As we enter a new year, the retail industry continues to evolve at the speed of AI. Walmart Chief Executive Officer Doug McMillon recently observed that generative AI’s comparatively short cycle times are helping his company learn and innovate faster to better anticipate customer needs.1 I’m energized to see the positive impact that the pace of AI innovation is bringing to the retail world.
This time last year, I was having conversations with retailers around the world who couldn’t wait to tap the seemingly unlimited potential of AI. For many of them, though, translating that promise into bottom-line impact took time. While many retailers were already deploying AI tools to drive increased revenue and reimagine cumbersome business processes, most were still figuring out where to begin and how specifically AI could help them gain an edge in the market. Today, the conversations I have are more sharply focused on identifying AI use cases that can help retailers grow revenue and increase profitability across the value chain. To achieve these goals, retailers are beginning to develop a rich agentic world marked by a vivid tapestry of AI agents. In addition to agents for app development, compliance, information security, and other broad, cross-organizational business process needs, retailers are already deploying custom agentic solutions to improve core retail scenarios, like shopping and store operations. A new era of AI is here.
Microsoft Cloud for Retail
Connect your customers, your people, and your data
This year at NRF 2025, we’re excited and proud to demonstrate how our data solutions, Copilots, and customizable retail agents are helping to lead this shift across every retail segment. We’re just as eager to showcase how easy we’ve made it for retailers to maximize the success of their AI investments on the Microsoft Copilot and AI stack—the most advanced platform for creating AI solutions that drive retail growth and profitability. Used by over 100,000 organizations worldwide, Microsoft Copilot Studio offers over 1,400 prebuilt plugins and connectors to integrate all of your data, APIs, and other third-party services. And with the unveiling of Microsoft Azure AI Foundry, organizations can simplify and scale their AI workloads with confidence. The same AI platform that we build our Microsoft Copilots on is now available to retailers. With the most versatile stack of AI development tools, we are committed to helping our customers push the frontiers of what’s possible with agentic retail and be ready for whatever the future may hold.
In short, our mission is to help our customers become Retail Ready.
What does it mean to be Retail Ready?
In today’s rapidly evolving retail landscape, being “Retail Ready” means more than just keeping up with trends. It’s about being forward-thinking and making smart technology investments with the power to grow the topline while improving the bottom line. Together with our partners, Microsoft Cloud for Retail provides AI that is built for the future, ready now. With our deep customer relationships and comprehensive partner network, we are uniquely positioned to help retailers across all segments find new value with AI. Our solutions enable retailers to transform the shopper journey, empower the retail workforce of the future, create agile, sustainable supply chains, and unlock the potential of their data.
Personalized Shopping Agent improves the shopping experience for consumers with a context-aware conversational assistant to help them find the perfect products for their needs. Store Operations Agent puts safe, company-governed generative AI in the hands of store associates so they can spend less time searching for product information or answers to store policies and procedures and more time helping customers. And retail data solutions in Microsoft Fabric give retailers the power to unify and enrich a wide range of retail data sources, enabling real-time, actionable insights.
To learn more about how Microsoft’s retail agents and AI solutions are helping customer become Retail Ready, read AI-powered retail: Elevating customer experience and operational efficiency.
Transform the shopper journey
In today’s highly competitive retail landscape, personalization has become the standard. Bain Consulting Group estimates that retailers can increase revenue by 5% to 10% through AI personalization tools.3 But the stakes can be high. As the technology becomes more common, customers are beginning to expect tailored experiences and reacting more strongly to ineffective personalization. To deliver the optimal customer journey, retailers are increasingly turning to generative AI-powered solutions that help them answer shopper inquiries, manage virtual shopping carts, tailor marketing and product recommendations, deliver enhanced search capabilities, elevate customer service interactions, and more. By engaging with customers early in their shopping journey, conversational commerce agents and other AI personalization tools are boosting customer satisfaction and driving top-line growth.
