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A RETAIL PERSPECTIVE

THE SYNTHESIS OFDIGITAL AND PHYSICAL

INTRODuCTION

Customers are more empowered than ever before. They have huge reach and influence through social media, more options and choice of what to buy, when to buy, how to buy and who to buy from with higher levels of customer service expectation. On top of this, they are using that power to fundamentally alter the experience they receive from retailers. Customer experience is not just the transactional process, but every step that helps customers make a decision.

At Microsoft, we have a unique perspective on how these challenges can be embraced by retailers to not only improve your customer’s experiences, but also those of your employees. Our heritage is digital, but as our ecosystem evolves, so too have we, with the advancement of Xbox, Kinect and more recently Bands and Stores. Today, Microsoft operates over 100 retail stores worldwide, creating closer connections with customers and enabling them to experience new technology in an immersive way.

The insight we have gained from the considerable time we have spent with retailers and our shared customers has allowed us to create a vision of how a retailer could differentiate themselves in a crowded marketplace.

Our aim is to share with you those ideas and work with you to deliver highly impactful change to your organisation within a few months rather than a few years. We have an approach that will help us envision whilst still delivering experience enhancements quickly, both inside and outside of your organisation. Our approach to application and service design is to focus ruthlessly on the user experience through interviews and observation work. Only when we truly understand the user’s needs and context can we hope to deliver a credible solution.

We want to work together with you, in partnership, to consider the perspective shared within this brochure and deliver amazing experiences to your customers.

CONTENTS

INTRODUCTION

WHAT ARE WE SEEING?

THE DIGITAL, PHYSICAL SYNTHESIS OF RETAIL

WHAT COULD IT LOOK LIKE?

GETTING THERE

A RETAIL PERSPECTIVE

THE SYNTHESIS OFDIGITAL AND PHYSICAL

WHAT ARE WE SEEING? INCREASINGLY FRAGMENTED CuSTOMER JOuRNEYS

It is well recognised by the retail industry that joining up the customer experience across different modes of interaction can help shift the conversation with a customer from a commodity transaction to an experience. Retailers are beginning to focus more on a customer’s needs, goals and aspirations across multiple channels as a means of differentiation, understanding it is as much about the physical assets as it is about the digital ones.

And yet, all too often this journey is one that most customers have to navigate for themselves, using their own precious time to make the system work for them...

A truly personalised experience continues to elude most retailers and any ambitions of a more personal, engaging and proactive experience are generally considered impossible to deliver within current typical infrastructure of disconnected stores, systems and online assets.

How customers experience a business is no longer a linear experience involving one organisation and a single channel. There are many touch points and influence points on the customer journey.

TRANSACTIONAL POINT-IN-TIME FOCuS

A typical retailer interaction with a consumer is often limited to the transaction at the point of purchase, where the customer journey intersects with the product lifecycle.

The potential sphere of influence that a retailer could have over a customer’s end-to-end journey presents an untapped opportunity to differentiate throughout the lifecycle, exploiting a larger number of opportunities to land brand advocacy and loyalty.

The product journey also presents an opportunity to better communicate its development from conception to market, specifically through its formative design stages to prospective customers.

ONLINE FATIGuE

The increasing use of mobile devices, the rise of social media and high bandwidth connectivity has fuelled consumer desire for instant access to services, regardless of time, location or device. On top of that, the online purchasing process has grown increasingly complex with the explosion of choice. Your customers get inundated with recommendations and are overloaded with price-comparisons and it’s leading to online fatigue.

PuRCHASE

Looking for the answer

DELIVERY uSE

Seek personal and external validation

MAINTENANCE

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consumables, etc

DISPOSAL

Scraping the last from the bottle

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DIGITAL PHYSICAL SYNTHESISWEAVING ONLINE INNOVATION WITH IN-STORE AND VICE VERSA TO ENVISION A NEW AND DIFFERENTIATED RETAIL ExPERIENCE

A Retail Perspective - The Synthesis Of Digital And Physical

NEW ExPERIENCESThe digital physical synthesis is liberating customers; they’re experiencing stores both virtually and in reality in ways that are sympathetic and compelling. For them, the edges of real and virtual maybe transient, but high-value experiences are engaging them relevantly.

