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Transform Retail with Today's Advanced Planning Solutions

By Colin Wright, Worldwide Industry Director, Consumer Goods, Microsoft on November 8, 2017

Filed under Retail & Consumer Goods

Learn how today's advanced planning solutions can help transform the retail industry
 
Retailers have long struggled with bridging the gap between supply and demand. Even after decades of collecting point-of-sale and loyalty program data, retailers are data-rich yet insight-poor—lacking the real-time information needed to make agile buying and assortment decisions that give them a competitive edge.
 
Good news. The ability to harness the power of your data, to more easily identify and enable opportunities locked away in these data sources, is now here with the latest innovations in advanced planning solutions.
 
Featuring machine learning capabilities, today’s planning software empower merchants with predictive and prescriptive insights to balance price and inventory at a hyper-local level. The solutions assess shopping and market insights along with external data such as weather, store traffic, and social signals, empowering merchants to quickly understand what customers want, how much they want to pay, and when they want it. Talk about tightening your supply and demand gap!
 
In this tough environment, we’re finding at Microsoft that retail and consumer goods companies are eager for the digital transformation that retail analytics can deliver. Industry leaders agree. Eighty-eight percent of retail CIOs believe advanced analytics will have the greatest impact on their organizations over the next five years, according to a 2017 Gartner CIO Survey.
 
Where are the biggest opportunities for retail analytics? Gartner research suggests pretty much every inch of your enterprise: marketing, merchandising, pricing, distribution, store operations, and every other internal process in between.
 
“Ultimately, retailers will need the ability to decide in a split second if an opportunity is potentially desirable or undesirable in favor of the next momentary opportunity. Retailers will leverage Big Data, advanced analytics, and algorithms to enable these decisions with greater accuracy and timely execution of customer-facing processes.” – Robert Hetu, Research Director, Gartner

Creating personal, engaging and relevant experiences

At Microsoft we understand the urgency of turning your data into actionable insights. Yet pinpointing the factors that make retail products desirable in a specific market or channel has been no easy task. Fortunately, our engineers and partners are always up for a challenge. Leveraging our technology expertise and industry experience, Microsoft’s advanced planning solutions provide a retail analytics and visualization platform for your buyers to make optimal purchase decisions to drive product profitability.
 
What can you expect with the latest planning software? To start, you can expect our solutions to complement your existing inventory control systems, while delivering state-of-the-art, near real-time capabilities. For example, dashboards enable your buyers to drill into each market or product segments with tailored machine learning recommendations. By making it easier for your people to connect, share information and work together across organizational and geographical boundaries, they can more effectively perform in an increasingly competitive digital marketplace.

Walmart-owned Jet.com transforms e-commerce

To understand how Microsoft solutions for advanced planning can work in your environment, let’s look at some examples of retail success. A great place to start is with online retailer, Jet.com. Its founder and CEO Marc Lore saw an opportunity in 2014 to transform ecommerce by focusing and innovating around price. Truly an ecommerce pioneer, Lore’s strategy is brilliant.
 
By giving customers unprecedented control at checkout, Jet.com customers can watch the price of items in their basket drop in real time, based on selections that affect the actual costs of that particular transaction—product warehouse location, items in a shipment, payment method, returns and more. For example, customers can waive the right to return certain items or pay directly from a checking account to save more money.
 
To make its vision for dynamic pricing possible, Jet.com turned to Microsoft in 2015 and, more specifically, Microsoft Azure as the foundation for their Smart Cart and Rules Engine technology. Our solution delivers everything Jet.com needs to shake up the online shopping industry—a secured cloud platform with the stability and maturity to handle the demands of large volumes of data and a rapidly expanding customer base.
 
Providing the Microsoft cloud technology for Jet.com to grow from zero to a full-fledge ecommerce marketplace in about 12 months was a thrill. Another cool fact: Walmart acquired Jet.com for $3.3 billion a mere 13 months after the site’s launch. Their latest initiatives include the launch of a private-label brand, called Uniquely J, to win over urban-millennial customers. Want to learn how it all began for Jet.com? Read our case study and check out this video for an inspirational ecommerce success.
 
“To be one of the best e-commerce destinations in the US, we will have to handle millions of customers, placing tens of thousands of orders a day. That requires a top-class e-commerce system built on a flexible, open cloud platform. That is exactly what we got with Azure.” – Mike Hanrahan, CTO, Jet.com

Improving the customer experience with machine learning

Another e-commerce retailer improving the customer experience with retail analytics is Hamburg, Germany-based OTTO. Our partner Blue Yonder, a leading provider of machine learning solutions for retail, uses Microsoft Azure as its primary cloud and data platform to power OTTO’s automated replenishment and pricing decisions.
 
OTTO’s revolutionary approach to advanced planning with Blue Yonder Replenishment Optimization is creating phenomenal outcomes. And, no surprise, they’re garnering lots of attention such as this April 2017 profile in The Economist which cited OTTO’s results including:
  • Predict with 90 percent accuracy what will be sold in 30 days
  • Reduce surplus stock by one fifth
  • Decrease product returns by more than two million items a year
  • Support environmental sustainability with fewer packages thanks to consolidated shipments
“Through the machine learning algorithm, our forecasts are constantly improving. This way, we get precise results that help us plan and control a future-oriented product range.” – Mathias Stüben, Director of Category Processes, OTTO

Pier 1 looks to gain insights, leverage AI learning and improve agility

Our longtime customer, Pier 1 Imports, is also continuing to embrace the opportunities of retail analytics. Back in 2014, Pier 1 approached us to better connect with its customers using insights and data. The company took to the cloud to pilot a predictive analytics solution based on Microsoft Azure Machine Learning and Microsoft Power BI. The multichannel retailer planned to use data insights to predict which products customers will want in the future, create a dynamic website using predictive modelling, and create more efficient and effective marketing campaigns. You can read about their initiative here.
 
I expect more great things to come from Pier 1. During its September 2017 earnings conference call, Alasdair James, president and chief executive officer, discussed Pier 1’s commitment to better aggregating data and driving increased automation. James cited the work being done to “establish an infrastructure that will allow for the utilization of advanced analytics and machine learning to drive efficiency. To that end, we expect to be able to optimize our promotional programs to capture efficiency. As we strengthen our IT platform, adding tools and automation we’ll be better positioned to gain insights, leverage those learnings and improve our agility.”
 
At Microsoft, we’ll continue to help multichannel retailers find new ways to engage with customers and drive profits through cloud machine learning and retail analytics. Discover how we can help your company by visiting our advanced planning solutions page today!
 
LinkedIn: Colin Wright

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