Distribution and services companies wanting to succeed have to do everything they can to retain customers. Bill Gonzalez of Microsoft takes a look at the technology that is keeping customers coming back for more

Distribution and services companies in the retail, hospitality, food services and consumer goods industries face unprecedented challenges in these turbulent times. One of the most significant outcomes of economic uncertainty has been a dramatic change in consumer and customer behaviour. Customers everywhere demand brand, quality, service and, above all, compelling prices. In recent years, for example, retail customers have begun to spend more time shopping online, researching products and even comparing retailers online before they buy. As a result, customers know more about products, prices, stock availability and the overall marketplace than ever before.

Value is what keeps customers loyal to a store, a brand or a company. The value-driven consumer creates challenges and great opportunities for distribution and services companies everywhere. In the last few months we have visited distribution and services industry customers in many countries and had many discussions about the ways we can work together to get through these trying times. Our customers shared with us the challenges they face – identifying ways to save money and finding ways to retain their current customer base and use innovation as a way to work through and out of the current economic situation.

We believe we can help distribution and services industry companies to generate savings and retain customers in a number of different ways: by improving usability of their current IT environment; by providing ‘virtualisation’ and management tools as critical components of their data centres; and by incorporating metrics for business intelligence in their business units and throughout the entire enterprise.

These are the challenges and they are a priority for us and for the commitment we have made to our customers. These challenges are amplified in today’s uncertain economic environment by six macro business trends impacting the distribution and services industry worldwide.

Major Trends Reshaping Today's Distribution and Services Industry

The first trend is a change in customer demands. Consumers want to make informed shopping decisions, taking into account product features, pricing, warranties, availability, environmental impact, competitive comparisons and more, and they will use technology to accomplish this. They seek relevant information from retailers – but also from their social networks and independent third parties. As a result, successful retailers will collaborate with consumers and suppliers to facilitate information access and focus on delivering a consistent, positive total shopping experience across multiple channels and geographies. Consumers will reward retailers who innovatively help them make informed purchases and secure the best value.

Consumers also expect to access shopping related information on the go. To satisfy this demand, they increasingly rely on technology to connect with useful information wherever they are. Successful retailers will also combine communications technology, in-store technology, consumers’ personal technology and familiar Microsoft products and solutions to connect on-the-go shoppers with information they seek to make informed purchase decisions. Consumers will favour retailers that support their spontaneous, mobile shopping behaviour.

Another trend is consumer centricity. The new global demand chain is driven by information in the hands of people. To satisfy today’s consumer needs, retailers must become customer-centric enterprises.

Consumer expectations range from personalised attention to unassisted shopping. But regardless of the level of personal contact, consumers expect a positive, convenient shopping experience.

To meet these requirements, and as a result increase their share of wallet, successful retailers will capture and maintain customer and product information, and connect shoppers and store employees with it to enable successful shopping experiences. Share of wallet is the industry measure for success.

In this current economic environment, airlines and hotels are also looking for ways to reduce costs and increase revenues from new channels. Microsoft helps hospitality companies deliver a rich interactive guest experience for today’s highly connected traveller using mobile technology for work, entertainment and social networking. Blurring the lines between the physical and virtual worlds, these technologies provide new opportunities to engage with travellers and power the next-generation of media experiences incorporating video, animation, interactivity and stunning user interfaces on any Web-enabled device. Companies can also leverage social media to enrich the entire traveller experience – starting with initial planning and booking, through providing innovative services during the actual trip and by maintaining virtual community ties that, after they have returned from the trip, keep travellers engaged and interested in future travel opportunities.

The third trend is globalisation. The global economy is outpacing growth in the US today, and globalisation is a reality in the distribution and services industry. Consumer goods manufacturing, for example, is feeling the increasing influence of emerging economies and their consumers. As a result, ‘one size fits all’ no longer works to meet unique local consumer needs and demands.

Consumer goods manufacturers need global scale to compete, but must be able to execute locally. They must be agile to respond to the changing needs in widely differing markets worldwide. To succeed, they must achieve what we at Microsoft refer to as ‘profitable proximity’ by developing capabilities to sense and respond to unique local needs as well as to the growing threat of low-cost local competition.

Microsoft’s Unified Communications offerings, for example, can lower travel and communications costs while improving employee collaboration throughout the enterprise and across geographical boundaries worldwide. Microsoft can also help distribution and services industry companies to better connect to and retain their customer base through the use of CRM.

Environmental and social sustainability is another trend. The rapid growth of global demand described above is fuelling rapidly rising costs in commodities and transportation, in distribution and services as well as elsewhere in the world economy. This acceleration in global demand is also having an adverse impact on the environment and quality of life. As a result, consumer goods manufacturers must use technology to reduce waste in their supply chains as well as to create, market and deliver sustainable products and services – now a necessity to compete and survive.

Adding to the pressure on distribution and services companies to go green, today’s consumers increasingly expect retailers to operate in environmentally sustainable ways. This has resulted in retailers and their suppliers’ growing interest in contributing to making the world a better place by conserving energy and protecting the environment.

To meet consumers’ demand for increased social responsibility while controlling costs, successful retailers will deploy a flexible technology platform across their enterprise that connects customers and store employees to sales-enabling information. They must also take advantage of technology – for example, computer server virtualisation – to reduce data centre space and power consumption. And they must leverage technology to make customers aware of their sustainability efforts.

The fifth trend we are seeing is digital convergence. The power balance in the distribution and services industry is shifting from retailers to consumer communities powered by the latest Web 2.0 capabilities. Change in distribution and services is being accelerated by the digitisation of the economy, enabled by many factors including better hardware performance and unlimited storage and memory; software breakthroughs and natural user interfaces; ubiquitous broadband; mobility; new devices; form factors and high fidelity displays.

The increasing convergence of the digital lifestyle with the digital work style is supporting seamless professional and personal productivity gains at the office, at home and on the go. Distribution and services companies need to provide their employees with access to business information anytime, anyplace, on any device. They also must have the ability to reach their suppliers, customers and consumers, anytime, anyplace and on any device.

The final trend we are seeing is new business models. Distribution and services business models are changing at an unprecedented pace due to global and technological opportunities and challenges. Competing in the digital world demands new skills, technologies and strategies from retailers and product companies. Successful distribution and services companies will use technology to digitally connect with customers and suppliers and deliver a differentiated, value-added, multi-channel shopping or guest experience that enhances their brand value and encourages customer loyalty.

As an innovative and cost-effective way to manage IT services, Microsoft offers the option of ‘cloud’ computing and Software as a Service. Microsoft is well placed to help distribution and services enterprises take advantage of new IT architectures and opportunities with its broad infrastructure offerings spanning devices, servers and the cloud and with its familiar tools and productivity solutions used across all levels of the enterprise.

While technology is not a cure-all for the current financial crisis and the sharp drop in consumer spending, Microsoft and its partners continue to help distribution and services companies succeed in today’s competitive global marketplace by meeting the demand for a highly personalised and connected shopper, traveller and food services guest experience.