The right experience at the right time that drives to meet the customer’s desired outcome, blurs the edges between physical and digital, and brings well known constructs from one to the other in ways that provide both a sense of familiarity and the potential to create engaging, relevant and deeply personal experiences. This relentless quest will also force the edges of traditional organisational boundaries to be questioned, explored and broken down – new partnerships, business models and ecosystems will emerge as the consumer comes to terms with - and learns how to - best exploit this renewed focus on them.

Some progressive retail-chains have invested in the IT required to realise the change, embracing the ecosystem, realising the influence of a network and joining up the customer journey. In their stores you won’t find a coercing sales assistant on a customer’s heels. Now you will be met by a likeable expert: a store associate who, tablet in hand, gives real-time product information, facilitates engagement and leverages his or her customer’s data.

Goods producers and retailers used to have a big say about pricing and distribution matters. With the web came candid reviews, honest price-checks and social media. Today power is being removed from retailers and handed to customers; they have more control over purchases and from where they source. So there’s never been a more crucial time to seize and retain your customers’ attentions.

Our vision at Microsoft is the digital physical synthesis of retail. These new perspectives are informed by the success of Microsoft Stores and today’s digital democratisation. We embrace the shopper-centric reality and are uniquely positioned to help you identify the experiences your customers desire and make them a reality.

Friends have reviewed or favourably rated a product.

You’ve already purchased this top online.

You’ve checked into a sushi restaurant in a city.

In-store suggestions that the customer might like or be interested in this product as it is endorsed or approved by friends.

Location-based suggestions for other highly-rated sushi restaurants.

In-store display uses this knowledge to suggest matching skirt in the correct size.

NEW CONSuMER ExPERIENCES Consumers are able to benefit from the best of the digital conveniences now taken for granted with their continuing desire to experience retail physically in an integrated and seamless way.

Personalisation at scale means that every interaction is built upon the unique profile and data that the consumer has chosen to share, preferences, predictions and trends all come together to create a uniquely personal and compelling set of experiences.

Those who are successful making this a reality for their customers will benefit from increased loyalty and advocacy, increasing their market share and stealing the innovation limelight from their competitors.

NEW EMPLOYEE ExPERIENCES

The employee experience within your organisation is a critical focus area, potentially as important as that of your customer. Typical IT solutions and their associated user interfaces are rarely designed around the end user, their needs, expectations and working environment. Instead, they often offer a generic user experience which can lead to usability challenges, extensive training and in some cases manual processes replacing the use of the solution.

With the advent of a modern, well-architected solution that presents itself as a series of services there is an opportunity to produce highly specialised, simple, task focused modern applications to bring together the key information required to perform a task and simplify its completion. These new modern applications can be deployed across a broad

range of devices and form factors which leverage common services and their data but with dramatically improved usability and effectiveness.

Applications can revolutionise store management, customer service, employee training and routine tasks such as shelf layouts.

benefits:

• Increase employee productivity & effectiveness

• Reduce or remove training requirements

• Free up time to spend with customers

WHAT COULD IT LOOK LIKE?AN EXAMPLE RETAIL EXPERIENCE

THIS FOLLOWING SECTION TAKES A FICTITIOUS CUSTOMER EXPERIENCE AND ADDRESSES SOME OF THE CHALLENGES DESCRIBED USING NEAR-TERM SOLUTIONS THAT COULD HELP MAKE A DIFFERENCE TO YOUR CUSTOMERS, EMPLOYEES AND ECOSYSTEM.

WHILST THE SCENARIO ITSELF MAY NOT BE RELEVANT TO YOUR BUSINESS, THE CONTENT AND THE APPROACH ARE INTENDED TO ILLUSTRATE HOW WE CAN WORK WITH YOU TO CO-CREATE A VISION THAT ADDRESSES YOUR SPECIFIC CHALLENGES AND THE MARKET NEEDS.

