday shopping system, said Gordon Jaquay, Hickory Farms' director of IT. Microsoft further described the two companies' implementations, among others showcased at NRF, in a blog post.

Consumer packaged goods companies, which rely on retail to distribute their goods, are also using some of these new services. Saurabh Parihk, a VP at Coca-Cola, discussed at the NRF session how the company has started using Azure services to gather data for those in the field serving a broad constituency, which includes grocery markets, restaurants and vending machine operators. "Our current 2017 big focus is on predictive capabilities," Parihk said. "That's where we are understanding how we can better predict demand using our internal transaction data as well as external data, and, at some time in the future, we want to do more optimization because of some of the capabilities are not there yet."

Posted by Jeffrey Schwartz on 01/20/2017 at 12:17 PM