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Microsoft Industry Blogs - Australia

Written by Sonia Nazaretian, Sector Director – Retail & CPG, Media, Telco and Travel, Microsoft Australia

As Australian companies consider resuming activity, in light of continued progress and relatively low numbers of daily COVID-19 cases, many organisations have been exploring their comeback plan. Retailers in particular may be one of the first to shape the “new normal” globally, through innovation and partnerships around Artificial Intelligence.

What may this new normal look like? With customers increasingly more digital and mobile, Microsoft’s recent whitepaper “How Artificial Intelligence is powering Australian Retail in 2020 and beyond” showcases how data-driven retailers are raising the bar in terms of personalised service and new business models to meet new challenges.

The whitepaper offers business-focused insight and steps for success for Australian retailers embarking on their AI journey. This Australian-led research offers a comprehensive ecosystem perspective, based on the insights of 20 business leaders, to bring together global insights and best practices with local opportunities and issues. The whitepaper spans retailers, start-ups, tech partners, academics, analysts and advisories including Coles, Morrisons (UK), Harvey Norman, The ICONIC, LumaChain, Black.aI, Blue Yonder, Adobe, EY and Kellogg Business School.

The pace of change

In talking to many organisations over the past few weeks, what’s been most fascinating to see as businesses tackle the challenges of COVID-19 is the pace of technological change which is fundamentally transforming how they operate. Changes which can be underpinned by AI.

We’ve seen these changes in where and how employees work, along with changes to supply chain and the emergence of new business and customer service models. Retailers have faced drastic shifts in demand, mandated store closures and evolving customer needs, along with major health and safety concerns for their employees and customers.

McKinsey offers a framework which incorporates the five horizons that every executive should use to ensure an organisation’s rapid response, adaptation to change and reemergence in a position of strength.

The first horizon Navigate the here and now illustrates what we’ve seen – organisations setting up crisis response or nerve centres, along with protecting employees who are on the front-line day-in day-out. They are also emphasising customer safety, putting in place protective measures for social distancing.

At the same time, organisations are also reorienting the business to amplify digital. Here AI has a key role to play, with the AI in Retail whitepaper offering a deep dive into AI’s applications in Intelligent Supply Chain and Knowing Your Customer. These insights and key findings, drawing on real-world use cases, offer a way forward for organisations to emerge from the COVID-19 crisis well-placed to meet the challenges that lie ahead.

Organisations’ ability to move so quickly in response to the crisis has been impressive. In the context of a silver lining, this begs the question: do we need a crisis like this to make this step change in transformation? How can a change in our environment and therefore our mindset give rise to advancement and innovation with positive benefit, as organisations build their recovery plans to create a comeback plan and define strategies to shape the new normal?

Preparing for the new normal

In shaping the new normal, McKinsey encourages organisations to assess changes in consumer sentiment and behaviours which may stick post-crisis. This involves leveraging retailers’ most valuable assets – consumer behaviour data indicating commercial intent – and converting this data into actionable insights in order to deliver benefits to retailers, brands, suppliers and customers.

In the AI in Retail whitepaper, we spotlight how brands are putting digital at the centre of their relationship with consumers and ideating how to evolve products and services. This includes evaluating new business models and partnerships, while preparing and planning for the long-term network implications for stores and supply chain.

Organisations must put digital at the centre of their relationship with consumers with virtual connections at a premium. They must also ideate how to evolve products and services – including new business models and partners – while preparing and planning for the long-term network implications for stores and supply chain.

Digital transformation and Artificial Intelligence play a critical role in how organisations shape their culture, strategy and technologies in response. Areas which are starting to emerge include:

Rethinking social contracts: We’ve seen the federal and state governments play an essential and expanded role, organising the response and protecting people. This power shift transforms long-held expectations about the roles of individuals and institutions. There is an opportunity for business to consider the role it can plan in assisting government and communities in the way they shape product and service models. For example, when it comes to provision of essential supplies such as groceries and pharmaceuticals, how can a ‘one supply’ integrated system assist? Leveraging AI capabilities such as personalisation, predictive ordering and real-time fulfilment could become a vital engine to support vulnerable community groups such as the elderly, indigenous Australians and those in lower socio-economic demographics.

Defining the future of work and consumption: This crisis has propelled new technology across all aspects of life, from e-commerce to remote-working and remote-learning. In Asia, we have seen this through Alibaba DingTalk, WeChat Work and Tencent Meeting. In Australia, the optimisation of video and audio collaboration platforms such as Microsoft Teams and others has enabled front-line workers to engage in new customer service approaches which have the potential to become a permanent fixture. How can these tools enhance customer engagement pre, during and post-purchase in new and immersive ways to enhance loyalty?

Mobilising resources at speed and scale: Within weeks of the outbreak, retailers added new product and service models to support communities in need, with packages, products and new delivery models leveraging the thousands of displaced workers. How can the continued investment in new tools and AI – to map supply, demand and workforce re-allocation – deliver economic stimulus?

Implementing foundational changes like these involves a cohesive approach across strategy, culture and technology. Microsoft’s approach to working with clients and partners provides some useful considerations. It is important to focus on innovations which matter and are quick and easy to implement, and then make it real by empowering people at different layers of the organisation to contribute and implement AI responsibly.

This requires focused teams which understand not only what is possible, but also the pitfalls, and which work closely with consumer groups, government and regulators to safeguard your business and customers.

The AI in Retail whitepaper outlines the necessary basecamps to foster an AI ready transformation journey including Getting the Data, Creating a Sandbox, Scaling successful AI Pilots and Drive Autonomous Decision Making. Underpinning this approach is an absolute focus on responsible AI.

Learn more

AI is set to play a key role for retailers in meeting the challenges which lie ahead. To learn more about how we’re working with customers and partners, check out Microsoft’s “How Artificial Intelligence is powering Australian Retail in 2020 and beyond” whitepaper, along with the resources in responding to COVID-19 together.