THE CUSTOMER: JACKjack has smashed his mountain bike’s front light — luckily it was old anyway. He’s keen to get the most out of LED technology now that he’s got to buy a new one. jack is ‘always-connected’ and needs fast answers to his queries. He is used to retailers replying through live chat, SMS, 24-7 hotlines and all forms of social media. He wants to use the insights from his network to help with his decision-making through experiences and recommendations of friends and family.

jack posts a picture of his smashed front bike light on Facebook and ‘Likes’ one or two sarcastic comments. Determined to find the best high-powered light he can afford, he picks up his tablet and begins to search...

INITIAL SEARCH

Jack scans his search results and opens his Product Hub; it presents him with bike accessory reviews and prices. This aggregated view of products is presented in order of relevance based upon Jack’s previous shopping search and purchase history.

LOCATION bASED LOYALTY PRIVILEGES

Driving the next morning, Jack’s phone alerts him — he’s close to a branch of the sports chain. His ‘wish-list’ lights are in stock. He taps the ‘drive to store’ command. Jack’s app tells the store that their customer’s on his way. Since his phone has previously been registered with the chain, its retail personnel are alerted. The store ‘knows’ that Jack is a loyalty club-member and reserves him a parking bay.

PHYSICALLY IMMERSED

On entering the store, a proximity app prompts Jack to ‘check-in’. It shares a photo of this morning’s ‘bike’ store associate. The app’s reality view shows the location of ‘bike accessories’. An augmented reality view of the store is presented to Jack on his phone, he is shown where in the store the lights are located as well as where he can find relevant related products.

DIGITAL ENGAGEMENT IN THE STORE

As he’s guided through the store, Jack’s product user-interface notifies him of an in store offer on reflective bag-covers. He taps that he’s interested. The app then displays the two lights he was comparing along with their demo pics. The price-comparison is updated — one light has come down in price since yesterday.

PRO-ACTIVE CuSTOMER SERVICE

Jack glances at what is now an app combination of his augmented reality view of the store and product comparator to review his selections. Meanwhile, Rob; store associate on ‘bikes’, greets Jack and hands him the reflective bag-cover he’d shown interest in earlier.

MObILE POINT-OF-SALE

Jack and Rob discuss the pros and cons of LED bike lights. Jack decides to buy the more expensive of the two along with the bag-cover. Jack puts his debit card into Rob’s mobile point-of-sale device; it takes into account Jack’s loyalty club-membership and auto-updates accordingly.

SOCIAL IDENTITY AND CONTExTuAL APPS

He taps a link. It opens on his favourite sports chain’s site. Because he’s already a customer, Jack gets logged-in with one of his social network identities. His start up experience is then enhanced by the search context and his view is refined with the competition’s bike accessories, reviews, ratings and price-comparisons.

DIGITALLY COMPARE THE PHYSICAL

Recommendations from his social networks appear amongst the high-power lights, and Jack picks two to compare. Better than a bullet-by-bullet list, photos appear that compare the way different LEDs illuminate a trail. Alongside are some crowd-sourced videos of the bike lights in action.

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THE STORE MANAGER: ROBMeanwhile in a side office, store manager Rob searches through his dashboard home page. He is presented with a wide selection of apps providing him and his sales team with crucial information about the operations and management of the store. From here Rob can also plan, create and adjust store virtualisations, including window-dressing and shelf-layouts. He can provide feedback on what does and doesn’t work from his laptop or tablet.

GRAPHIC OVERLAYS

Jane can use her product interface’s graphic overlays to check that her shelf displays are properly arranged and she has all the latest products and offers in prime position.

AT HER FINGERTIPS

Jane has been asked to attend to the VIP that has entered the store. With all the customer’s previous purchases and buying habits available to her she is able to provide a better experience with tailored product recommendations and ease of shop by having the purchases delivered straight to her home.

