Hello and welcome to the retail podcast.
Now I've had the pleasure of seeing Keith actually was I
think last year at Shop Talk Spring when Microsoft had a, a
room to the one of the sides and you were one of the, the, the
speakers there, Keith. And for Full disclosure, I have
known Keith from my previous life at Microsoft, but that
shouldn't stop us talking about some of the awesome things that
I know Keith has been travelling the world telling people what
about what Microsoft is doing. But Keith, for those people who
don't have that intimate knowledge of who you are and
what do you do, How about you tell us who you are and what do
you do at Microsoft? Of course.
And first of all, thank you for Alex for having me on the retail
podcast. So excited to be here.
I grew up in retail. I spent 27 years working for
Gap. It's in my blood.
So I love having retail conversations.
But for the rest of you, I am the Vice President of the
worldwide retail and consumer goods industry team at Microsoft
and our role is to work with our top retail and consumer goods
customers globally. We are all ex industry folks.
We I always call us the great translators of customer business
problems into ways that Microsoft technology and
Microsoft partners can help solve those problems.
So thanks for having. Yeah, I know.
And I and I think it's a testament to how well Microsoft
has grown within the retail community, how your team has
basically been able to address those major issues and what a
time it is for those major issues.
So I mean, I'm, I'm really curious.
You, you meet executives day in, day out.
I know. I'm surprised you're at home, to
be honest, right? You're not.
It's, I mean, the airport somewhere.
Yeah. What's well, what's what's the
thing that's top of mind right now?
What are what are people coming to you?
And talking to you about or wanting to talk to you about.
I mean, it's really about a gentic AII mean the the pace at
which this technology is changing and the importance that
executives realise that it can have on their business is
probably unparalleled than any other technology that I've ever
seen. So they really want to
understand how can they uniquely adopt these capabilities to
reduce cost, to give better customer experiences, to build a
more agile supply chain, and honestly make use of the
incredible value of data that they sit upon.
And retailers have an incredible amount of data.
And for years they generate data, but they haven't been able
to really unlock the value. So with generative AI, agentic
AI, they're seeing finally this uniqueness of how they can take
that competitive advantage and put it to work to change and
transform their organisations. If you don't mind, if we do like
a quick one O 1 on what a gentic is, because I think sometimes I
mean, it was the IT was sort of the on on stage at shop talk
this year, shop talk spring. It was like, you know, a gentic
is just from from the person who's in data and AI.
You you tell us what is a gentic.
AI yeah, yeah. And I'll start back from when
generative A kind of first came on, you know, came in the market
with GPT, which was this natural language interface, which which
you could ask questions, generate content.
And that's that's where we started.
And it taught us all how to have the power of the prompt, right.
The output was only as good as the input.
And we all had to learn how to do these inputs.
So at Microsoft we took that capability and started launching
Co pilots and Co pilots were the ways you could access your data.
It's the way you could help generate that first draught of
an e-mail. And that's really where we
started. Now you layer on a gentech and
the good news is we believe Co pilot is the UI for all AI.
So the way we will communicate with agent with agents in the
future is the same way we've been communicating in the last
year and a half by using prompts.
But agents now can do more than where we started.
So the first thing is more about retrieval, going out and finding
a piece of information and bringing that back to you.
You're still directing it using natural language.
Then it will move to tasks, so performing a task on your
behalf. So I think about the marketing
function and every campaign starts with a brief and we used
to use Co pilots to write that first draught of the brief.
Now we can have an agent write the first draught of the brief,
and once we build confidence in that agent, over time we will
see those agents act autonomously and start to
generate briefs on their own based on the insights the agents
are seeing in the business. And that is really the unlock of
value because now the human intervention is still always
going to be there, but it will be significantly less than it is
today, which means we as humans, we'll be able to do higher level
thinking, think more strategically, and take a lot of
that kind of lower level work, like brief generation and
business insight, you know, analysis.
The agents will be doing that on our behalf and surfacing those
insights and recommendations to the humans.
