Microsoft - The State of the Retail Industry 2024

A New Era of AI Transformation for Retail

By Kathleen Mitford, Corporate Vice President, Global Industry Marketing, Microsoft

2023 was the beginning of a new era of AI transformation in retail that is making personalized shopping experiences richer, more relevant and more valuable for customers. According to a June 2023 McKinsey study, AI- based shopping experiences have the potential to grow yearly revenue by as much as $660 billion across the retail and consumer goods industries. But what are customers saying? In a study published this month by Futurum in partnership with Microsoft, 69% of customers surveyed that were more likely to shop with a retailer that uses AI stated it was for more personalized choices and more efficient shopping.

The top question that I’m hearing from retail leaders is: How will my organization power continued resilience and growth by embracing the full potential of AI, while safeguarding our business, our employees, and data – ours and our customers? The Microsoft Cloud for Retail is helping answer that question with new generative AI and data capabilities that are giving retailers new ways to elevate shopper experiences including the ads and marketing campaigns customers receive.

In 2024, consumers are more likely to shop with a retailer that uses AI because it would provide more personalized choices and more efficient shopping. New generative AI and data capabilities are giving retailers new ways to elevate shopper experiences including the ads and marketing campaigns customers receive.

By Kathleen Mitford, Corporate VP Global Industry Marketing, Microsoft

Marketing is the top priority for retail AI investments in the next 12-18 months, with 64% of retail executives saying that is where they are most focused on driving improvement. Retail marketers can leverage Retail Media Creative Studio to use generative AI to auto-generate banner content and optimize campaign performance to deliver a more personalized shopping experience. And new copilot features in Dynamics 365 Customer Insights enable them to develop a holistic view of their customers’ wants, needs and buying behaviors to create and hone marketing plans from a single prompt.

Underpinning all of this innovation is a strong foundation: Microsoft Fabric is an end-to-end, unified analytics platform that brings together all the data and analytics tools that organizations need to unlock the potential of their data and lay the foundation for the new era of AI for retail. This foundation, combined with responsible AI governance is key for the 26% of customers who are comfortable with using AI but have concerns about privacy. At Microsoft, we adopted a set of Responsible AI principles in 2018 and we continue to apply them by making sure AI systems are developed in ways that warrant people’s trust. This presents an opportunity for retailers to build trust with clear and well-communicated privacy policies and with the industry’s most trusted and comprehensive cloud.

This is just a glimpse of the potential for creative, trustworthy AI innovation in retail in 2024. I'm excited by the opportunity ahead and am looking forward to working with our partners and customers to explore more ways to elevate the shopping journey for customers.