- A prime example of the success of gen AI-powered conversational commerce is Walmart’s integration of OpenAI’s GPT-4 into its voice order and Text to Shop features. This innovation allows customers to search for items, place orders, and schedule pickups or deliveries with human-like, interactive responses throughout the entire buying journey.
- Recognizing that up to 80% of tire purchases start with a visit to a retailer’s website, Canadian Tire Corporation built a conversational commerce app using OpenAI Service and OpenAI’s GPT-4. Named CeeTee, the app helps customers identify the right tires for their needs early in the shopping journey, increasing opportunities for conversion and boosting brand loyalty.
- Retailers like Natuzzi and Gardens Alive are leveraging Dynamics 365 Contact Center and Dynamics 365 Customer Service to transform customer service with generative AI. These solutions enable personalized customer journeys by answering inquiries, tailoring recommendations, and streamlining operations, creating seamless self- and assisted-service experiences that win customer loyalty.
- The Dynamics 365 platform is enabling gourmet chocolatier Venchi to deliver a personalized omnichannel shopping experience to customers and improve clienteling at the point of sale.
Join Kathleen Mitford, Microsoft Corporate Vice President of Global Industry Marketing on Monday, January 13, 2025 on the Big Ideas stage at NRF 2025 for Transform the shopper journey to learn more from Thilina Gunasinghe, Chief Digital and Technology Officer at Bath and Body Works, Fabio Tormen, Chief Information Officer at Venchi, and Kathie Johnson, Chief Marketing Officer at Sitecore.
Empower the retail workforce of the future
At Microsoft, we’re dedicated to developing AI tools that enrich the employee experience with the access and insights they need to deliver exceptional customer interactions. Whether through the use of our Store Operations Agent or through a custom partner-developed implementation, retailers now have the power to elevate their retail workforce, making them more agile and responsive to customer needs, and employees are ready for AI. The 2024 Work Trends Index found that 84% say AI helps them be more creative and focus on the most important work.2
I’m really excited about the unique and innovative ways our customers are deploying AI to empower their retail workforces. Here are a few notable examples:
- Swedish retailer Lindex custom designed its Lindex Copilot to understand store associate roles and responsibilities and provide tailored guidance that helps employees deliver contextually relevant and personalized support.
- With their custom ChatCTC employee digital assistant, Canadian Tire Corporation is saving its 3,000+ corporate employees 30 to 60 minutes a day, freeing them from mundane tasks to focus on higher-value customer experiences.
- Using Store Operations Agent, employees at leading Nordic retailer Kappahl can now use generative AI to securely surface product information and store policies and procedures in seconds, increasing store associate productivity and upleveling the shopping experience for customers.
- MediaMarktSaturn’s MyBuddy voice-navigated in-ear AI agent—developed in partnership with Accenture/Avanade and leveraging Personalized Shopping Agent—enables store associates to “shop” the store catalog for the best products for the customers. This solution boosts customer confidence and enhances employees’ product knowledge to make the most of conversion opportunities at the point of sale.
Join me on Sunday, January 12, 2025 on the Big Ideas stage at NRF 2025 for Retail ready: AI built for the future, ready now, to hear from Walmart and Aaron Berg, Vice President, Digital Transformation at Walmart, and Cari Covent, Head of AI and Emerging Technology at Canadian Tire about the opportunities and challenges for organizations bringing generative AI to their workforces.
Create an agile, sustainable supply chain
Reducing out-of-stocks isn’t the only way retailers can get ahead. Many retailers are discovering the benefits of a more sustainable supply chain, from increased customer satisfaction to growing supply chain resilience. Not surprisingly, Gartner finds top supply chain organizations are using AI to optimize processes at more than twice the rate of low performing peers.4
Let’s look at a couple of the top supply chain focused retailers using AI.
- The Netherlands’ largest grocer, Albert Heijn, set out to reduce food waste by (among other things) improving the efficiency and precision of its supply chain. Using generative AI tools that help food arrive to the point of sale at maximum freshness and dynamically discounting prices to encourage shoppers to buy before that food is no longer fresh, Albert Heijn is helping save more than 250,000 kilos of food from going to waste.