STATUSES, TASKS AND ACTIVITIES

Rob takes a closer look at his home page. His operations and management apps includes statuses, tasks and activities for any particular day, week, month and year. And no matter what he’s working on, it brings urgent alerts to the fore.

STAFF ROSTER

A store associate has just pressed an alert on her tablet at home. She’s too sick to join today’s shift. She was also tonight’s designated first-aider, so Rob taps his staff roster to see who else is trained that could cover her.

VIP CuSTOMER ALERTS

A VIP customer has just entered the store and ‘checked in’ alerting Rob of her arrival. Rob is able to see who he has on the shop floor today and direct the most experienced associate to help her.

THE STORE ASSOCIATE: JANEStore associate jane’s dashboard allows her to dispense advice, offers and recommendations. She can keep up to date with training requirements, new product information and any changes to the store layout she should be aware of.

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THE CATEGORY MANAGER: MILES

Miles is the sports chain’s category manager. He often works from head office and regularly keeps in touch with the branch store managers. Using his dashboard, Miles keeps tabs on what’s being sold, what’s being returned, social trends and future predictions of trends and seasonal designs.

THE IN-STORE DESIGNER: PAM

Pam takes her design inspiration from many different environments, so it is key that her dashboard allows her to design and innovate, regardless of location. Leveraging the collective knowledge of the sports chain, she can take an idea from its conception all the way through to production.

MANAGEMENT REPORT

Miles and his team are preparing a monthly management report for his stores. They use the online template to collate base information, highlights and trends across the departments.

AGGREGATED VIEW

Before lunch, Miles does a final check-through. His dashboard allows him (and his sales colleagues) to annotate product information with his own comments and buying insights. He taps ‘publish’ and the report arrives on the tablets and other devices of every manager, board member and director.

HOLIDAY INSPIRATION

Pam came up with one of her themes for next year’s sports apparel collection whilst on holiday in France. Using her dashboard, she created a design mood board of photographs, her scamps and some screen-prints she’d found on the internet.

CROWD SOURCING IDEAS AND FEEDBACK

Via Lync, Pam shares her ideas and gives people the opportunity to contribute and comment in near time.

REAL TIME CO-CREATION OF DESIGNS

Following feedback Pam was able to adjust her designs, explore suggestions and accelerate the time to get her new collection into the store.

INSTANT SHARE

Lauren, a member of the board, reviews the reports on her tablet at home before making her way to the meeting.

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MICROSOFT STOREMicrosoft operates over 100 retail stores worldwide to create closer connections with customers and let them experience new technology in an immersive experience.

MODERN POINT OF SALE

One thing you won’t find in a Microsoft Store is a checkout. All transactions are performed by employees on a mobile device anywhere in the store.

RAPID DELIVERY

The Microsoft retail team configured Microsoft Dynamics AX for Retail and performed the implementation with all necessary integrations within three months which includes deployment, testing, integration, and user training,.

DELIVERED CAPAbILITIES

• Retail business functionality, such as point-of-sale (POS) features, item file management, inventory management, pricing control, and targeted promotions.

• Store management capabilities to facilitate transactions, resolve customer issues, and keep in-demand products available.

• Comprehensive reporting to assess and direct the sales performance of stores, product lines, and associates.

• Customer relationship management tools to provide a full view of customers’ purchase histories, preferences, and engagements with the Microsoft Store online and in the physical locations.

• Integration with functionality of critical importance to the customer experience, including surface and tablet computing, cell phone activation, warranty tracking, and service management.

• Integration with SAP, the legacy corporate system at Microsoft, which was to be used for finance management.

MICROSOFT STORE

http://www.microsoftstore.com

MICROSOFT STORE CASE STuDY

http://aka.ms/StoreCaseStudy

In order to fully understand the challenges and highest priority requirements with each of our retail customers a period of research will be undertaken.