And we could just say, Yep, keep moving forward.
So that is really going to change the game in terms of
humans and agents working alongside of each other.
I know Satya, maybe one month or two months ago, he gave an
interview where he said it was the death death.
I can't remember the death of Sass or Sass is gone or I don't
know. I'm just curious.
Was that just, was that like a sound bite someone took or is
that genuinely how Microsoft is actually seeing it because you
have so many products underneath your agentic just from a
Microsoft perspective, if I'm the Microsoft customer?
And in the spirit of that comment is around if you think
about the number of business applications that we use to do
our jobs everyday. So if you are in a marketing
function, you probably have some data that's sitting in Excel,
you have some data that's sitting in some type of web
analytics tool. You have other data sets that
are sitting in in your advertising tools.
And all of those are individual business applications that
you're going in and out of every day to gather data.
So you can do some analysis potentially in a fourth tool
like Excel. Yeah.
And what we're, what we believe is that agents will now be the,
the systems going in and interacting with that.
So we don't have to do that any longer.
And we'll simply use natural language as our communication
and UI through a Co pilot. So you no longer have to go in
and out of all of these different business applications
to get your insights. The agents will be doing that on
our behalf and we'll just be asking questions.
And it doesn't matter where the data sits any longer, right?
It doesn't matter if it's in this tool or that tool, as long
as you trust the data, as long as the data is secure and
compliant, then we'll let the agents do that work on our
behalf. So I think the spear of that is
more about natural language will be the UI throughout your Co
pilot, which was how we'll start to interact with disparate data
sources across the entire company.
Yeah, I mean we, I mean that makes perfect sense.
So thank you for. Yeah, of course.
Clarifying that, I remember from days gone by, we used to talk
about retail operating at 2 speeds in terms of, you know,
almost people that have structured the data, people who
have spent time, energy, money and effort over over the years
getting some form of structured data.
And then you've got this other sort of wheelhouse of retailers
that haven't done anything and everything lives in silos.
I'm just curious. I I guess this this question
breaks into a couple of points and I'd love to know if I'm a
Microsoft customer and I sit in in those two worlds, does a
gentic AI actually help me or no, sorry, you still need to get
your data into some order. That's the first question.
And then if I'm not a Microsoft customer, but I'm, you know, I'm
saying here, listening, going, holy cow, this really sounds
like, you know, I I'll be with the dinosaurs.
If I'm not going ahead, I'm doing, you know, Where did you
start? What does it look like?
Well, I love. It we're having a data
conversation, because it is, I always say every generative AI
conversation always leads to a data conversation.
You can't have one with the other, right?
You can't. And you, you said it, Alex, like
retailers traditionally have siloed data.
It's just how they've been built.
You know, many started as brick and mortar and built entire
organisation and tech stack around that.
Then they launched e-commerce and that was a different data
set. Maybe they went into a different
model or wholesale, whatever. But the disparate data silos
have been a challenge in the industry and for years.
You're right, many retailers have been working to bring these
this data together. It's hard, it's expensive, it's
slow. It's really a process.
And what we're seeing now is we've launched the data platform
that Microsoft called Fabric that is less about breaking down
the silos. It's leave the data where it is.
We can just help you extract what you need.
Well, so you can build that first AI use case.
And I'd say what we're seeing in the industry is this like I've
got to get my data house in order before I can even start.
And yes, that's true. But we have ways to help you
fast track that. And we're, that's where we're
spending a lot of time with our customers today is let's pick a
use case. Let's look at the data sources
that drive that particular use case.
Let's unlock those first. Let's feel good about the data.
Let's make sure it's secure and compliant, and then let's launch
a use case. And I think that has been
actually one of the barriers we've seen.
We've seen a lot of our customers launch a lot of Pocs
last year, but they've kind of got stuck in this pilot
purgatory where they have been able to move to scale.
And we really want to help them take those use cases to scale.
And the data unlock is is key to that.
