Microsoft's Retail Experience Center: It's all about connectedness

Last month, I was invited to visit the Microsoft Retail Experience Center near the company's headquarters in Redmond, Wash. We've talked about the REC before, as well as shared with you a video walkthrough, but I didn't want to miss the opportunity to see it first-hand.

It's a truly remarkable retail test lab, one that could easily be mistaken for a real electronics superstore, but you'd never know it if you drove by: The 20,000-square-foot facility is tucked away inside an unmarked building with no Microsoft signage anywhere to be seen. It's an invitation-only affair, a place where the company can bring retailers, partners and focus groups to test-run merchandising strategies and in-store technologies.

Stephen Sparrow, Microsoft's senior industry marketing manager for U.S. retail, is the driving force behind the center. He said his emphasis is on making the retail experience more connected, a word he uses a lot. It's at the core of his philosophy of what retail must become in order to thrive — connecting stores with one another, with their employees, and with their customers.

"Disney used to say, when you're on a Disney cruise line, we'd better be able to recognize you as someone who just dropped four grand on a cruise," he said. "(We want to) create a world where you have more transparency, where you can deliver the right information and business insights to the right person, in an actionable way, when they need it and where they need it."

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SLIDESHOW: Take a look inside the Microsoft Retail Experience Center

The store itself is a faux electronics store, replete with big-screen TVs, laptops, Xbox games and boxed software. But beneath the surface, the emphasis on connectedness bubbles up in some unique and new ways.

Take the shopping cart, with integrated touchscreen. Anyone who has attended a retail trade show in recent years has seen any number of such smart carts, but here it is integrated with the store's loyalty program to connect store database with shopper from the moment the shopping experience begins. An interactive store map, with turn-by-turn directions, not only delivers the shopper to the right place but builds an ever-growing pool of behavioral data.

Most of the products the shopper passes by in the store bear a Microsoft Tag, a technology that Sparrow calls "leveraged capital" — a unique example of an in-store technology that the customer paid for himself, the cell phone. Giving a shopper a handheld scanner is one thing, but utilizing a device that is already in his pocket is quite another.

Giant touchscreens dot the walls, allowing customers to browse never-ending catalogs in a very intuitive fashion. Similarly hands-on experiences are served up by a Surface tabletop computer. In each instance, the devices in the store are pulling from the same central database, which not only insures a consistent experience, it saves the retailer time and money — a screenshot or a product photo or a box cover need only be scanned once, and can then be automatically resized and repurposed for whatever touchpoint needs it.

Making the supply chain fully visible from source to shelf requires tagging, and in a perfect world, retailers will have RFID tags applied by the manufacturer. But for smaller retailers or those with a manageable assortment of products (or perhaps assortments from a large number of sources), the answer lies at the back of the REC. A desk bears a computer station with an RFID printer; as products come in the back door, a staffer prints a tag for each one and applies it to the box. Boxes are walked through a pair of reader gates, and from that moment on, the store is aware of each and every product for sale in the house.

In the back office, the database is mined through a data-rich but easy-to-understand management dashboard. From a single location, a manager can see any idiosyncrasy at the device level, and can make smart scheduling decisions. Color-coded feeds give real-time sales data, out-of-stock alerts, camera arrays, and even comparison charts detailing other stores in the network.

Sparrow pointed out that it's not just customers that benefit from the connected experience — it empowers store managers to do their job better.

"You look at store managers — retailers typically take their best sales rep and make him the manager and put him behind a desk with a Monday morning report," he said. "We say, give him that report mobile. And do it quickly, so he can get back on the sales floor, helping customers."

Sparrow said the REC is a "living, breathing facility," one that is evolving over time. In recent weeks, his team has begun experimenting with interactive storefront windows and new merchandising strategies.

"We understand that it's all about the customer — how do you help them find what they need," he said. "And how do you help the employee help that customer."