Microsoft and Partners Address Challenges Unique to Retailers Like Tesco

REDMOND, Wash., July 17, 2001 — People shop. From gasoline to groceries, people around the world make purchases at a rate of US$7 trillion per year. Vying for those customers are hundreds of thousands of retailers, who face challenges so daunting its a wonder anyone would make a go of it. But they do, year after year, and one tool that fuels the tenacity of the retail segment is technology.

Tesco, the 10 th largest retailer in the world, recently committed to upgrading to Microsofts Windows NT Embedded 4.0 as a common operating platform for its point of sale (POS) system. The largest grocery retailer in the United Kingdom, Tesco operates 865 stores in eight countries. The first phase of the implementation starts this fall.

Tesco considered several other options before choosing Microsoft, according to Colin Cobain, Tescos UK information technology (IT) director.

“We needed a company that could support us in the long run, one that was comfortable supporting 24,000 tills,”
Cobain says.
“Our technology interacts with the customer, and handles virtually all of our revenue, so its important that we have a system thats flexible, responsive to market change and well-supported. Microsoft offers us that guarantee.”

Another key in Tescos decision to go with Microsoft is the fact that the Windows NT Embedded 4.0 solution lets Tesco implement new technology on existing tills — which are currently proprietary — rather than replacing everything. Also, the consistency of the new system will allow employees to move among different environments — from stores to gasoline-filling stations, for example — without requiring additional training.

The consistency across stores also means Tesco can offer customers the same loyalty programs, whether they’re purchasing gasoline or groceries.

The Tesco maxim, says Cobain: “Better for the customer, simpler for staff and more affordable for Tesco. Our deal with Microsoft is a perfect example of this.

Partners Continue to Build on the Microsoft Platform

As more retailers deploy Microsoft-driven technologies, Microsofts partners continue to develop new ways to serve the retail segment.

“The first thing to realize is that technology alone doesnt solve business problems,”
says Desmond Martin, vice president of the industry marketing/retail solutions group at NCR.The Ohio-based solution provider builds Point of Sale (POS) systems — ranging from cash registers to kiosk touch screens — for companies such as Dollar Tree Stores and Elder-Beerman on the Microsoft platform.
“What it does do, however, is answer the need to move information around more quickly, which is crucial to retailers. They need the tools to provide the information that is the most useful, when and where its needed.”

NCR develops systems on the Microsoft platform, Martin says, to address the challenges currently facing retailers: increasing globalization; more rapid growth and consolidation as the bigger retailers get even bigger; a more competitive marketplace; new ways to access customers via new channels to market; branding that transcends geography and channels; and a labor shortage in either quality and quantity or, in some cases, both.

On top of that is possibly the biggest challenge of all: more sophisticated, more demanding customers.
“People have been educated to expect to never pay full price for anything,”
says Martin.
“Customers are more mobile than ever before, and they expect more choices. They have more power because they have more options.”

“Our focus is developing hardware that uses Microsoft solutions offering greater integration and an enriched platform because its part of the Office suite,”
he says.
“Its a more robust environment because all of the devices are shared. Were also offering extreme reliability — which is very important to this segment — and greater speed and functionality.”

Standards across the industry are also a key factor for more effective, efficient technologies, according to Martin. The Association for Retail Technology Standards (ARTS), which is part of the National Retail Federation, has launched an initiative for retail standards.

Microsoft, says Martin, has recognized the importance of standards and taken a leading role in adopting them. In 1996, Microsoft led a worldwide collaborative initiative that aims to reduce the cost, time and risk associated with integrating and deploying line-of-business solutions in the retail enterprise. Called ActiveStore, the initiative recently released the second version of the Retail Business Information (RBI) Schemas, which aim to enhance retailers’ ability to use technology with a standard infrastructure, regardless of the operating system and language.

“Without standards its complete chaos,”
he says.
“Retailers are becoming more and more network-centric. The expertise is pushed up and out of the store and has become more centralized. A network-centric world without standards is like having roads that dont connect. Microsoft is a pioneer in many ways in driving and developing these standards.”

Radiant Chooses Microsoft Platform for Greater Flexibility

Radiant Systems, which serves the retail, consumer services and hospitality industries, also uses a Microsoft platform for its site-based transactions systems and for Web-based management systems. Atlanta-based Radiant Systems’ client roster includes AMC Entertainment, Tosco Marketing, and the Tricon Global Restaurant brands Pizza Hut, Taco Bell and KFC.