I mean that that's a wonderful segue in terms of obviously we
can dwell on the whole data and AI element, but I can on the
second speed where people are moving at blistering speeds.
What are some of the use cases that have really sort of
impressed you? Yeah, on your travels around the
world. Well, you know, there's two that
we're seeing a lot of traction and there's many, but I'll, I'll
talk about two. And I like to talk about these
two in conjunction because one of my roles many, many years
ago, that gap was when I first started, I was a sales
associate. It was my first job.
I was in high school and I was folding jeans and I was, you
know, I had to learn everything about our products.
We had this printed manual and we studied it every season.
So I could talk about features and benefits, but we didn't sell
very much. It was jeans and T-shirts and
sweaters. It was relatively easy, but I
think about the complex nature of the sales associate today in
retail and some of the products that customers and offer and how
do you learn everything about all your products in a confident
way where you can just help a customer on the sales floor.
And I've always said, you know, retail brick and mortar is very
service rich but very data poor. And this is where agentic AI is
going to help bring the necessary data into the
fingertips to the associate at the moment they need it, which
is the moment they that matters with that customer.
And I'll I'll tell you a great customer story with me to mark
Saturn. If you don't know them, they're
yes, I'll see 3 Taylor in Germany.
I'm in that carry a very broad range of a highly complex and
very similar products across many brands.
And they've launched this my buddy in in my ear Co pilot that
is a on demand basically phone a friend to ask a product question
and have it answered in your ear while you're working live with
the customer. And it really is changing the
game of how they can answer questions about think about, you
know, big screen televisions. I have 5 of them that look very
similar. They're different brands.
The price point's very similar. How do I explain to a customer
what the differences are? So yeah, my buddy has been a way
to help bring that information into the front line worker at
the moment they need it. So bringing that that data along
with the service, now I'm going to take you to the e-commerce
world. And that was a role I also had
at gaps like I have to run the e-commerce business for a while.
And you kind of have the opposite problem.
It's actually very data rich, right?
Data is just a click away on the web, but it's very service poor.
There's no one there. You're you're kind of
self-guided, right? And e-commerce hasn't even
changed very much in 20 years. You've got your navigation
across the top, some categories down the left, your search box,
but that's kind of it. So conversational commerce is
changing how customers solve problems.
So if you're trying to throw a World Cup watch party for 10
friends, what should I buy? Well, you might need drinks, you
might need snacks, you might need a large screen television
and a great sound system. So companies like Walmart are
bringing that type of conversational commerce
experience to the web. And what they're seeing is it's
their customers are moving from this kind of scroll based
shopping to goal based shopping. And we're seeing other brands
launch this and we're seeing increases in basket size.
We're seeing speed through checkout, which are all great
signal that consumers are engaging on this and they're
finally able to shop by solving their real problem versus kind
of searching for things. So those are two of my
favourites and that we're seeing today.
And and so just just to sort of understand that in terms of the
Walmart use case that you were saying you were talking about
there. So just so I've got a clear in
my head, I'm I'm having a BBQ. Is that me?
Instead of typing with the e-commerce page or site I'm
talking to, it is that is that it's.
Oh, can you just. Yeah, it's right.
You're actually seeing not only, and now they haven't launched
this yet, but we're actually seeing multimodal where you're
saying, I've got this a hiking shoe.
I, I want something just like it.
And you're holding it up to the camera and have an agent behind
that camera who's recognising that and comparing that to your
product catalogue. So it's text, it's voice.
And very soon you'll start to see multimodal commerce where
you as a user can interact with different ways that are most
comfortable to you and helpful. So where Walmart is starting
right now is they've added more conversation to their search,
but we'll eventually move to a full conversational commerce
experience. Other examples are Bath and Body
Works in the US has launched full conversational commerce
where you can literally ask a natural language question around
I'm, I'm looking for a gift from Mother's Day.
What ideas do you have? I mean something like ask a
sales associate in the physical store.