This will include time spent with all key staff across the company to perform observation and start to refine the Digital Physical vision.

In addition, technical research to understand existing systems and data management will be performed to ensure any proposal is grounded with the operational realities present today.

RESEARCH

Business

Technology

Experience

Industry trends

Qualitativeresearch

Quantitativeresearch

Ongoingexperimentation

Explicitneeds

Latentneeds

Uniqueinsight

Newpotential

ENVISION

DESIGNPROTOTYPE

RAPID, ITERATIVE, RESEARCH-bASED DESIGN

Our Design-led transformation and innovation approach combines best practice business, technical and experience design into a Research, Envision and Design methodology.

buSINESS OuTCOME DRIVEN

Starting with business aims, we research end-user needs, technical systems, and business opportunities to craft propositions that are innovative, engaging and viable.

uSER-CENTRED RESEARCH & DESIGN-LED

Our user research specialists elicit end-user needs and motivations, translating them into design briefs for designers and developers. We conduct in-situ interviews to elicit the real-world requirements and go back to end-users when we have conceptual designs.

TECHNICALLY INNOVATIVE

In parallel with user research and design, technical specialists research the existing and potential technical landscape, requirements and opportunities. Undertaking technical proofs of concept to prove out step change propositions for the business.

AGILE & RAPID, ORGANISATIONALLY VIAbLE

We work closely with the range of organisational stakeholders to identify and prioritise the most impactful scenarios, and feed those priorities into a programme of agile, rapid development waves to yield value back to the business as quickly as possible.

ENVISIONING THE FuTuRE AS WE buILD FOR TODAY

The focus is on delivering tangible benefit into the hands of users and customers in weeks rather than months. Each release builds towards the overarching vision which can be adjusted to respond to changing priorities and new opportunities.

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WHY MICROSOFT

The heritage, depth and range of Microsoft’s devices and services is unique, and leveraged when we work with our customers to help identify new opportunities.

WE DESIGN CONNECTED ExPERIENCES

In a world of devices and services we build and deliver connected solutions across all channels, ranging from single purpose apps to the most complex technical engagements.

We provide effective use of existing assets, platform modernisation, and breakthrough experiences. We deliver them through the research, envisioning, and design of new products, services and experiences.

WE CONNECT CONSuMER AND ENTERPRISE

Bringing the experience and breadth of our consumer, commercial and enterprise business to your business is an unparalleled opportunity. We’re able to connect service promise to tangible value.

WE DELIVER AND SuPPORT

We deliver digital services to businesses large and small, in accelerated timeframes and on budget. From desktop deployments, to private clouds, to hosted Collaboration through to CRM and ERP services. We provide proactive and reactive critical support and management services, helping businesses optimise costs, reduce risk and increase productivity. This provides certainty for your mission with continuous improvement.

WE HAVE A MATuRE RETAIL SECTOR APPROACH

Retailers and brands need to invest in significant digital transformation to secure their futures on today’s technologies by creating personal, seamless, and differentiated customer experiences. Microsoft platform and partner solutions empower retailers and brands to thrive by optimising business operations for customer engagement, business insight, omni-channel, and enterprise devices.

MICROSOFT RETAIL AND CONSuMER GOODS SECTOR

http://aka.ms/IndustryRetail

DID YOU KNOW?

We’re talking to similar core audiences in consumer and enterprise segments. At Microsoft we have an unparalleled technology portfolio and a proven capability to deliver. We have unique insight, skills and expertise to Research, Envision, Design and bring engaging experiences to life like never before.

OuR ENGAGEMENT & REACH

• 800+ million videos streamed, on average, in Q2 2013

• Xbox subscribers are spending more than 300 million hours per month on video applications

• MSN reaches 45% of the global internet audience, 661 million

• Bing indexes over 2 billion Facebook status updates and 0.5 billion tweets a day

• Skype users spend up to 2 billion minutes per day using the service

• Our enterprise social network Yammer has over 8 million registered users

• Outlook.com has over 400 million active users

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