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Microsoft director says retail is not dead, but calls for a change to traditional retail model

iStock/Thinkstock(NEW YORK) -- Microsoft said retail is changing, not dying, and that the tech giant will help its retail partners keep up with the industry's shifting landscape.

"We're at the epicenter of a huge amount of change," said Microsoft's Global Retail Industry Director Karen Garrette, who spoke with ABC News from the retail conference NRF 2018.

Garrette told ABC News that the biggest question facing the retail industry is "Why do people shop?"

"They shop for the experiences," she said. And if they can find ways to bring customers to their stores, then their "propensity for buying becomes very high."

She said retailers are innovating the designs and locations of their stores as they experiment with ways to incentivize customers to come into their brick and mortars.

Nordstrom Rack, for instance, recently opened Nordstrom Local, which is significantly smaller than one of the retailer’s traditional stores and does not carry any inventory, according to Garrette. Instead, the downsized Nordstrom Rack allows customers to pick up and exchange online purchases while offering tailoring services and some dining options. Smaller stores also allow for companies to open more in varied locations with increasing real estate prices, Garrette said.

The Microsoft director also pointed to the different ways companies are using technology to change the in-store shopping experience.

For instance, some Microsoft partners at NRF were showing how they use virtual reality headsets to help customers see "what an item would look like in their home or day-to-day experience," all while being able to touch and feel the actual item in the store.

Retailers are also utilizing artificial intelligence, putting data into computers and gauging consumer interest in the products specific shoppers like. Artificial intelligence uses the data to help retailers limit their inventory by determining "what a customer will buy before the customer knows" themselves the next time they decide to walk into a potentially revamped brick-and-mortar.

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