Retail is transforming at lightning speed, shaped by AI, seamless shopping experiences, and sustainable practices. A new retail industry report from SAP delves into these shifts and reveals how savvy retailers can use AI to elevate personalization, adopt dynamic pricing to optimize profits, and turn returns into new revenue streams.
Learn how retail companies can leverage SAP Business AI for seamless customer experiences
As consumers demand more convenience and accountability, retailers that are ready to integrate omnichannel flows and eco-friendly packaging will be primed to lead. So here are some hot takes from the report to stay ahead in the evolving retail game:
AI and Personalization
Retailers not using AI to meet customer expectations risk being left behind, as AI is not just a one-time tool but a transformative asset. While 61% of shoppers support more AI in retail, 40% believe most marketing emails lack relevance and 23% think retailers do not personalize content effectively. By adopting AI for personalization, 78% of marketers have increased customer engagement and 75% reported improved customer loyalty. The takeaway: Investing in AI-driven personalization not only meets customer demands but can significantly boost engagement and loyalty.
Omnichannel Integration
Seamless customer experiences across digital and physical channels are now the standard, with 80% of retailers syncing customer carts across platforms. By making returns easier, as 65% of retailers already do, businesses can enhance loyalty and encourage repeat purchases. The opportunity is clear: retailers that streamline omnichannel shopping can capture more customer loyalty; for newer brands, this is a strategic differentiator.
Dynamic Pricing and Inventory Management
AI-driven dynamic pricing is becoming a game-changer in the retail space, allowing real-time price adjustments based on market conditions. AI-based pricing can increase revenue by 1.3% annually on average. Additionally, 67% of consumers want real-time stock updates and 31% find items are often out of stock, underscoring the need for predictive inventory management. Retailers that leverage AI for both pricing and stock visibility can enjoy enhanced profitability and meet customer expectations more reliably.
Returns as Revenue
Returns — often seen as a hassle — present untapped revenue potential. By adopting strategic return incentives such as in-store bonuses, retailers can boost foot traffic and secondary sales. Thirty-three percent of U.S. shoppers intentionally over-purchase with plans to return some items. AI-led returns processing can reduce return rates by an average of 26%. Creative return programs, such as second-chance sales and re-commerce, offer a way to turn returns into customer loyalty and revenue opportunities rather than costs.
Sustainable Packaging
Upcoming regulations across the EU, U.K., and certain U.S. states mandate heightened recycling targets — 65% recycling by 2025 in the EU, for example — within the near- to mid-future. While many businesses are aware of the targets, they are not ready for them. As packaging solutions evolve, brands investing in eco-friendly packaging and reusable solutions can gain a competitive edge and connect with increasingly eco-conscious consumers. Retailers that see beyond short-term recycling and invest in sustainable, or even regenerative, packaging are positioning themselves for long-term success in an environmentally driven market.
As retail transforms, staying adaptable, data-driven, and customer-focused is essential. The SAP report reveals the winning strategies of top brands, from harnessing AI to reimagining returns and leading in sustainable packaging.
Explore the full report for actionable insights and strategies that can elevate your business — and catch these insights live at industry events like NRF, where retail’s future is on full display. Your blueprint for the next big move starts here.
Joerg Koesters is head of Consumer Industries Solutions Marketing at SAP.
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At Microsoft Ignite, SAP and Microsoft are highlighting their collaborative vision to redefine workplace productivity through the seamless integration of SAP’s AI copilot, Joule, and Microsoft 365 Copilot.
Meet Joule, the AI copilot that truly understands your business
First introduced at SAP Sapphire in 2024, this vision takes a significant leap forward as our companies expect to announce a limited preview of the integration by the end of the year.
This partnership bridges SAP and Microsoft 365 business applications to deliver a unified experience that maximizes productivity. With Joule and Microsoft 365 Copilot integrated, users will soon experience a world where they can perform tasks and surface insights from both systems through either copilot, eliminating the need to switch between applications. Imagine a future where the most-used SAP tasks can be accomplished directly from Microsoft 365 – and vice versa. This is the vision SAP and Microsoft are advancing.