- SPAR ICS, the independent IT unit of SPAR Austria Group, created an award-winning, AI-enabled demand forecasting system. With the new system, SPAR Austria Group is optimizing its supply chain and achieving 90 percent inventory prediction accuracy.
- Leading Australian retailer Coles has launched a five-year strategic partnership with Microsoft to expand Coles’ world-leading edge computing platform, Intelligent Edge Backbone (IEB). Coles and Microsoft will co-innovate to explore how the IEB can connect and manage IoT devices across Coles’ supply chain and into stores to advance Coles’ sustainability goals, improve customer experiences, reduce stock loss, and boost team member productivity and safety.
Join Gina Claxton, Microsoft CVP, US Retail and Consumer Goods, Avanade, and 1-800-Flowers.com on Monday, January 13th on the Big Ideas stage for Selling roses: Avanade presents – the 1-800-Flowers story to learn how the business has flourished by staying agile and innovative, moving early to thrive in the .com era, and now doing the same in the AI age with the help of Microsoft and Avanade.
Unlock the potential of your data
For retailers seeking to understand their customers, it’s hard to overstate the value of a data platform that enables them to leverage all of their data while minimizing risk through robust security and governance. Gartner forecasts that through 2025, 80% of organizations seeking to scale digital business will fail because they do not take a modern approach to data governance.5 Conversely, the AI opportunities are seemingly limitless for the retailers who are able to unify and secure their retail data and turn it into customer value.
Here’s how some of our customers are using Microsoft’s data platform and AI solutions to unlock the potential of their data:
- The ASOS team is using Azure AI Foundry to develop custom AI solutions that pull and embed knowledge of trends as they surface, enabling them to curate and share items with shoppers based on a deep knowledge of the latest trends.
- Saucony optimized customer acquisition during Black Friday and Cyber Monday via a custom AI model developed in partnership with Yobi, leading to a strong surge in new customers in just weeks.
- With the help of the Microsoft Fabric data platform, Chanel is deploying generative AI securely for critical tasks like content creation, personalization, quality monitoring, supply chain management, real-time translations, and sales aftercare.
- Microsoft Azure’s suite of tools helped Brazilian retail chain Fast Shop prepare their data estate for AI transformation via improved data reliability, faster data delivery, enhanced data governance, security, and self-service access for its lines of business.
Join Keith Mercier, Microsoft Vice President, WW Retail and CG Industry on Tuesday, January 14, 2025 on the Big Ideas stage at NRF 2025 for The future of AI in retail to hear how Microsoft, Lenovo, and Intel are equipping customers and partners with the solutions they need to implement AI at the edge.
Eager to learn how you can become Retail Ready? Visit the Microsoft booth at NRF 2025 to see our AI demos in action, including hands-on experiences in the Copilot Agent Zone. And download Microsoft’s 2025 retail report The AI Advantage: How retailers are shaping customer experiences with data-driven insights, produced in conjunction with Cascade Insights.
Learn more
1 Yahoo Finance, Walmart is the 2024 Yahoo Finance Company of the Year, December 2024.
2 Microsoft, 2024 Work Trend Index Annual Report, May 2024.
3 Bain & Company, Retail and Gen AI: Now Scale Those Terrific Early Returns, May 2024.
4 Gartner, Gartner Survey Shows AI and Generative AI Top Digital Supply Chain Investment Priorities, October 2024.
5 Gartner, Choose Adaptive Data Governance Over One-Size-Fits-All for Greater Flexibility, April 2022.
Shelley Bransten, Corporate Vice President, Global Retail, Consumer Goods & Gaming industries, grew up in retail. She’s a passionate advocate for customers and works tirelessly to ensure they’re set up for success. During her time at Microsoft, she has overseen groundbreaking partnerships with leading brands and retailers across the globe. Shelley also sits on multiple boards including NRF, RILA, and Trove.
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