I think, I mean, that sounds a little bit like because I saw
the CEO founder of Perplexity sort of saying that's what
they're trying to build or building or training their
models to do. But obviously as a retailer, I
want to own and have as much control of that.
Why would I want some? I mean, obviously I'll, I'll be
open to all channels, but why would I want someone else to
have that data on, on my business?
So that makes so much sense because I I, yeah, I remember.
The point on data is important, one, because what we haven't
talked about in the case of conversational commerce, imagine
if you're a fashion retailer and you offer that experience and a
woman comes and types in. I'm going to a wedding in Greece
in June. Can you suggest an outfit?
Yeah, of. Course.
And now as a marketer, I now know it's, you know, it's early
May and next month you're going to Greece in June.
I've got some real context to start marketing to you about.
Well, here are some great items you should buy for sightseeing
while you're in Greece. And have you thought about a
swimsuit for the beach in addition to the out that we
recommended for the wedding you're going to be attending?
So you could start to see how the data capture of
conversational commerce is very strategic for retailers because
I'm getting more context about you as a shopper, I could hand
that back to your customer data profile so I can use that in the
future. So it's really opening up this
opportunity for true personalization that we haven't
seen before. And I think that's another
unlocked. It's not just the the the
existing customer experience that we're going to see, but
it's this incredible data capture that's going to come out
of it. Yeah, and it makes so much
sense. What do you see as the blocker?
What's the barrier? If you were going to do a CHEAT
SHEET, you know what? What's holding people back?
I think there's a few things. I think 1 is I talked about, we
talked about data is like how do I start to think about my data
strategically? And, and it was a this, this
isn't the CI OS problem. This is the CEO and the
executive leadership team is a retailer's data is very
strategic because it's incredible about their customer,
about their products. It's unique to them.
So there's that. There's the second part is how
do I start to get off and running with with a use case?
And part of that is assigning some business value.
So we do spend a lot of time with our customers helping them
prioritise use cases around business values.
They know which ones that are going to, you know, offer the
most cost savings or revenue uplift, whatever the KPIs are
they're trying to drive. So I think that's the second 1/3
is organizationally, you know, it's these are going to change
the way we work, right, right. And if you, if you've had a
chance to use a Co pilot everyday, I know I do in my job,
I'd have to change the way I work everyday because I now have
a Co pilot that I can go to first to ask questions and
summarise my emails and tell me what I missed when I was out
last week on vacation. That's very different way of
working than I used to. So yeah, it's going to change
the way teams work together. It's going to change the way
functions work. So I think that kind of cultural
change and organisational change is also another one.
It touches on in terms of you were talking about this bimodal
or, you know, trimodal in terms of voice, text and image.
Yeah. In terms of when you look at the
future then I don't know if you talk about quantum computing and
the chip, but forgetting that for one second, practically when
you then think about the future of retail, it feels like you're
describing this sort of multi sensory e-commerce world, right.
Is that, is that where we're going?
But I think it's a world where shoppers are finally going to
get the level of service in stores that they that they
crave. And I think as frontline workers
are finally going to get the data that they want at the
moment that matters. It's going to help their jobs be
more enjoyable. It's going to make them feel
more confident when they work with customers.
So I think we're going to start to really see those things come
together in ways that keep associates happy in their jobs
that make cut. Edwards and associates.
You think today, when a customer and a sales associate has a
conversation that is dark data, it goes away and there's some
really valuable information in there.
So I think in the future, when you think about conversational
commerce capabilities, we'll capture that data.
And finally, retailers will be able to deliver on that promise
of personalization that they've been really going after for
years. So I'm excited because I think
as a shopper, our experiences are going to be elevated.
It's just going to happen. As a retailer, our ability to
learn more about you and use that with your permission to
make your future shopping experiences better is finally
going to happen. And, and that frontline worker,
you know, who's been so underserved for so many years as
a persona is going to be happy doing their jobs because they're
going to have these incredible digital tools in their hands or
in their ear that are going to bring that information that they
need and just help them get through their day, just like we
are every day in the office. So I, I'm excited by, you know,
about how it really is going to raise the ceiling for everybody,
but also raise your floor for everybody.
