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Personalized customer experiences

The most successful loyalty programs are agile. The ability to quickly respond to change is key to success not only in business overall but also in loyalty programs specifically. Having customer data that provides insights into why your customers are loyal to your brand will give you a solid foundation for your loyalty program.

Customers have so many contact points with a brand. Maintaining consistency and relatability, across online, offline, in-store, and more is massively complex. The ability to capture and analyze the multitude of customer signals across these channels provides the customer knowledge you need. Over the past few years, the explosion of e-commerce and direct-to-consumer strategies has provided many new ways to reach customers. This evolution has impacted every aspect of retail and consumer goods, from transforming supply chains to merchandising, customer service, and advertising. Adapting your loyalty strategy from being reactive to predictive requires a system that can analyze all that data. Often AI solutions are required to make it predictive. Data is a great enabler for every brand, especially retailers and consumer goods companies.

Have you noticed the brands you shop with are expanding into interesting new services? Brands are experimenting, trying new and diverse ways to both attract and retain customers. Some brands are doubling down on their resale business, providing customers with opportunities to sell products back. Resale channels are increasingly popular for fashion brands. For example, one popular clothing retailer partners with secondhand e-tailer. Another clothing brand resells its gently used products via its own site. Brands are also offering unique payment options. A popular smart-bassinet brand promotes rental services to new parents. Subscription models are growing as a category—from meal prep to clothing and accessories to diapers—a subscription set-it-and-forget-it strategy ensures brands stay top of mind. Managing economic uncertainty over the last few years, more brands are offering new payment solutions like buy now, pay later (BNPL). In fact, in the age group of 18 to 24 years, 61 percent of consumers made a BNPL purchase.¹ These programs are designed to meet customers where they are economically and keep conversations ongoing. They also feed an incremental stream of data related to customer needs that can point to new and necessary loyalty solutions and offerings.

As critical as it is to leverage data to power a strategy to increase loyalty, it’s equally important to capture data from customer events and power it to uplevel the overall customer experience. Brands can drive deeper customer engagement by using customer data to improve their overall experience. Campari launched a campaign “Aperol Together Again” focused entirely on bringing people back together as COVID-19 restrictions were lifting. The campaign was entirely orchestrated on the Microsoft platform. Data from in-person events across the globe fed into behavioral and transactional customer data to inform the next best actions online, like intelligent product recommendations and predictions.

Demonstrating and communicating core values is another key ingredient to earning customer loyalty. Shoppers want to know what brands stand for and how they give back. Classic differentiators like price, selection, services, and convenience are not the only factors influencing loyalty. Brands are building connections with customers on an emotional level by entwining mission and purpose with products. According to Capgemini, “86 percent of consumers with high emotional engagement say they always think of the brands they are loyal to when they need something, and 82 percent always buy the brand when they need something.”² One clothing brand sends customers receipts for purchases that cite the exact impact a purchase made towards saving the planet (12 pounds of carbon dioxide and 8,196 gallons of water). One clothing retailer famously donates a pair of socks for every sock pair purchased to homeless shelters. Shoppers want more than standard perks for their devotion and data.

Examples of how brands are adapting

To earn access to data, retailers and consumer goods companies must first gain the trust of their customers. Be explicit and clear about the information you are collecting and how your organization will use it.

Trust is a long game to win, and a short one to lose. It takes years to build long-term loyalty, but one small slip-up can reset things to zero, so it’s critical for retailers and consumer goods companies to get it right. If brands want to use customers’ data to drive their loyalty programs, they must prove they can be trusted to use it wisely and transparently and provide perks such as personalized services, relevant product recommendations, exclusive promotions, or better delivery options in exchange.

Brand loyalty program staples such as mailing lists, coupons, and advertising are being reevaluated. AI, including generative AI, can improve personalized messages to customers. Finding ways to include gamification can attract customers or build unique engagement opportunities in a commerce-enabled environment in the metaverse. Unlocking insights hidden within data gives brands what they need to build connected, personalized experiences for customers, employees, and partners.

Finding ways to combine online and in-store experiences creates consistency for customers. Brands are exploring how to use mobile applications to send personalized promotional offers to customers in real-time while they’re in stores.

The future of loyalty programs

The evolution of loyalty programs continues. Recent headlines have shown brands shifting and changing their programs. The reality—and the challenge—is that customers expect consistency across every brand channel. They expect better and better experiences with each engagement. Staying current with technology, both customer-facing and behind-the-scenes, is critical. Having a platform to collect, store, and analyze customer data is the first step. However, customer touch points like point-of-sale systems will also need to evolve. Having the ability to engage with customers on their smartphones will continue to be important.

