The retail industry has been through massive changes over the past five or so years, including global supply chain disruptions, shifting priorities for in-person and online shopping, and—no surprise—the integration of cutting-edge technologies like AI. This means BIG CHANGES to the industry! So, what are some of the biggest challenges and opportunities retail is facing? I had a great conversation with retail expert and President of IHL Services, Greg Buzek, to find out.

Omnichannel to unified commerce model

When looking at the state of the industry, we both agreed that one of the major retail trends of 2024 is unified commerce. Right now, many organizations run multichannel operations, meaning customers can access a company both in person and online. This level of access can expand a company’s reach to a wider audience but often leaves data siloed and customer experiences disconnected. Luckily, organizations have the tools to improve this system and shift from multichannel operations to unified commerce.

In essence, this approach connects the silos formed in a multichannel method, providing businesses with a single, overarching view of their operational data and offering a seamless, consistent experience to both employees and customers. Take Lucky Brand as an example, working with Amperity on Microsoft Azure, which utilized this approach to unlock the power of its data. Using Amperity, Lucky Brand uncovered valuable data hidden within 12.7 million records, allowing them to attribute $192 million in lifetime value to 1.5 million previously unknown customers!

The impact of this sort of transition can often be felt across an organization. Simpson Strong-Tie, with the help of Microsoft partner Optimizely, has seen significant benefits from unifying its data for B2B e-commerce. This solution powering sales to big box retailers brought with it a monthly average of $100,000 in sales and an 18% increase in unit sales.

Not only does this approach transform operations end-to-end—from supply chain to fulfillment to the physical storefront—but it also merges the shopping experience for customers across all platforms. It’s why DICK’S Sporting Goods worked with Microsoft to develop a more consistent experience between online shopping and its 850 physical storefronts. Whether a user is ordering from an online shop or checking out in person, unified commerce ensures a consolidated, frictionless transaction. As Greg succinctly put it: “It’s not just e-commerce, it’s just commerce.”

Our partners and customers are turning to unified commerce to empower their employees, delight customers, and prepare for future growth!

Generative AI as part of digital transformation to unified commerce

One of the major technological developments on many retailers’ minds? Generative AI. These solutions can transform retailers from end-to-end, offering everything from increased efficiency to enhanced personalization and operational agility.

When you consider what retailers have been facing the last several years—a pandemic, supply chain delays, and ongoing political unrest across the globe—it’s no surprise that a tool like AI would make it into the toolbox of any organization looking to adapt to whatever 2024 (and beyond) throws at them!

One notable (and previously mentioned) area ripe for AI integration is unified commerce. Since unified commerce is about gathering data in one place for easy access, AI capabilities help exponentially enhance those data sets. You’re basically giving an AI solution access to an “all-you-can-eat” array of data, which provides improved insights across operations.

When considering how to leverage AI, our customers often find it easiest to start with small deployments and thoughtful experimentation, which can go far in the long run. I love Greg’s advice: “When you think through it, you want to start with the best data. You want to start where you can achieve the best bang for your buck.”

As for AI in action, you better BET our partners and customers have been jumping at the chance to harness this phenomenal technology! Recently, Walmart teamed up with Microsoft to integrate generative AI into its search function, helping consumers reduce the time they spend every week managing shopping and general household planning. Meanwhile, the largest pizza company in the world, Dominos, is harnessing solutions like Microsoft Azure OpenAI Service to modernize storefronts, empowering employees and customers alike!

As technology rapidly evolves, I’m sure we’ll see even more incredible examples of digital transformation at work in the future.

Making More Possible

Technology is transforming our industry landscape, and customers look to Microsoft and our partners for guidance. I’m proud of the collaboration with our partners to empower clients with AI and cloud solutions to meet their needs across the entire retail process. From boosting efficiency to enhancing user experience, unified commerce really is the retail solution of the future!

Want to learn even more? Explore industry trends and expert insights from some of our influencers, including Brandon Rael, Chris Walton and Anne Mezzenga, Ron Thurston, Incisiv, Cathy Hotka, and more from the wonderful Greg Buzek! You can also follow Shelley Bransten, Corporate Vice President of Global Industry Solutions at Microsoft, for gems like this post on #MSPartner Domino’s, and listen to Ricardo Belmar’s The Retail Razor Show podcast.