So I think that's really exciting.
Do you think I mean you, you touched on a really important
point and I don't know how many read because just going back to
the perplexity or, or search, so many, I mean, when Alexa came
out, people were like, oh, this is fantastic until they, and a
couple of US retailers, large ones realised that all of those
search terms invoice, they had no idea.
They, they had absolutely 0 idea what people were searching for.
And it feels like people or retailers haven't woke up to the
fact that, yes, there's lots of great platforms out there, but
that data isn't yours. You're not going to be able to
get context on that. And, and I remember from years
gone by, Microsoft was really sort of it's your data, you,
you, you get access to all of that.
We don't do anything. We just give you the cable.
Is that still the case? Is that like because it's such a
fundamental point? Yeah, definitely.
Like we're not training our models at 1 customer and taking
them to another. I always say each instance of AI
is kind of like your own child that you're raising with your
data. Got you.
And that stays? But it's a really important
point. I think it's so important.
Yeah, we, we definitely obviously having like, like
retailers must have a trusting relationship with their
customers. We need to do the save.
So when we talk about our AI that runs in Azure, that is
being utilised by retailers to build conversational commerce
experiences or build frontline worker experiences, that is all
trained on the retailer's data. That is their unique first party
strategic advantage. So obviously that stays there.
So every platform is unique. Just like today when a customer
runs on Azure that that data is not commingled with any other
customers that run on Azure. It's very walled off that way.
It's critical. Yeah, no, OK, that's, it's good
to hear because I think that's that's something that people are
sleepwalking into, if I'm honest, you know, well on that
point. Though I would say what is
really becoming critical security, because if you think
about democratising data and putting it into the hands of
folks that might not normally have it, but you're doing it
because it's going to bring value, it's going to save money
and time, it's going to allow for new experiences.
How you secure that data is now more critical than ever because
obviously we know when when there's a trust break between a
data breach at a retailer takes many years for trust to be built
back. So we always talk a lot about
security as well, or I always say get us your chief, get your
your chief information security officer involved early and often
when you're doing AI use cases because you want to make sure
that everything you do is still within the guide.
The guise of like secure and responsible AI, which is the
other bookend of that is using this capability in a responsible
way that make it your customers feel confident it doesn't
violate privacy laws. So all of that is in critical to
all of these use cases as well. It's foundational, honestly.
I think, well, I mean, look, we've had so many public cases
recently in the UK with two major retailers having outages.
I mean, there's, there's it's like who hasn't had a security
or cyber event? I get, I guess it gets
overlooked because people sort of almost think that the Ciso's
taking care of it where, you know, it's a culture thing as
well, right? You need everyone on the same
page. Yeah, but in this world of
privacy, GDPR and everything else, there's a whole another,
you know, how are you protecting the critical data that you're
gathering on, on your on your customers?
No one wants to know that their their AI data set has been
stolen. I think that's that's another
level from your credit card. But again, that's like we're
getting into I think that's a little bit further down the line
that people, people need to be aware of it in, in terms of
where you are going to be focused on for the rest of the
year. Is that due?
Because obviously Microsoft again operates in, you know,
four or five different product areas, right?
Cloud security teams, what a workforce in playing what, what
are the things that you're going to be like?
How is the rest of the 2025 going to be for you?
I'd say we're seeing this adoption of a Gentek AI mean
this is going to, as I said earlier is helping our customers
think about natural places to adopt.
And I think, you know, marketing content creation is a great
example. I talked about that earlier.
You know, I think about business analysts, the merchandising and
the, and the inventory management sides of the world.
I remember, you know, my days at Gap, every Monday morning, our
inventory folks would come in, our merchants would come in,
They'd spent 4 hours kind of diagnosing the business.
And that was about 20 people doing that, right?