We’ll continue to explore new technologies to create solutions such as headless loyalty services. Headless commerce is the separation of a website’s front-end from its back-end e-commerce functionality. This separation gives more flexibility and increases the number of buyer experiences you can create. There is an appeal to loyalty engines that are always present and consistent, regardless of which channels customers engage with. In addition, brands are exploring how to use the metaverse and Web 3.0.

Capitalize on Microsoft technologies and solutions

Now is the ideal time for your brand to drive lifetime customer loyalty. Both the market and customer expectations are changing. There are new technologies that can help you capitalize on opportunities and enhance customer relationships. However, we would caution against haste. Retail and consumer goods companies should view the race to win customer loyalty as a marathon, not a sprint—every experience matters. A customer’s last best experience sets the standard for the type of experience they expect everywhere, particularly in the digital world where experiences transcend industry boundaries. Take time to understand your customers, plan loyalty strategies carefully, and harness the power of technologies and solutions from Microsoft and key partners to help you develop and deliver unforgettable experiences that lead to lifetime loyalty.

Learn more

Explore our strategy blogs, website resources, and how consumer goods companies are innovating:

• Read our blog on how to harness powerful, customized tools to consolidate and manage data flow to drive improved performance and more.
• Visit our website on Microsoft solutions for the consumer goods industry.
• Grupo Bimbo takes a bite out of production costs with Azure IoT throughout factories.
• Campari Group personalizes customer experiences and builds brand awareness with Dynamics 365.
• Peet’s Coffee meets market changes with Dynamics 365.
• PepsiCo uses Azure Machine Learning to identify consumer shopping trends and produce store-level actionable insights.

¹Gen Z is flocking to buy now, pay later to beat inflation, ModernRetail.

²Loyalty Deciphered—How emotions drive genuine engagement, Capgemini Digital Transformation Institute.

The post Building brand loyalty and how data can guide you appeared first on Microsoft Industry Blogs.

Fashion apparel companies see this same trend and are thinking deeply about opportunities to increase circularity and resale, reduce waste and items that end up in landfills; as well as the overall impact of clothing, footwear, and accessories manufacturing on the planet—from carbon emissions to water usage, and from ethical sourcing to fair labor practices. 

The recent New York Fashion Act¹ presented in the New York state legislature is spurring apparel retailers to accelerate their actions on these issues, as well as plan for greater consumer transparency through sustainability impact product labeling. And as the European Union may go even further in requiring supply chain sustainability and transparency², fashion retailers must act now to avoid potential fines and reputation risk. 

The takeaway is clear: Being thoughtful and transparent in addressing consumers’ interest in sustainability is both a necessary and sound business practice. The challenge and opportunity, however, is in how fashion manufacturers and retailers can go about reducing environmental impact and increasing transparency.

The challenge of sustainability impact tracking and reporting

As consumer demand and government regulations are rapidly evolving, apparel companies are trying to adapt and accelerate their sustainability initiatives. One of their key challenges is best encapsulated by the old adage, ‘what gets measured, gets managed.’ The apparel industry, among others, employs complex supplier networks whose data has largely not been digitized, so just measuring and benchmarking is a challenge—let alone reducing and optimizing.

If we look at an example from the intricate fiber supply chain, a single garment might contain cotton from India, which is then shipped to Vietnam where workers sew it into a blouse, then put aboard a ship for transit to Los Angeles, and finally delivered by truck to its destination. Every step of the journey presents an opportunity to capture and optimize environmental impact. But gathering data at each of these points remains elusive.

Traditional data collection mechanisms like manual inspections, supplier surveys, or spreadsheets are error-prone and can’t scale. These disparate and often manual data sources hinder a company’s efforts to improve sustainability. The information they need to affirm a garment has taken an environmentally-friendly path is hard to gather, organize, and validate.

Data latency also is a problem—by the time a company collects relevant information, it may already be out of date. Environmental impact information must be gathered as close to the source, in as real-time as possible, and be consistently reported, clearly presented, and easily understood—something well beyond the reach of many apparel suppliers, manufacturers, and resellers.

A better way to collect data

Finding ways to digitize and streamline timely data collection, and implementing tools to synthesize and analyze this data to produce actionable insights can make a significant impact in helping the fashion industry meet sustainability goals. Cloud applications and services can help make this possible. 

At Microsoft, we work with companies all over the globe to meet just these types of challenges—helping industries from manufacturing to retail to automotive gather better data on their supply chains and operations, improve manufacturing efficiency, and perform deep analytics on varied and complex data.

