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NRF 2020: Microsoft CEO Satya Nadella Declares Era of ‘Tech Intensity’ for Retailers

The brands that build their own proprietary tech solutions will win the race for customers, he says.

Bob is the managing editor of BizTech magazine.

Retailers’ success over the next decade will hinge not merely on their effective use of technology, but also on their ability to build their own proprietary tech solutions to deliver differentiated experiences for customers and employees.

So argued Microsoft CEO Satya Nadella, speaking Jan. 12 to a standing-room-only crowd of executives, journalists and others attending the National Retail Federation’s Big Show in New York. To get there, he said, it’s imperative that retailers embrace a new era of “tech intensity.”

“What’s the proprietary technology that you can claim on your own?” Nadella asked. “What I always tell retailers is that you can’t be cool by association, by riding along with somebody else’s technology. You have to be cool on your own. You have to take pride in the digital capability that you have built. For us, our goal is to enable and empower you to have that tech intensity. It’s about helping you build your independence with IT — that’s our mission.”

The event, which has drawn a record 40,000 attendees to the Jacob K. Javits Center, is the industry’s annual gathering and kickoff to the retail year. It runs through Jan. 14.

Retail Should Use Data to Its Advantage

Nadella argued that the industry is sitting atop a huge trove of the most valuable information in the world — data about consumer interests, intentions, moods and actions. “Retailers generate 40 terabytes of data every hour,” he said. “And not just any data — it’s the demand signal for the world.”

But “intelligent retail” starts with knowing your customers, he said. “How do you use all that data, and how do you take digital technologies to the next level to empower employees, enable the digital supply chain and redefine the retail experience itself?”

Nadella highlighted several retailers that are deploying tech to reinvent themselves.

AI and AR Help Starbucks, Natuzzi Tackle Projects

For example, Starbucks has built its own AI technology, called Deep Brew, which is enabling it to automate its inventory process, better allocate staffing and deepen customer relationships. Starbucks CEO Kevin Johnson told analysts last year that the technology is vital to its efforts to build deeper relationships with customers, especially those in its loyalty program, for whom “spend increases meaningfully.”

“Deep Brew will increasingly power our personalization engine, optimize store labor allocations and drive inventory management in our stores,” Johnson said in November.

Another example, though less well known: Natuzzi, a high-end Italian furniture company with galleries and stores around the world, is using Microsoft HoloLens, a wearable augmented reality device, to let customers experience the company’s furniture inside their homes. The technology is currently in use at the company’s London store.

“We let them walk their home virtually showing our collection without boundaries,” explained Pasquale Junior Natuzzi, the company’s creative director and stylist, in a Microsoft news post. “The mixed reality system gives us an incredible opportunity to lower the stock and the inventory in our stores and increase the sales per square foot.”

Employee Tech Delivers Big Benefits for Retailers

Nadella said retailers must also focus on putting transformational technology in the hands of store employees, who have the most direct impact on customer satisfaction. He cited home furnishings giant Ikea, which developed an app that simplifies employee scheduling and makes it more responsive to real-time needs.

“Giving data to employees is probably the single most ROI-intensive thing you can do,” he said. “It increases your conversion rate by 15 percent and your satisfaction rate by 10 percent.”

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