So there was like 80 hours, 80 human hours every Monday
diagnosing the business. And then in the afternoon, my
leadership team and I, there's five of us, we would decide what
we were going to do about the business in the course of an
hour. And I think about the imbalance,
80 hours spending, diagnosing 5 hours spending making strategic
business decisions. That's an imbalance, right?
We we need to unlock more of that 80 and shift it to more
strategic thinking. And that is where a gentek is
going to make a real impact. You know, maybe those eight out
those eight, you know, 80 hours become 20 hours because over the
weekend agents have been diagnosing the business.
So when when the merchandising team comes in and Monday morning
the insights are ready, some recommendations are already teed
up and maybe even in the future of autonomous, the first draught
of the marketing brief has already been written on the
promo that needs to run as a result of last week's business.
Like imagine that happening and being kind of ready on the
desktop Monday morning. And that is really game changing
when you think about running your, your, your retail
business. Yeah, I mean, you, you, you
touch on a this isn't, this isn't going to be a self
promotion about a book, But I, I like many people, I've written a
book about the future of retail, but I talk about the store being
your signal generator, right? So all of the signals that the
store's generating that you then need to respond to, whether
that's a, a TikTok trend that has been, you know, going up and
up and up. And if you don't tap into it or
it's a Netflix movie that has, I don't know, blown people away
and people want that jumper in that colour.
Those signals are currently, you know, again, we're going to that
people are trying to sort of chip away at those types of
problems. Yep.
But the store is a is this is a data centre.
There's petrol bytes of data that's going to come out of that
store and and how do you tap into it?
So I think the signal story is is brilliant because it's also a
data problem, right? So if you know they're right,
traditional store signal sits in rows and columns, right?
That's it. A TikTok video is an
unstructured data source. An Instagram feed is an
unstructured data source. So something that's trending on
a social platform is mostly unstructured data.
So really it's how do you take both?
How do you take the traditional structured data from the store?
And by the way, you multiply that by miscue count, by region,
by store, right, by how many countries you operate in, plus
all the unstructured data. And how do you take all of that
signal and turn that into some recommendations on what you
should do next, whether that's what you should be buying next
year because there's a trend that's emerging that you want to
make sure you capture on or whether it's responding to out
of stocks in a location based on a significant change in weather
and all of that signal and resiliency is where generative
AI, a gentic AI is going to play a role.
It's it's you just can't throw enough humans at it.
It's just impossible. It's costly, it's slow, it's
filled with bias. Like this is where I think we're
going to see such that this really step function changes.
Retailers will finally be able to kind of take all that data
signal back in even from your commerce, like all that data
exhaust that comes from all the clicks and the movement and
really make sense of it in real time and start to act on it in
real time. And that's going to be really
incredible to watch. Where, where, where is is mine?
Where's Mike? I know Microsoft has the biggest
presence at NRF, which is also, I don't know are you anywhere
else throughout the year is Microsoft, are you at any other
events or is there anywhere else people?
Could still definitely it's one. More plan have a.
So retail NRF in New York is definitely a big one.
NRF Asia, we have presence there in June, say cool.
Those who are going to be there with definitely be there
talking. Stage Yeah.
And then we also on the consumer goods side of the business, we
go to the consumer goods forum every year and present.
And then this year, I'll be at camp, there's a lot of our
customers, marketers go to Can and we have some events planned
around that, specifically around how generated by Agentic AI is
transforming the marketing room of the house.
That's fantastic. Well, Keith, thank you so much
for giving up some time to speak to us.
It's probably early in the morning for you there, right?
It's not so bad. It's not so bad.
That's wonderful. Not bad at all.
And thank you Alex. It's just a pleasure always to
chat with you. We've I've always liked chatting
with you. We've never had a problem
talking. So in six months, let's do it
again because a lot will change as we know and we'll we can give
an update. Well, hopefully, maybe maybe
joking aside at NRF 2026 with. Less 2.
Yeah, wonderful. Thank you.