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For M&S’ Digital Transformation, Microsoft AI’s the Answer

Marks and Spencer (M&S), among the many department-store retailers struggling through turbulent times, is bringing Microsoft on board as a strategic partner that will use artificial intelligence (AI) technologies to execute the British chain’s vision of transforming through technology.

At the dawn of 2018, M&S announced a Technology Transformation Programme through which it intends to catch up with peers and become a digital-first retailer. As part of that initiative, M&S said it would adopt a “more customer-centric approach to technology services” and save tens of millions of pounds in the process. Its new Technology Operating Model that calls for adopting agile methodologies according to industry standards, went into effect on March 1.

Under the newly announced partnership, AI engineering experts from Microsoft will align with counterparts from the M&S Retail Labs in an effort to fast-track the retailer’s rebirth as a firm that operates from the digital-first point of view shoppers and their smartphones expect. Microsoft’s AI offer is designed to help retailers redefine customer engagement and personalize shopper journeys; empower employees to deliver effective customer service; embrace agile retailing through operations optimization; and improve products with augmented and virtual reality.

M&S CEO Steve Rowe said in a statement that the entire retail sector is in the throes of a revolution led by a changing, discerning customer.

“Working together with Microsoft to understand the full potential of how technology and artificial intelligence can improve the in-store experience for our customers and the efficiencies of our wider operations could be a game changer for M&S—and for retail,” Rowe said.

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M&S’s finances reflect the difficulties it’s having contending in a competitive landscape. For the 52 weeks ended March 18, post-tax profits plunged 74.8% from the prior-year period to £29.1 million ($38.5 million). When he announced these results on May 23, Rowe said the first phase of the retailer’s transformation roadmap was already quickening the “velocity of change” galvanizing the business. The day prior, M&S said another 14 stores were set or targeted for closure, bringing the total number of planned shutdowns by 2022 to more than 100.

Retailers that want to ensure they’re around for the next decade or three have found that laying a strong digital foundation and delivering the tech-driven experiences that customers demand is the answer to more than a few of their problems. Rowe called out M&S’ underperformance in the May 23 earnings report. “Our online capability is behind the best of our competitors and our website is too slow,” he said. “Our fulfilment center at Castle Donington has struggled to cope with peak demand and some of our systems are dated.”

At the close of the 2017-2018 fiscal year on March 18, M&S operated 1,035 stores in the U.K., including 300 focused on clothing, home and food, 696 that offered food only and 39 outlets.