Whether you’re just starting your digital transformation journey or are in the middle of development, we’re here with the support and resources to help you reach your goals:

• Dive into Microsoft retail developments.
• Discover the power of Microsoft Cloud for Retail.
• Find a Microsoft partner.
• Learn how to become a Microsoft partner.

As we continue to invest in Industry Clouds as a launchpad to greater industry-specific partner innovation, we are striving to understand what you, our partners, need to deliver value, create tightly tailored solutions, and strengthen last-mile industry execution.

My passion is for partners and, as the leader of Microsoft’s Global Partner Solutions team in the US, it is critical that I deeply understand your challenges and work with you to find solutions. That’s why my team and I have planned a series of listening sessions where I meet with partners to discuss their experiences working with Microsoft and the Microsoft ecosystem. These listening sessions are invaluable, helping us understand what we need to continue doing and what we need to change in order to be the best technology company partner, for our partners.

Earlier this year, as part of my listening strategy, I hosted a roundtable for a cross-section of our Retail partners, and I would like to share with you what I learned and highlight some of the trends we discussed that underscore the retail cloud opportunity in 2022 and beyond.

Key takeaways from Retail partner roundtable

During our recent Retail partner roundtable, I was joined by O9 Solutions, Amperity, Theatro, NCR, Flintfox, and Bamboo Rose. During this roundtable, I had the privilege of learning directly from these partners about what they felt was going well in their relationship with Microsoft, where they encountered friction, and where they saw the opportunities and challenges within the Retail industry.

One of the biggest themes was around ideas for further improving our co-sell motions. This included identifying ways to improve tooling to streamline, sharing of customer deal details to identifying signals to help sellers and partners more naturally come together to explore opportunities.

What was very clear is that the co-sell motion is gaining momentum. It’s been great for initiating conversation and presenting new opportunities for both partners and Microsoft to do more together – but there is always room for improvement! We recognize that some partners have felt the growing pains of change. Making sure our partners and customers feel supported means improving our go-to-market approach together. We’re working with the help of our partners to get our Microsoft field team pivoting around our partner solutions so that the solutions we drive are the very best options for our customers – our highest shared goal.

I was encouraged to hear from these Retail partners that they feel they have good access to Microsoft and industry leadership. This is the foundation of our success together and a critical element in our shared mission to lead the retail industry toward digital transformation. Meeting with these partners reinforced for me the incredible experience and expertise within the Microsoft partner ecosystem. This was clearly on display as the participating partners touched on many of the trends being forecasted by Retail industry experts. The following are just a few of these trends.

Retail technology trends to watch for

Challenges for this sector have created uncertainty, but with uncertainty comes great opportunity. Retail industry trends point to sustainable opportunity for cloud growth and, by extension, growth opportunities for partners poised to engage side by side with Microsoft.

In response to significant and abrupt changes in the retail landscape since early 2020, organizations have accelerated their investments in digital, with more than half the global economy now based on or influenced by digital¹. As the U.S. and other global economies emerge from the constraints of the pandemic, increases in inventory and deferred demand are expected to drive above-trend growth.^2,3

Retailers who were able to weather the storm now face continued pressure to digitally transform to meet the demands of today’s consumers. Same-day delivery, even for an added fee, and easy and instant product returns will be key differentiators for retailers in 2022^4,5. Retailers will also invest in technologies to efficiently process, refurbish, and restock that inventory⁴.

Whether operating brick-and-mortar shops, digital storefronts, or a hybrid of both, experience and expedience will dominate retail success,⁶ and data will continue to be the key. In fact, more data will be generated in the next three years than in the past 30⁷. Zero and first-party customer data will be mission-critical for marketers in 2022,⁴ driving retailers to invest in solutions that can unify customer data across sources.

In the next year, businesses will increasingly redesign their operations into a seamless, interconnected operational fabric that encompasses front- and back-office functions, leveraging their ERP systems as the data and transactional hub of their industry-based ecosystem.⁸ Investments in supply chain automation to overcome chronic worker shortages and order management software will be an area of focus to boost productivity, inventory velocity, and customer experience⁹.

Industry clouds, like Microsoft Cloud for Retail, will be a differentiator for businesses taking the next step in their digital transformation. According to Lee Sustar, principal analyst, and Lauren Nelson, vice president and research director at Forrester, cloud buyers will be drawn to industry-specific clouds that “[deliver] compliance while enabling application developers to do their jobs faster and better in their specific vertical.”