How the Integration Works
The end goal of this integration is a seamless user experience where employees can access either Joule or Microsoft 365 Copilot to complete tasks and retrieve data across both SAP and Microsoft environments. This means that users in Microsoft 365 can rely on Copilot to pull SAP tasks and data through Joule, while those in SAP applications can leverage Joule to access Microsoft 365 information and workflows. This two-way integration allows employees to work in the environment most effective for the task at hand, helping to ensure they have everything they need to get their work done efficiently.
Previewing the Potential at Ignite
At Microsoft Ignite, attendees are experiencing demo previews that showcase the early stages of this integration. For example, within Microsoft Teams, users can harness the combined power of Copilot and Joule to review tasks across both SAP and Microsoft 365, engage in chats, exchange emails, check the delivery status on sales orders recorded in SAP S/4HANA, submit employee promotion requests to SAP SuccessFactors solutions, and more. These demonstrations provide a glimpse of how Joule and Microsoft 365 Copilot together can simplify complex workflows and empower users to manage tasks seamlessly across systems.
Expanding Possibilities with Joule’s Reach
With Joule’s skills rapidly expanding to support SAP’s most-used tasks, this integration can unlock new productivity potential across both SAP and Microsoft environments. Imagine HR, finance, and supply chain professionals seamlessly accessing Microsoft 365 tools within their SAP workflows, while Microsoft users gain access to SAP’s powerful data and task automation. From onboarding employees in SAP SuccessFactors solutions to checking delivery statuses in SAP S/4HANA or scheduling meetings in Outlook, users can accomplish critical tasks directly within their chosen environment.
Together, Joule and Microsoft 365 Copilot set a new benchmark for cross-functional productivity, making it easier than ever to drive real-world business impact.
Looking Ahead: Limited Preview
At Microsoft Ignite, we’re setting the stage for this integration’s next phase. With the expectation to announce a limited preview before the end of 2024, we are eager to showcase how Joule and Microsoft 365 Copilot will come together to empower users and redefine productivity across SAP and Microsoft 365 applications. Those interested in experiencing this groundbreaking integration firsthand can register their interest for the limited preview at aka.ms/CopilotJoule. Spots are limited; don’t miss this opportunity to explore how SAP and Microsoft are reshaping the workplace.
Brenda Bown is chief marketing officer for SAP Business AI at SAP.
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Purpose is becoming an essential part of job satisfaction today. Almost 90% of Gen Z and Millennials say this is the case. These generations are also likely to decline future career opportunities with employers that don’t align with their values.
As these cohorts collectively account for almost half of today’s workforce, it is imperative today that businesses integrate these insights into their retention strategies.
Powering equitable access to economic opportunity, education and employment, and the circular economy
In 2021, SAP launched the Pro Bono for Economic Equity program, a collaborative effort with Pyxera Global that supports historically under-resourced businesses and social enterprises across North America through employees participating as pro bono consultants, addressing systemic and critical strategic business challenges. Over these last three years, SAP employees have dedicated over 22,000 hours to providing pro bono consulting to more than 70 Black and Indigenous-owned businesses in Canada and the United States.
The Pro Bono for Economic Equity program is a testament to the value of integrating pro bono work into corporate development strategies. Ninety-five percent of participating business expressed confidence that the involvement in the program helped them feel more prepared to address future challenges for their organization. The exceptionally high Net Promoter Score (NPS) of 92 further underscores the program’s effectiveness and the participant satisfaction.
Anthony Wingham, co-founder of Nuez Acres, said that one of the most impressive aspects of the program was the openness and honesty from the beginning: “As an Indigenous person, I’m used to conversations about business that either come with a price tag or feel exploitative, where ideas might be taken without genuine support. However, from the start, the discussions were transparent and collaborative. We were able to share our unique strategies and delve into areas where we needed real support.”