But we must also continue innovative thinking on how to digitize supply chains and suppliers to understand their impact. Farmers, for instance, could use sensors embedded in the soil to measure methane output. Ships and trucks could provide automated reporting on their fuel consumption and carbon emission. And manufacturing plants could use IoT devices to track their electricity and water usage, and waste output.

How the Microsoft Cloud for Sustainability can help

Here at Microsoft, we are committed to helping all companies reach their sustainability goals. The Microsoft Cloud for Sustainability can help apparel manufacturers on their path to more sustainable production by automating data collection, analysis, and action—enabling companies to more effectively record, report, and reduce. And beyond sustainability initiatives, Microsoft is also working with retailers to help them maximize the value of their data, elevate shopping experiences, build real-time and sustainable supply chains, and empower store associates—all through the Microsoft Cloud for Retail.

In today’s world, sustainability is everyone’s concern. I know it’s top of mind for me, every day. At Microsoft, we want to help empower the fashion industry to win the loyalty of consumers who see sustainability as an important part of their purchasing decisions. Now is the time for apparel manufacturers and retailers to engage consumers, take action to improve environmental impact, and showcase their commitment to a better planet.

¹Senate Bill S7428, New York State Senate website.

²“Companies in the E.U. could be held liable for violations along their supply chain,” The New York Times. February 22, 2022.

The post Fashioning a more sustainable future: Transparency and consumer labeling in apparel manufacturing and retail appeared first on Microsoft Industry Blogs.

We all want to be more sustainable in our day-to-day lives, as consumers and businesses. In fact, I typically consider a new brand or product specifically because of its sustainability practices. And I know I’m not alone. Many of my friends and colleagues share that they like to learn about a brand’s sustainability practices before they buy it for the first time. Being thoughtful about how your company addresses these seven sustainability initiatives can lead to better business, and help you build a brand with purpose.

1. Meeting consumer expectations—better for me, better for the planet

We’ve all heard the old adage that the customer is always right! Here it’s consumers asking retailers and consumer goods companies to produce products that are better for me and better for the planet. Whether it’s with healthier snacks and alternatives to meat or sugary drinks; or clean beauty products and vitamin supplements, we’re seeing transformation across a wide array of product portfolios and assortments. We’re also seeing increased interest from consumers for “green” labeling—transparency to make the most sustainable choice—products that have been made with the least impact to the earth.

2. Carbon, water, and waste measurement and reduction

For many retailers and consumer goods, there’s a concentration of carbon emissions, water usage, and waste produced in the manufacturing and supply chain processes. So many are looking for opportunities to improve measurement granularity and timeliness—whether from farms, factories, or fleets—to understand baseline metrics, set corporate, divisional, or product line goals, and improve them over time. The Internet of Things (IoT) sensors and real-time measurement can be the key to meeting sustainability goals.

3. Sustainable and transparent sourcing

The ingredients or raw materials used to produce the products we know and love are often the not-so-secret ingredient to a sustainable product. Whether it’s sugar, dairy, cocoa, coffee, fish, cotton, or leather, a raw material or ingredient’s origin is becoming as critical to the consumer selection process as the caloric content or fit and finish. More and more retailers and consumer goods companies are investing in sustainable farming, forestry, fishing, and sourcing to ensure a quality (and traceable, transparent) supply will be available for years to come.

4. Improved demand forecasting for less waste

It seems obvious, but if you can order or produce the right amount of an item or product, you’re likely to have less wasted materials or inventory that ends up in landfills. But accurate demand forecasting is challenging in the best of times, with shocks to loyalty, supply chain constrictions, and demand spikes brought on by the pandemic, it’s become increasingly elusive. Several companies have emerged to apply sophisticated artificial intelligence (AI) to improved forecasting and even markdown optimization to reduce food and product waste.

5. Re-commerce

What’s better than buying something once? Buying it again! Only it could be a neighbor enjoying the experience the second time around. While resale of gently used products has been a mainstay for some time in categories like electronics and sporting goods, it’s quickly becoming popular with fashion, accessories, and home furnishings. Re-commerce extends the life of a product, reducing its overall carbon footprint, but also prevents items from stacking up in landfills. But challenges with reverse logistics have long plagued retailers, who now need to maintain even greater traceability of the product’s full lifecycle to ensure the authenticity of resold products.