“Microsoft offers us a standards-based way to build applications, which makes our products flexible in terms of how we deploy them,”
says Mark Haidet, vice president of Radiant Systems.
“For site systems, we can scale applications down nicely to handhelds and use Windows NT for heavier-lifting applications. The flexibility allows us to tailor specifically to the segments we serve.”

Haidet says the biggest challenge facing the retail and hospitality segments is the distributed locations, which creates difficulties in deploying new marketing initiatives and maintaining technology.

“Were using a consistent platform and focusing heavily on taking robust applications and hosting them centrally so they can be dispersed to multiple locations,”
he says.
“Having multiple locations makes it hard for organizations to get their arms around them all, so our technology aims to provide a facility for doing that. It cuts out a tremendous cost.”

Another huge challenge, Haidet says, is the high employee turnover his clients face — in many cases in excess of 100 percent per year — among a labor force that isnt always the most experienced when it comes to technology. This, he says, can make a significant dent in profits.

The solution? Easier-to-use, centrally managed technology.
“Were deploying technology that offers both sophistication and a simple user interface, which means the training is simplified and repairs can be made remotely,”
Haidet says.
“Were building smart applications and appliances that can be managed remotely, and by doing that, were getting on-site employees out of the business of having to know anything about the technology.”

Like Martin, Haidet says he has seen accelerated adaptation of new technologies across the retail industry.
“Many of the areas we are in have historically been underserved by technology,”
he says.
“The pace has certainly accelerated, and I believe that its due to the fact that technology is becoming more integrated. Theres been such a proliferation of technology that people have become more aware of it, meaning the level of understanding has increased.”

Radiant Systems and Microsoft complement each other in the quest to cut technology costs for retailers, according to Haidet.
“We host our applications and provide an Application Service Provider (ASP) model to our clients,”
he says.
“Also, taking advantage of the standards Microsoft has adopted, such as XML, has helped us to more rapidly develop and integrate systems.”

Microsofts Commitment to Serving Retailers

Microsofts effort to work with partners who serve the retail segment is led by Margue Hunt-Familton, global industry retail manager with Microsofts Enterprise and Partner Group. In previous positions, Hunt-Familton developed systems in-house and caught the
“consumer bug”
by training for every position in a grocery store except meat cutter.

“Im a retailer at heart and soul, who happens to understand technology,”
says Hunt-Familton.
“I believe the best approach for us to add value to the industry as a whole is to serve as a conduit for bringing resources together to solve some of the ongoing problems that retail faces,”
she says.
“We dont have all the answers but we can make certain we work with everyone to develop solutions that add health to the industry.”

Historically, Hunt-Familton says, one of the biggest problems has been the lack of understanding between retailers and technology providers, resulting in less development in the retail area.
“Retail, in general, has been more averse to new technology, so it hasnt been the first choice for technology providers,”
she says.
“Profit margins are low in the retail segment, so cost is a greater consideration.”

To provide more affordable access to new technologies and upgrades, Hunt-Familton says that Microsoft and its network of partners are embracing the Microsoft .NET strategy that calls for delivering software as a service any time, any place and on any device.

“A major grocery chain can only afford to send a technician to a store once a quarter,”
she says.
“So the Windows XP platforms that are coming along are really focused on the ability to manage remotely. Down on the retail level, we need to act on that vision even more in-depth, and work with retailers, consulting services and partners to develop architectural guidelines for what a POS system needs to make it appropriately valuable.”

Hunt-Familton says shes optimistic about Microsofts ability to work with partners and deliver technologies to the retail segment that meet its specific needs.
“The biggest reason I came to Microsoft after spending 20 years in retail is that it offered me a chance to fix some of the problems retailers face,”
she says.
“Now I get to resolve some of the issues Ive lived through.”

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Tesco Moves Forward With Microsoft

Tesco, the United Kingdom’s No. 1 Grocery Retailer With 865 Stores Internationally And an Annual Turnover of £20 Billion, Has Selected Microsoft’s Leading-Edge Technology Based on Its Windows NT Embedded 4.0 Platform for Its Point-of-Sale Technology