Microsoft Cloud for Retail is a launchpad for partner growth

With these challenges and trends in mind, we have accelerated our efforts to support and co-innovate with our customers and partners, both in the present and in the long term. Microsoft Cloud for Retail embodies that evolution and provides an advantageous launchpad for further innovation.

By bringing together disparate data sources across the retail value chain, Microsoft Cloud for Retail enables retailers to realize the true value of their data by enriching core business processes and turning data into actionable insights. It is modular and deployable both in end-to-end scenarios like curbside pickup or standalone composable services like recommendations. All of this is built on one unified data platform with industry-leading AI to reason over that data and drive more meaningful insights.

There are limitless opportunities for our partner ecosystem to extend the value of the platform with industry specific solutions to address the industry’s most urgent challenges and help retail organizations future proof for what’s next.

Similarly, there are limitless ways for Microsoft Retail partners to align and scale, build, enrich and unlock opportunities for growth with Microsoft Cloud for Retail. The opportunities are strong as evidenced by the latest IHL Group study highlighting which solution providers retailers will be increasing their IT spend with this year. Microsoft tops the list with 48% of retailers surveyed indicating they will increase their spend with us, greatly exceeding the next highest vendor in the survey. Our growing partner solutions make this possible!

Looking forward

As we forge ahead on this exciting journey of helping our shared retail customers digitally transform, I want to thank partners like O9 Solutions, Amperity, Theatro, NCR, Flintfox, and Bamboo Rose who took the time to help me and my team understand and feed knowledge back into Microsoft.

Microsoft is on a never-ending journey to become the technology company with the greatest partner experience and the best value for customers. Learn how to deepen your engagement with us and how to build your Retail practice with Microsoft Cloud for Retail.

Learn more

• Learn more about Microsoft Cloud for Retail
• Learn how you can build your Cloud for Retail practice
• Hear from Satya Nadella and Alysa Taylor on what’s next for the Retail industry
• Explore other Microsoft Industry Clouds

¹ IDC FutureScape Webcast: Worldwide Digital Transformation 2022 Predictions

² 2022 Global Economy: Normalizing, Not Normal | Morgan Stanley

³ Economic Trends to Watch in 2022 | JPMorgan Chase

⁴ Predictions 2022: Media And Advertising

⁵ Insider Intelligence’s Retail Trends to Watch in 2022 – Insider Intelligence Trends, Forecasts & Statistics (emarketer.com)

⁶ https://content-na1.emarketer.com/top-10-trends-2022

⁷ IDC Global DataSphere Forecast Shows Continued Steady Growth in the Creation and Consumption of Data

⁸ IDC FutureScape Webcast: Worldwide Intelligent ERP 2022 Predictions

⁹ IDC: Top supply chain predictions for 2022-2026 | Chain Store Age

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Celebrating the strength of our ecosystem: Reflections on 2021

The areas below will help you facilitate customer engagement and grow market share, enabling partners at all levels in their lifecycle to build intelligent solutions, accelerate time to market, reach new customers, and be discovered in the Microsoft commercial marketplace by millions of customers.

We hope that this will be a useful guide in helping you identify which priorities integrate well with your partner competencies and what steps you can take to grow into these key opportunity areas.

Priorities for the next half year

These select priorities have been defined for Microsoft and partners to focus on in the second half of our fiscal year (January-June 2022).

1.      Make Hybrid Workplace a reality for customers with Microsoft 365 E5

We see a massive opportunity as customers continue to embrace Hybrid Workplace and look for productivity solutions that facilitate rich team collaboration and foster employee engagement, while strengthening your cybersecurity posture. Microsoft 365 E5 continues to be a top priority for Microsoft field teams in our fiscal H2 (January-June 2022).

Microsoft partners make the possibilities of the Hybrid Workplace a reality for our customers – through workshops and pilots, and accelerating deployment and adoption of these advanced workloads.

The following workshops can help establish the value for Microsoft 365 E5 workloads:

• Modernize Communications
• Microsoft Viva
• Microsoft Viva Insights
• Threat Protection
• Discover Sensitive Data
• Manage & Investigate Risk
• Hybrid Cloud Security

Please nominate customers for workshops in MCI Engagements via aka.ms/MCI/Claim.

2.     Employ the power of Surface for employee retention

Our customers are among the many organizations struggling to overcome what’s been coined ‘the Great Resignation’ where as many as 40% of employees are considering leaving their job this year¹. One of the primary pain points – reported by 70% of workers – is the need for improved devices to support a successful hybrid work experience².

