Transform business processes in retail with AI - Case study introduction

Industry context

Retail today is undergoing massive disruption. Based on shifting demographics and the rise of online-first retailers, customer expectations and behaviors are changing rapidly. Today, customers are shopping across many channels—in fact, 73% of shoppers report using multiple channels during their shopping journey.1

The emergence of multi-channel retailing has created new challenges for retailers. As customers shop across more channels, they expect their preferences to translate into deeply personalized and consistent experiences whether they're in store, in browser, or in app. Retailers understand this expectation, but struggle to ensure, for instance, that the offers and messaging a customer sees in their email are both personalized and consistent with what they see in-store and on the retailer's website. Making this expectation a reality represents a major opportunity for retailers: 44% of consumers say they would become repeat buyers after personalized experiences, but only 22% of consumers actually find their retail shopping experience to be highly personalized.2

Shopping Multi-Channel Context: Customer expectations and behaviors are changing rapidly. 73% of shoppers report using multiple channels, 44% of consumers consider becoming repeat buyers after personalized experiences, 22% of consumers have a real personalized experience.

Multi-channel retail also presents challenges for retail operations. Many retailers lack visibility into inventory levels across channels, and supply chain and fulfillment are increasingly complex to manage. This means, for instance, that many retailers are not able to reliably prevent loss of business from out-of-stock products: 70% of retailers desire the ability to accurately forecast future out-of-stocks but cannot do so today.3


Since 2009, Microsoft Corp. has served local communities and welcomed customers to Microsoft Store properties globally. Microsoft Store—whether shopping in a physical store, online, or through your Xbox or Windows 10 device—is the first and best place to experience technology from Microsoft and its partners, featuring an assortment of innovative products and solutions to empower all of us to achieve more.

One of Microsoft Store's challenges around multi-channel retail has been an influx of data, particularly customer feedback. This feedback is coming from many different sources (from online ratings and reviews to post-purchase surveys and in-store interactions), making it challenging for us to glean insights.

But with challenge comes opportunity. The explosion of new channels provides retailers like us with access to more data than ever before. If harnessed at scale, this data could drive better customer experiences and enable retailers to manage their operations more effectively. To drive scale and efficiency, we are turning to AI-based technology to unify disparate data channels and derive meaningful customer insight.

Microsoft Store Challenges: AI technology unifies data channels and customer insight. 1. New channels to reach customers, 2. Influx of data from different sources, 3. Gain insights to drive better customer experiences, 4. Use data to improve the management of operations.

Strategy questions

The following are questions you can use to start thinking about how to implement AI in your own retail organization. Think critically about these questions before watching the executive perspective video and continuing on to the case study resolution.

  1. How do you anticipate applications of AI impacting the full lifecycle of a product? How can you ensure customer insights are shared with the right stakeholders?
  2. How can you incorporate best practices from your frontline store managers into your AI applications?
  3. How can you use insights from AI to coach sales associates and drive improved performance?
  4. Do you know what your competitors are doing with AI? How can you use AI to differentiate from your competitors?
  5. How will you ensure buy-in from both executives and store managers to ensure AI is implemented successfully across the enterprise?
  6. How will you prioritize competing objectives? For example, if gains in business efficiency came with the trade-off of a slightly lower-quality customer experience, would you accept that?

Now that you've gained context on the challenges Microsoft Store faces today and considered critical questions to answer before implementing AI, watch the executive perspective video with David Porter, Head of Microsoft Store.