12 January 2010

As retailers gather in New York for NRF, a new year and a new decade bring hope after a difficult year. Many retailers are looking to take advantage of tech trends to help lift them out of the recession. David Gruehn, industry solutions director for retail at Microsoft, says these trends provide significant opportunities as well as difficult challenges for retailers and Microsoft is well positioned to help them navigate the technology and its effects.

“Microsoft is trying to help retailers bridge the three worlds of the digital work style, the digital lifestyle and the emergence of the cloud,” Gruehn says. “We saw a maturity of the digital work style in the ’90s and the digital lifestyle has really exploded in this past decade. Now, Microsoft has built a digital platform in the cloud that is the answer to how we bridge these three worlds.”

Microsoft has developed a strong position in the retail industry. It has created technologies used in stores, such as Microsoft Surface, that help customers explore products, and sells tools such as mobile tablets that retailers use to check stock. It has also developed back-office tools with its Microsoft Dynamics products that help retailers find insight in customer and product data. And with the Windows Azure platform, Microsoft is helping retail customers easily scale up computing power to manage demand for special events or holidays.

With the average consumer spending less in 2009, retailers were forced to make large cutbacks. Now both consumers and retailers are ready to get back to business. Eric Beder, a retail and consumer analyst at Brean Murray, Carret & Co., has observed how retailers have regrouped after their initial panic.

Microsoft is trying to help retailers bridge the three worlds of the digital work style, the digital lifestyle and the emergence of the cloud.

David Gruehn, Microsoft “There is more of a focus on productivity internally and externally and looking at every expense going forward,” Beder says. “They’re trying to make their model more robust for both the bad times and for when the good times return so they can drive higher margins and higher productivity than they’ve ever had.”

Many retailers’ restructuring plans include ways to leverage new technology and online trends to better do business with hyper-empowered consumers who are always connected to the Web via a broadband connection or a mobile device.

Over the past ten years, the Web and the mobile industry have shifted power to consumers, who now hold more information than ever. Not only can shoppers quickly get information from a retailer, they can also get information from that retailer’s competitors and share it among a community of other consumers. Having all this information at their fingertips shifts power away from the retailers that simply put products on shelves and count on shoppers finding comparison-shopping too difficult and time-consuming to do en masse.

As Gruehn says, “Retailers are beginning to be significantly affected by the consumerisation of IT. It has caught them off guard and they’re now just realising that it is a force to be reckoned with. It’s a force than can give you a significant advantage if you figure out a way to tap into it and leverage it. Or it can be a significant disadvantage if you try to ignore it or don’t effectively leverage it.”

Gruehn says that during the 1990s, every retailer scrambled to create an online store but few have continuously updated that store’s infrastructure to take advantage of current innovations.

“It used to be if a retailer had a site and people could buy stuff on it, that was enough,” he says. “Unfortunately, many retailers set up their online stores in a silo. What they didn’t realise was that it’s not a separate thing to a customer, it’s a store. The expectation of the consumer has become, ‘Why am I getting a different experience on the site than I do in a store?’”

One of the most powerful trends retailers are looking to take advantage of is the ubiquity of cell phones and smartphones. Gruehn says that in the future, a consumer’s mobile device will act as a personal information kiosk for shoppers while they are in a store.

These personal portals can connect with a store’s digital infrastructure via a Bluetooth or Wi-Fi connection to suggest products based on profile information, allow barcode scanning capabilities, show product availability, show a map of products within the store and offer personalised coupons. What’s even better for retailers is that these devices cost nothing for them to buy or maintain, because consumers do that for themselves.

“You’re starting to see individual companies offering apps that you can download which allow you to interact with that store,” Gruehn says. “To me, that’s the same as a loyalty card. I’ve got so many loyalty cards now. I’d rather just have them all digitally in my phone so I can get the benefit and be able to carry hundreds of these things.”

The mobile device as a digital wallet is also a trend worth exploring for retailers. Having shoppers pay with digital cash from a bank account over a mobile device would help retailers circumvent costly transaction fees from the credit card companies.

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