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Microsoft unveils new GenAI, data tools for retail industry

The tech giant is adding industry-specific features in Data Fabric along with GenAI Copilots designed to better personalize shopping as well as aid frontline workers in real time.

Microsoft unveiled a Cloud for Retail update aimed at better enabling retailers to reach insights with data and develop personalized shopping experiences using generative AI.

The update includes industry-specific data tools in Fabric and Copilot templates in Azure OpenAI Service. In addition, it features the new Retail Media Creative Studio in the Microsoft Retail Media Platform and new Copilot capabilities in Microsoft Dynamics 365 Customer Insights.

Microsoft unveiled the new capabilities for the retail industry on Jan. 11 ahead of NRF 2024: Retail's Big Show, a convention for retailers in New York City that starts on Jan. 14.

Like numerous other data management and analytics providers, such as Databricks, Snowflake and SAS, Microsoft provides vertical industry versions of its capabilities. In particular, such suites are designed to help customers more efficiently deploy and operationalize its tools so they meet the unique needs of organizations in a particular industry, according to Mike Leone, an analyst at TechTarget's Enterprise Strategy Group.

Microsoft Cloud for Retail includes access to data products developed by the tech giant's partners, retail-specific connectors and applications, shopper and operations analytics tools, and industry-specific fraud detection capabilities.

"We're seeing a growing theme right now in the AI and GenAI space that's much more industry focused," Leone said. "It's about ramp-up speed and time-to-value. By providing a tailored approach to meet the unique needs of specific industries, customers can take advantage of features that are specifically designed for their industry, resulting in more efficient workflows and increased productivity."

Similarly, Doug Henschen, an analyst at Constellation Research, noted that the primary benefit of industry-specific clouds such as Microsoft's Cloud for Retail is to speed up the onboarding process and eliminate some of the customization organizations need to do to make general-purpose tools fit their needs.

"The idea is to accelerate the development of industry and customer-specific capabilities building on the general-purpose technologies available from the vendor," he said.

In addition to Cloud for Retail, Microsoft offers 12 other industry-specific versions of its tools, including Cloud for Financial Services, Cloud for Government and Cloud for Healthcare.

GenAI and analytics

In its product rollout, Microsoft noted that retailers are facing challenging conditions as consumers change their shopping habits.

One of the consequences is high turnover in store staffing. Another is a drop in brand loyalty.

To deal with the uncertainty, many retail organizations are increasing their reliance on analytics, including AI. In fact, a study commissioned by Microsoft and conducted by IDC showed that retailers average a return of $3.45 for every $1 they invest in AI.

As a result, Microsoft is adding more AI, including generative AI. to its Cloud for Retail.

A Copilot template now in preview is designed to help retail organizations build personalized shopping experiences -- mimicking what an in-person personal shopper provides -- for its customers.

Using OpenAI's GPT-4 through Azure OpenAI Service, the Copilot is trained on data that will allow customers to ask for and view products in natural language just as they would ask a personal shopper to collect items throughout a store that the consumer could experience before deciding whether to buy them.

Instead of clicking on a dropdown menu, consumers will describe their situation and ask for assistance. For example, they might type into a chat, "My child is starting Little League. Please help me find the right equipment," or "I'm attending a summer wedding. Please show me dresses for the occasion."

The Copilot will then query the data used to train the generative AI model that feeds the Copilot and respond with recommendations in natural language.

Meanwhile, the prebuilt Copilot can be embedded in a retail organization's current systems, including websites and apps, so it can be found and used by the retailer's customers.

A second Copilot is designed for retail store associates.

According to Microsoft's Work Trend Index, nearly two-thirds of frontline workers are excited by the promise of digital tools, but about one-third don't believe they're being provided with those tools.

A Copilot template now in preview that will be available on Azure OpenAI Service is designed to enable retailers to develop generative AI tools that will provide frontline workers with access to key data and other information within the flow of their work to fuel real-time decisions.

"I really like how these [Copilot] capabilities aren't just focused on the customers," Leone said. "Enhancing and personalizing the customer experience is, of course, critical. But there is a massive need to better empower associates and frontline workers in retail. They need -- and more importantly, want -- to use more effective data tools to improve productivity and efficiency."

Henschen, meanwhile, said that the introduction of generative AI capabilities in preview and not yet generally available continues a pattern established by Microsoft and other vendors in 2023.

He added that Google is expected to introduce similar retail-oriented capabilities during the retailer conference. Like those from Microsoft, most of the generative AI capabilities thus far unveiled by Google remain in preview.

"We have yet to see if any of these announcements will really stand out based on real-world productivity gains delivered and adoption realized once these features are actually generally available," he said. "General availability … is everything. We're still deep in the GenAI hype cycle, and the hype is wearing thin."

Beyond Copilots, Microsoft's Cloud for Retail update includes three new data tools in Fabric, which the tech giant launched in November 2023. It combines the capabilities of Power BI, Data Factory and Azure Synapse Analytics.

They include the following:

  • A retail industry data model now generally available that can be used to plan, design and develop data tools for governance, reporting, business intelligence and advanced analytics.
  • A connector to import e-commerce data from Sitecore OrderCloud -- a tool now in preview -- into Fabric in real time so users can act and react to customers as they shop.
  • Analytics templates such as "frequently bought together," which provide recommendations to retailers that they can use to upsell customers and optimize operations.

With Fabric still so new -- generally available for less than two months -- Leone noted that the capabilities introduced on Thursday mark just the start of Cloud for Retail tools in the new data management and analytics platform.

"I'm really excited to see where the new retail data solutions in Microsoft Fabric goes," he said.

Additional capabilities

In addition to the Copilots targeted at shoppers and frontline retail works, the Cloud for Retail update includes new Copilot features in Dynamics 365 Customer Insights aimed at helping marketers develop campaigns and other projects and the introduction of the Retail Media Creative Studio.

We're seeing a growing theme right now in the AI and GenAI space that's much more industry focused. It's about ramp-up speed and time-to-value.
Mike LeoneAnalyst, Enterprise Strategy Group

The copilot features in Dynamics 365 Customer Insights enable marketing teams to use natural language to describe the desired outcome of their project, to which Copilot will respond by generating a project board the teams can then use to manage their workflows. In addition, as projects progress, the Copilot can generate recommendations.

Meanwhile, the Retail Media Creative Studio, available in preview this month, is a tool in the Microsoft Retail Media Platform that will enable advertisers to auto-generate and edit creative materials using generative AI.

Taken in sum, Henschen noted that while the new capabilities in Cloud for Retail advance the platform, they don't represent significant innovation given that the capabilities mimic other capabilities within the Microsoft AI and analytics ecosystem.

"These are incremental, retail-specific twists on general-purpose capabilities for serving customers, helping employees and helping marketing creatives with GenAI capabilities," he said.

Eric Avidon is a senior news writer for TechTarget Editorial and a journalist with more than 25 years of experience. He covers analytics and data management.

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