Microsoft Surface is one way we are helping customers achieve a competitive advantage in holding onto top talent. In fact, when Microsoft asked their customers about the benefit of M365-powered Surface devices, 86% agreed that they help drive employee satisfaction and retention³. Devices partners can take Microsoft services to market on their devices, offering incremental value to their customers.

To ensure that more customers recognize this opportunity, we’ve launched Modern Work Assembled, an integrated Microsoft 365, Surface, and Services Partner program aimed at streamlining cross-solution selling. New integrated training and BOMs are available to help partners kick off customer-centered conversations, and there are a number of channel and customer incentives and promotions available for you to leverage. Speak to your PDM for more information.

Get started:

• Learn how to include Surface in your Hybrid Workplace conversations.
• Explore Q3 Surface offers you can leverage through March 2022
• Invite your customers to our February Webinar: Reimagine workplace dynamics and adapt your business to the new world of work
• Learn more about the Windows 11 optimized Surface Premium devices: Surface Pro 8, Surface Laptop Studio and Surface Laptop 4

¹Work Index Study

²PC Devices Forrester Research Paper

³M365+Surface TEI Study

3.     Boost Business Applications billed revenue and Dynamics 365 customer adds

The US Business Applications market has grown beyond $78 billion⁴ this year. There is significant growth potential for Microsoft solutions and partners. Leading customers to their first Dynamics 365 workload is key to accelerating our market share and hitting our growth objectives in FY22 and beyond. Microsoft Internal Research shows that winning that first workload with a customer, and deepening relationships with business leaders (BDMs), is key to strengthening our impact across the customer’s organization and expanding reach into other next-best workloads.

In H2, we continue to focus on leading customer conversations with industry stories and business impacts that speak to the circumstances of the customer. In this way, we demonstrate empathy for our customers’ challenges, can better anticipate their questions, and build trust among BDMs.

Our FY22 Business Applications Partner Offers Presales Program enables partners to utilize Business Value Assessments to accelerate the sales process and funds pre-sales engagements at a customer level.

Partners are encouraged to understand our Sales Plays, Industry Marketing Priorities, and leverage our presales offers to grow their business.

• Learn more about the Microsoft Business Applications business opportunity and ways to grow your practice.
• Leverage the Partner Plays-in-a-Box bringing together capacity and enablement, go-to-market, and co-selling resources for Business Applications.
• Explore partner GTM resources and case studies: Dynamics 365 Partner Portal (microsoft.com)
• Request funding for pre-sales engagement: FY22 Business Applications Partner Offers – Presales
• If you need help closing a large deal, fill out the Partner Lead Sales Resource Engagement Form to ensure that you have the right resources to close the deal.

⁴ Microsoft Internal Research

4.     Drive co-sell readiness through Commercial Marketplace

Through Microsoft’s global co-sell programs and our cloud-based Commercial Marketplace, we are working toward enabling our partners and customers for digital transformation.

One meaningful benchmark of progress is enabling our partners to take advantage of transformational business opportunities like marketplace and Microsoft Azure Consumption Commitment (MACC). Becoming co-sell ready is the first step to getting there. By publishing transactable offers on the marketplace, partners gain access to Microsoft’s global customer base to build awareness of their solutions and drive frictionless B2B sales at a global scale. B2B sales at a global scale.

Microsoft’s industry-leading commercial marketplace gives partners unmatched access to customers and opportunity to drive sales more effectively and efficiently. Simply creating a listing in marketplace gives you access to over 4 million active visitors per month across 140 geographies. Through relationships with Microsoft field sellers and partner-to-partner co-sell, you can scale your sales force through the Commercial Marketplace while earning Marketplace Rewards.

Microsoft is committed to ensuring our partners know how to leverage commercial marketplace and how to benefit from associated FY22 Marketplace Incentives, such as the Teams Build With incentive. Publishing on commercial marketplace is easy – set up your account, prepare your offer, create your offer, publish, and go to market. Get started now with step-by-step guidance for publishing to commercial marketplace.

Takeaway

Staying aligned with Microsoft priorities ensures you are prepared to move into key industry growth opportunities and take advantage of programs, resources, and incentives Microsoft offers to drive mutual growth.

Stay connected

Keep a pulse on these priorities throughout the quarter – join Microsoft and other US partners in the US Partner Zone within the Microsoft Partner Community!