6. Sustainable and re-usable packaging

We’re all accustomed to paper and plastic packaging for most household products. Many retail and consumer goods companies are innovating with more recyclable and sustainable packaging and shipping materials. But what if containers and dispensers themselves were re-usable, not just easier to recycle or compost? And better yet, IoT-enabled to understand consumption patterns and trigger re-ordering? Having the product you need, with a lower environmental impact sounds like a win-win. Especially if re-usable dispensers can facilitate shipping refills with lower water content or packaging.

7. Green buildings and remote work

As we all shifted to remote work through the pandemic, retailers and consumer goods companies are realizing new ways of promoting engagement and productivity even remotely. Remote work and meetings can have a meaningful impact on the carbon emissions related to business travel. And as workers return to office buildings, stores, and warehouses, there’s new and renewed focus on green buildings and energy saving technologies like IoT command and control solutions that can monitor energy usage in real time and provide reduction recommendations.

Sustainability has been steadily rising to the top of the priority list for consumers. The ongoing pandemic has reminded our society that humans can be out of touch with their environment and the importance of re-establishing a healthy balance. Retailers and consumer brands have the opportunity to engage consumers while they are in this mindset—start sharing your goals, taking action on them and promote your progress. There’s a valuable audience waiting for your voice, and they want to hear it more than ever before.

The Microsoft Cloud for Sustainability, announced in July 2021, provides comprehensive, integrated, and automated sustainability management for organizations at any stage of the sustainability journey. It’s designed to streamline the process for businesses to collect data, analyze data, and turn insights into action. The Microsoft Cloud for Sustainability will enable you to more effectively record, report, and reduce your emissions on a path to net zero, with future to support water and waste tracking.

Go to Microsoft.com/sustainability to sign up for ongoing updates. Also, visit our website to learn more about how Microsoft is enabling consumer goods organizations to achieve more and to discover how Microsoft Cloud for Retail brings together different data sources across the retail value chain and uniquely connects experiences across the end-to-end shopper journey.

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What is a micro-fulfillment center?

Micro-fulfillment centers (MFCs), are small, tech-enabled warehouse facilities built near consumers—sometimes even within stores. They allow retailers to analyze inventory trends and quickly pivot to meet the market’s changing demands. Many retailers are evolving to a hub-and-spoke distribution model, where existing distribution centers serve as hubs and smaller outlets in closer proximity to consumers act as the spokes.

Learn more about Microsoft’s vision to reimagine retail with Microsoft Cloud for Retail.

Trends driving MFC adoption

With same-day delivery becoming table stakes in the e-commerce experience, micro-fulfillment centers may be the key to helping retailers succeed in the face of ever-increasing consumer expectations. A typical MFC can be as small as one-third the size of a typical supermarket but can also scale up quickly. MFCs optimize space by strategically stacking goods and leveraging robots for product retrieval, thus reducing labor costs, and increasing fulfillment throughput. And by bringing fulfillment centers closer to the end consumer, retailers can better manage their inventory and more effectively sell perishable products through their online channels.

Let’s look at some of the retail trends driving the adoption of micro-fulfillment centers:

1. Last-mile delivery

Traditional and manual fulfillment processes are struggling to keep pace with the rising demand for fast delivery or curbside pick-ups. Last-mile delivery plays a significant role in the overall logistics ecosystem and accounts for a significant cost. MFCs can leverage artificial intelligence (AI) to direct online orders to the optimal fulfillment location and use automation at various stages, from sorting to packing to last-mile delivery, to significantly speed up the fulfillment process and help reduce costs.

2. Dark stores

Dark stores are traditional retail outlets that have been converted to local fulfillment centers. As e-commerce adoption is accelerating, and in-store customer visits are decreasing, retailers are increasingly considering converting a percentage of their stores to dark stores. Stores already equipped with refrigerated and frozen sections can help meet increases in cold supply chain requirements to fulfill online grocery orders. MFCs in dark store locations can also fulfill all-important impulse purchases, made when orders are picked up.

3. Changing product assortments

As the volume of groceries being purchased online increases, grocers are facing a new challenge: managing dry goods, refrigerated, and frozen inventories. Because MFCs are hyperlocal, they can improve inventory storage and management, as well as manage unique assortments in each location. Furthermore, the combination of connected devices and fulfillment automation enables retailers to track inventory and shelf-life in real time. MFCs are well-suited for using predictive technologies that can help keep in-demand items stocked while limiting losses on perishable items.

MFCs are poised to transform the retail landscape

With consumer demand shifting to online shopping, and likely to continue to take brick-and-mortar traffic, utilizing MFCs in operational or dark stores can help retailers transform to meet changing consumer needs. Using efficiency-boosting technologies such as connected devices, robotics, and automation can lower costs, increase agility, and enable faster last-mile delivery. Additionally, automated systems can reduce the reaction time between supply chain trends, product demand, and product availability, including disruptions.