Marsha Guerrier, CEO and founder of HerSuiteSpot, shared about the impact of the participants and the work they did together on her business: “The people that are volunteering in these programs come with a level of expertise that when we’re so small we simply can’t afford. The team that SAP gave me to support my challenges and needs was dynamite. They really went all out for me. It felt good to meet with the team.”
The program doesn’t just benefit participant businesses, but also SAP employee participants.
Pro Bono as a Leadership Development Tool
“Pro bono work provides a platform to upskill employees and grow the company’s leaders,” said Katie Booth, head of North America Corporate Social Responsibility for SAP. “Employees report significant gains in critical areas like teamwork, intercultural sensitivity, and strategic planning, which are core competencies that drive business success in a globalized economy.”
While this initiative forms part of the company’s corporate social responsibility (CSR) strategy, it also invests in employee development that pays dividends in human capital and business acumen.
In fact, 98% of SAP employees involved in the Pro Bono for Economic Equity program have reported acquiring or refining essential skills.
Verena Lommatzsch, head of Technical Services for SAP Business Technology Platform at SAP, reflected that stepping out of her comfort zone and collaborating with people from diverse cultural backgrounds was incredibly enriching: “It sharpened my ability to navigate complex, multicultural business environments.”
“On a personal level, the program prompted me to rethink my approach to new challenges, reminding me that success isn’t solely about maximizing profit,” she added. “Professionally, it was incredibly valuable as well. As a global leader, I am often distanced from day-to-day business activities. Being hands-on and working directly with two colleagues I hadn’t met before was a great opportunity to challenge myself and learn new skills. I also gained a new perspective on what it means to be an entrepreneur, including using software to establish an online store and managing wholesale connections.”
This intersection of personal growth and professional development is where the Pro Bono for Economic Equity program truly shines. Participants are not only building their own capabilities but are also contributing to the resilience and adaptability of the businesses they support.
SAP employee Rahaf Assaleh shared that the program provided a deeper understanding of Indigenous cultures and their unique business practices: “It taught me to think creatively and resourcefully with the limited resources that Indigenous business owners often have, helping me to explore innovative ways to achieve business goals and foster growth.”
The program’s impact extends beyond individual development with 74% of participants reporting that their involvement has prompted them to engage more deeply with local, historically-marginalized communities. This increased engagement enriches employees’ lives and strengthens SAP’s commitment to breaking down unconscious bias and continuing support for the social justice movement, alongside its focus on social responsibility.
“At SAP, we believe in the power of shared growth,” Booth said. “The program exemplifies how pro bono initiatives can drive innovation, enhance employee satisfaction, and contribute to economic equity. It’s a win-win that benefits our employees, the businesses we support, and society at large.”
Companies that prioritize aligning employee development with social impact initiatives are not only investing in the future of their workforce but are also positioning themselves, and the impact businesses they work with for long-term success.
The time is now to rethink corporate strategies and ensure that they reflect the values of today’s purpose-driven workforce.
Megan Smith is head of Human Resources for SAP North America.
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I am excited to share that SAP S/4HANA Cloud Public Edition has been recognized as a Leader in both the Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises as well as the Gartner Magic Quadrant for Cloud ERP for Product-Centric Enterprises for the third year in a row.
The recognition is based on our Completeness of Vision and Ability to Execute in the cloud ERP market for both service-centric enterprises and product-centric enterprises.
This is truly fantastic news, and I believe further underlines the impact cloud ERP has on service-centric and product-centric industries by fulfilling their current and future technology needs.
SAP offers integrated cloud solutions that can support an organization’s end-to-end business processes, spanning across all functions. We help manage every part of an organization: enterprise resource management, spend management, human capital management (HCM), and customer relationship management (CRM). This deep know-how enables SAP to understand that every business is different and within a business not every application has the same infrastructure or process requirements.
Here is an overview on both the Gartner Magic Quadrantreports.
