Redesigning the Retail Industry with Intelligent Retail

 |   Microsoft Indonesia

December is the month for National Online Shopping Day or better known as HARBOLNAS, an online trading activity that is expected to boost people’s purchasing power and move the wheels of the nation’s economy. But changes due to the pandemic has set new challenges and opportunities for retail industry players.

This is supported by the size of the global e-commerce market, which is valued at US $2.3 trillion along with current consumers behavior of always being connected to their smart phones. In Indonesia, the e-commerce sector is one of the supporting industries for the digital economy. The total value of the digital economy in Indonesia is estimated at US$ 40 billion, of which more than half (US$ 21 billion) comes from e-commerce platform transactions.

According to the Coordinating Ministry for Economic Affairs of the Republic of Indonesia, the value of e-commerce transactions continues to climb, starting from an increase of 152 percent in 2018 and 88 percent in 2019, to a doubling of e-commerce transactions in the first semester 2020 compared to the previous period.

Microsoft Retail Data released at the Microsoft Cloud Innovation Summit 2020 reveals several facts and challenges that occur in the retail industry around the world, including in Indonesia today, namely:

  • 81% of buyers conduct online research before making a purchase online.
  • 80% of employees worldwide are first-line workers
  • 50% of manufacturing companies will have the ability to make direct deliveries to consumers by the end of 2020.
  • 50% of department stores at malls will close and focus their business on e-commerce.

These are becoming drivers for the retail industry to accelerate digital transformation and become an intelligent retailer.

In redesigning the industry to utilize intelligent retail, there are 5 important areas that require special attention, namely: store efficiency, automation, and safety; shopping without physical contact (contactless shopping); an integrated physical store as part of an online shopping fulfillment center; diversified shopping experiences; and in-store advertising.

Intelligent Retail ScreenshotFigure 1: Five key areas in redesigning the retail industry to be ‘intelligent retail’ according to Microsoft

In the digital transformation process, the use of appropriate and customer-focused technology such as cloud technology and artificial intelligence is key to helping retailers understand consumer behavior and preferences so that businesses can survive and even thrive in a pandemic. This is called Intelligent Retail.

According to Raj Raguneethan, Regional Business Leader, Retail & Consumer Goods of Microsoft Asia, consumer preferences during the pandemic have shown an increase in demand for personalized online shopping experiences and last mile delivery, or direct delivery of goods to homes.

“Knowing your customer is  key to your business. Identifying, adapting and serving evolving customer needs for deeper engagement across all your channels is vital. Enable to leverage AI to predict analytics and anticipate your customers evolving needs is very critical. That’s how you really can transform the way you deliver the experience to your customers,”  said Raj.

Kino Indonesia, Maximize Automation in All Business Lines

The digital transformation carried out by PT Kino Indonesia, Tbk – one of the leading FMCG retail companies in Indonesia today, has covered all parts of the business line from front-end to back-end using technology. This technological adaptation ensures a high level of accuracy and can produce measurable and analytical data.

“FMCG has a high level of competition, thus we at Kino continue to make many innovations, especially in the distribution, communication and product development areas. This of course requires a lot of data and accurate analysis in order to target consumers precisely and effectively. This is where we take advantage of technology. In fact, this crisis gives us the opportunity to make many developments and improvements, so that going forward, Kino will continue to grow and achieve high levels of productivity, “said Harry Sanusi, CEO and President Director of Kino Indonesia.

Kalbe Farma, Implementing Business Management Software Technology to Create A Seamless Retail Experience

PT Kalbe Farma, Tbk. a major retail player in the FMCG and pharmaceuticals industry, has also digitally transformed itself to implement Intelligent Retail. Kalbe Farma’s use of Microsoft Dynamics 365 business management software in marketing and their customer journeys aims to create a seamless relationship with consumers.

“Consumers play an important role in the retail industry, because our business is centered on meeting consumer needs. At Kalbe Farma, we aim to create a lifetime consumer for the sustainability of our business,” said Vidjongtius, President Director of Kalbe Farma. “Therefore, it is very important for us to be able to know, understand, and properly analyze the customer journey in order to create an effective and efficient communication and marketing strategy, and to provide consumers with a more personalized shopping experience, thereby adding value to the products we offer and increase customer satisfaction. ”

Intelligent Retail is part of the digital transformation process carried out by various companies in Indonesia that embraced a culture of innovation, which focuses on innovative solutions and a corporate culture that is responsive to change. This is in line with the results of Microsoft’s study on Culture of Innovation, released in early December 2020, where the study found that 74% of organizations in Indonesia have accelerated digitization to adapt to the “new normal”. Starting from launching digital products and introducing online payments, to embracing e-commerce and automation.

Thus, the National Online Shopping Day (HARBOLNAS) is not just an online shopping spree but a milestone in a nation’s economy and indirectly a measurement of digital transformation in the retail sector. With the help of technology and Intelligent Retail, retailers can better understand what consumers want. As a result, various business decisions can be made as effectively and efficiently as possible to increase company productivity, allowing business can continue to run and the wheels of the nation’s economy can continue to turn.

For more information on Intelligent Retail, watch the discussion by retail experts and practitioners at the Microsoft Cloud Innovation Summit 2020 on the fourth segment of Enabling Intelligent Retail. For more in-depth insights into Intelligent Retail, please download the Microsoft Retail Trends Playbook 2020.