Meet a Microsoft partner who can make it happen

Attabotics is the world’s first 3D robotics supply chain system for modern commerce. Inspired by the framework of ant colonies, Attabotics replaces the rows and aisles of traditional fulfillment centers with a patented, highly scalable storage structure and robotics shuttles utilizing both horizontal and vertical space, reducing a company’s warehouse needs by up to 85 percent. By empowering retailers to place fulfillment centers near high-density urban areas, Attabotics can improve the speed of delivery for customers and reduce costs associated with local fulfillment. With an increased demand for online ordering, retailers are looking for alternatives to third-party grocery delivery providers to drive brand loyalty and control the delivery experience for their consumers. Attabotics’ fast time to implement and cost-effective system tools give retailers what they need to compete and survive in a dramatically shifting market.

Discover how Microsoft Cloud for Retail helps connect your customers and data to provide seamless experiences across the shopper journey.

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The retail landscape has changed dramatically as the COVID-19 pandemic has forced store closures and brought about new consumer needs. Both online purchases, as well as requests to pick up purchases in-store (BOPIS), have experienced high growth rates from February 2020 to April 2020. And the Forrester Q1 2020 Omnichannel Panel Survey recently revealed that 79 percent of retail and brand professionals surveyed have implemented or have plans to implement ‘buy online, pick up in-store’ by the end of 2020. Retailers will have to rapidly evolve their technology and operations to meet this new demand.

There are three key areas retailers must master to meet the growing popularity of contactless shopping and curbside pickup: e-commerce and distributed order management, in-store picking and coordination, and preparing for multi-modal operations.

E-commerce and distributed order management

The COVID-19 pandemic has confirmed that retailers must have a digital relationship with their customers, and offer online shopping and transaction capabilities. But to enable BOPIS, a shoppable website with the ability to capture this demand must be coupled with distributed order management capabilities to allow for fulfillment of merchandise from store or warehouse locations. This can be a challenge for many retailers who may either have different packaging or SKUs for in-store and e-commerce merchandise, or who have traditionally managed their e-commerce inventory as a separate store. Step one for many is the process and technology transformation needed to drop orders to stores for fulfillment. But as in-store inventory levels are constantly changing (and historically inaccurate) based on customer in-store purchases, accurate and integrated real-time inventory will be increasingly important.

In-store picking and coordination

This step in the process could be the Achilles heel for many retailers, as it requires people, process, and technology to effectively come together to execute. For many years, retailers have focused their operational efforts on how to optimize getting inventory on the shelf with speed, efficiency, and one-touch. Now, as BOPIS requires speed, efficiency, and one-touch operations to pick inventory off the shelf, it has presented store operations leaders with new technology and process challenges.  Technology that can queue orders, map optimized picking routes based on store layouts and planograms, and assign tasks to appropriate in-store associates can all facilitate the needed changes to store-operating procedures. Increasingly, retailers are considering reserving some of their locations to be “dark stores”—stores that are not open to the public, but only for associates to pick and pack merchandise for pickup or delivery. This allows for greater optimization of inventory storage, order assembly areas, and even parking lot and drive-thru pick-up zones, and makes the implementation of autonomous (micro-fulfillment centers) or even semi-autonomous (robotic) picking solutions easier to manage if the space is not shared with shoppers.

Preparing for multi-modal operations

And finally, as retailers master digital transactions, multi-channel order fulfillment, and in-store picking, their next opportunity is to anticipate consumer demand for agility in fulfillment modalities.  While contactless curbside pickup may be the consumer’s choice today, in the future, their needs will likely diversify and their next request could be delivery to a locker for around-the-clock access and pickup, either at the retailer’s location, or another centrally located destination; and of course home or alternate location delivery will continue to be the fulfillment mode of choice for many consumers. This also creates a new opportunity for retailers to fulfill same day and next day at a potentially lower cost, assuming stores will be in closer proximity to the customer than typical distribution or fulfillment centers. The frequency and density of orders will likely determine if this can be a more cost-effective fulfillment model than shipping from warehouses.

They say necessity is the mother of invention, and certainly we have seen the unique shopping and fulfillment requirements the COVID -19 pandemic has placed on retailers and consumers. Focusing on e-commerce and distributed order management, in-store picking and coordination, and preparing for multi-modal operations can help retailers meet these unique and evolving challenges.

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