2024 Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises
Magic Quadrant for Cloud ERP for Service-Centric Enterprises (Source: Gartner, October 2024)
As service-centric enterprise customers move their mission-critical ERP processes to the cloud, we believe they seek trusted vendors that can provide the technology needed to drive transformation and unlock business value.
According to Gartner, “Leaders demonstrate a market-defining vision of how service-centric ERP systems and processes can be supported and improved by moving them to the cloud. They couple this with a clear Ability to Execute this vision through products, services, and go-to-market strategies. They have a strong presence in the market and are growing their revenue and market share. In this market, Leaders show a consistent ability to secure deals with enterprises of different sizes and have a good depth of functionality across all areas of core financial management. They have multiple proofs of successful deployments by customers, in their home region and elsewhere. Their offerings are often used by SI partners to support financial transformation initiatives. Leaders typically address a wide market audience by supporting broad market requirements. However, they may fail to meet the specific needs of vertical markets or other, more specialized segments, which might be better addressed by Niche Players in particular. They may also be too complex to deal with or too costly to be considered in less complex functional scenarios.”
We’re honored to be recognized in this space.
Integrated Cloud ERP Solution
IT decisions are shaped by a variety of factors, from the sensitivity and criticality of data to the need for local availability and the ability to scale ERP systems up or down. Given the complexity of modern businesses, the most efficient IT environments are those that seamlessly combine cloud services, leveraging the flexibility SAP offers across public, private, or hybrid solutions.
However, within this complexity lies untapped value and opportunity. At the heart of this transformation is SAP S/4HANA Cloud, empowering companies to grow, optimize, and innovate on their own terms while ensuring seamless integration across all business processes.
An example is REHAU China and its intelligent transformation journey and the value the company unlocked with the latest intelligent technologies, products, and solutions from SAP. This shows how cloud transformation is best achieved with process standardization, where composable services come together to support end-to-end processes.
I believe the Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises offers valuable insights into the trends and market forces shaping the industry. Companies that take proactive steps in orchestrating a well-planned digital transformation are better equipped to navigate the significant shifts in today’s operating environment.
To quote the report, “This Magic Quadrant reflects Gartner’s definition of ‘composable ERP.’ We define this as an adaptive technology strategy that enables the foundational administrative and operational digital capabilities for an enterprise to keep up with the pace of business change. This strategy delivers a core of composable applications and as-a-service software platforms that are highly configurable, interoperable, and flexible to adapt to future modern technology.”
SAP has developed a unified cloud solution to meet evolving business needs. I’ve often emphasized the importance of customer-driven product design to address unique industry requirements. Customer feedback is the ultimate benchmark for success, helping us innovate and solve today’s challenges while preparing for tomorrow. SAP S/4HANA Cloud empowers businesses with real-time insights, AI-powered capabilities, and seamless integration of end-to-end processes, supporting sustainable global expansion.
A progressive combination of technology and innovation are key to the growth of any business today. New cloud ERP systems are intelligent, flexible, and agile, and they impart these qualities to the businesses that run on them.
With offerings like SAP S/4HANA Cloud at the core of our RISE with SAP and GROW with SAP offerings, we can provide an integrated suite of tools that streamline critical business functions into a unified system. With new AI capabilities with our ERP tools, we can help customers enhance operational efficiency and ensure businesses of all sizes can benefit from tailored ERP systems by offering scalable, flexible, and innovative solutions.
From mission-critical operations to business model innovation, SAP S/4HANA Cloud is ERP for every business need
2024 Gartner Magic Quadrant for Cloud ERP for Product-Centric Enterprises
Magic Quadrant for Cloud ERP for Product-Centric Enterprises (Source: Gartner, September 2024)
Gartner has also named SAP a Leader in the Gartner Magic Quadrant for Cloud ERP for Product-Centric Enterprises, with SAP S/4HANA Cloud being evaluated. This is very good news, and we believe our positioning reflects our role as an enabler of innovation and in helping organizations become intelligent enterprises. Answering the call from our customers, SAP S/4HANA Cloud transforms the way businesses operate and helps them run at their best.
According to the report, “Gartner defines cloud enterprise resource planning (ERP) for product-centric enterprises as a market for application technology that supports the automation of operational activities for the manufacturing, distribution, delivery, and servicing of goods. Cloud ERP for product-centric enterprises is delivered under a SaaS license model (with frequent mandatory updates), where application support, infrastructure provisioning, and management are the responsibility of the vendor.”
Cloud ERP impacts companies in product-centric industries by fulfilling their current and future technology needs and helps them manage finance and material resources in a sustainable way.
According to the Gartner Magic Quadrant description, “Leaders demonstrate a market-defining vision of how ERP product-centric systems and processes can be supported and improved by moving them to the cloud. They couple this with a clear ability to execute their vision through products, services, and go-to-market strategies. They have a strong presence in the market and are growing their revenue and market shares. In the cloud ERP suite market, Leaders show a consistent ability to win deals with organizations of different sizes. They have a good depth of functionality across all areas of operational and administrative ERP. They have proof of multiple, successful deployments by customers. Their systems integrator partners frequently use their offerings to support business transformation initiatives.”
SAP S/4HANA Cloud is at the core of this transformational process that enables companies to grow, optimize, and transform on their own terms while providing for the smooth integration of all business processes. A strong example is the greenfield transformation at Hitachi High-Tech, which simplified life for its users, unlocking value with the latest intelligent technologies, products, and solutions from SAP.
SAP S/4HANA Cloud offers both user and developer extensibility, allowing customers to stay agile while balancing innovation and standardization. This flexibility enables businesses to adapt quickly without sacrificing control. The intelligent suite integrates end-to-end business processes across finance, procurement, supply chain, HR, and more, creating a unified system.
SAP S/4HANA Cloud serves as a single source of truth, ensuring consistent data across operations. In today’s fast-changing environment, businesses must continuously and intelligently adjust processes with automated, analytics-driven applications; SAP S/4HANA Cloud empowers them to do just that, fostering growth and sustainability.
We believe SAP’s recognition as a Leader in both the Gartner Magic Quadrant for SAP S/4HANA Cloud in Cloud ERP for Service-Centric Enterprises as well as in the Gartner Magic Quadrant for SAP S/4HANA Cloud in Cloud ERP for Product-Centric Enterprises acknowledges our unwavering commitment to customer-driven innovation.
We further feel that this recognition underscores our focus on delivering lean, responsive solutions that drive business transformation in the cloud.
But we’re not stopping here: our ongoing investments in SAP S/4HANA Cloud will continue to make it smarter and more efficient for businesses of all sizes. By providing flexible, scalable ERP solutions, we aim to help organizations anticipate future challenges and thrive in a rapidly evolving world.
We look forward to continuing this journey with our customers, partners, and analysts as we shape the future together.
The graphics were published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from SAP. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. and/or its affiliates and are used herein with permission. All rights reserved. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Gartner, Magic Quadrant for Cloud ERP for Product-Centric Enterprises, 11 November 2024, Dixie John, et. Al. Gartner, Magic Quadrant for Cloud ERP for Service-Centric Enterprises, 04 November 2024, Robert Anderson, et. Al.
Jacques Niewuland, Digital Transformation Director of Roca Group shares how cloud technology helps the bathroom fixtures and design company address supply chain challenges, spur innovation, and deliver the best customer experience. Read the SAP News Center story to learn more: https://news.sap.com/?p=229938
00:00 Roca Group
00:40 How Tech Helps
01:12 Migrating to SAP S/4HANA
01:24 AI as an add-on
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To enhance its operational efficiency and future-readiness, Bridgestone has completed an SAP S/4HANA upgrade with consulting support from Bluecrux, a value chain and technology firm. Bridgestone’s move to SAP S/4HANA comes as part of a strategic update to its enterprise resource planning (ERP) capabilities, replacing an aging system due for support phase-out in 2027. The […]
In the coming decades, humanity will achieve feats that would have seemed like magic to our grandparents. The rapid acceleration of progress, fueled by artificial intelligence (AI) and cloud technologies, is enabling us to solve problems once thought impossible. Some leaders are even calling this new era the intelligent age.
As our capabilities grow, businesses are embracing AI and other technologies strategically. SAP is leading the way, offering a smarter approach to business transformation services, combining cutting-edge tools with human expertise to help organizations unlock the full potential of these advancements.
Achieve real-world results and attain your full potential with embedded AI capabilities across your business
In this new era, cloud technologies, AI, and human intelligence are converging, resulting in remarkable advancements in areas like demand forecasting, supply chain resilience, and process automation. As a result, businesses are increasingly shifting their focus to high-value tasks and real-time collaboration, allowing them to unlock new levels of efficiency and innovation.
While the opportunities are immense, the benefits are not guaranteed. The winners in this new era will be those organizations that can transform their operations digitally in increasingly more intelligent ways to set themselves up for success. For example, getting the most from business AI requires first moving your systems to a cloud ERP with SAP S/4HANA Cloud.
Winning in the age of intelligence requires a newer and more intelligent approach to business transformation and the stakes could not be higher.
Combining the Power of Human Expertise with Technology
While the potential of AI-driven cloud systems is vast, some companies still struggle to fully leverage them. Many digital transformations fail to meet their objectives. Common pitfalls include a lack of technical expertise and employee engagement, inadequate management support, poor cross-functional collaboration, and a lack of accountability. Furthermore, sustaining a transformation’s impact typically requires a major reset in mindsets and behaviors.
Often the most difficult part of transforming businesses isn’t determining what to do, but rather how to do it. To address these challenges, SAP is building on a time-tested approach, combining cutting-edge tools with the power of human judgment, and taking it to the next level.
At the heart of this strategy is RISE with SAP, a game-changing initiative designed to help businesses continuously transform. To date, 7,000 companies – representing 32% of the global economy – have embraced RISE with SAP. These companies are already experiencing the benefits, including two percent lower operating costs and three percent lower inventory.
The critical “human” component of the RISE methodology are the enterprise architects, transformation experts who guide businesses through the intricacies of their digital transformation, ensuring they maximize the value of SAP tools and services.
Enterprise architects not only help customers utilize the RISE with SAP Methodology, but also harmonize all elements of the transformation, guiding customers to the modular cloud suite. This ensures a cohesive, effective process whereby the enterprise architect becomes a trusted advisor for the customer. By leveraging SAP’s integrated toolchain — across SAP Signavio, SAP LeanIX, SAP Cloud ALM, SAP Business Technology Platform, and WalkMe — enterprise architects help SAP customers transform holistically through their processes, data, systems, and their people, supporting their long-term success.
SAP has already seen a strong internal response to this approach, seasoned individuals are lining up for the role. Our recruitment and tailored enablement efforts are in full swing, with hundreds of cohorts currently going through training. We are also fine-tuning our enterprise architect operational and commercial model to simplify how we engage with customers and the early customer response has been very positive.
Shaping the Future of Business Transformations
Our early customer successes show the power and the potential of SAP’s intelligent transformation approach. By combining human expertise with advanced AI and cloud technologies, SAP is setting a new standard for what is possible through business transformations. As we look to the future, this integrated approach will continue to enable businesses to unlock new value and drive sustainable success.
At SAP, our vision is to redefine the way businesses transform, setting a benchmark for intelligent and integrated business transformations that drive real, measurable results. And for those organizations that adopt it, the possibilities in this new age are limitless.
Thomas Saueressig is a member of the Executive Board of SAP SE, leading Customer Services & Delivery. Thomas Pfiester is executive vice president and head of Global Customer Engagement & Services at SAP.
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