Retail giant Kroger has announced a new partnership with Microsoft, which aims to improve customer experience by employing the technology company’s popular cloud-based platform Microsoft Azure. Through the partnership, Kroger hopes to create a connected in-store experience. The alliance is the latest example of how big US retailers are deploying data-rich technology to improve the often tedious ritual of food shopping and to keep pace with Amazon.
“Kroger is building a seamless ecosystem driven by data and technology to provide our customers with personalized food inspiration,” says Rodney McMullen, Kroger chairman and CEO. “We are identifying partners through Restock Kroger who will help us reinvent the customer experience and create new profit streams that will also accelerate our core business growth. We are excited to collaborate with Microsoft to redefine grocery retail.”
The partnership will launch with the Kroger Technological Team rolling out a smart technology system powered by Microsoft Azure and connected by IOT sensors. This system will be used to transform two pilot stores located in Monroe, Ohio, and Redmond, Washington, near each of the companies’ headquarters. The pilot stores will each utilize RaaS, which will add new shopping innovations and levels of personalization for customers. It will also work to enhance store associate productivity.
“Our partnership brings together Kroger’s world-class expertise in the grocery industry with the power of Azure and Azure AI,” says Satya Nadella, CEO of Microsoft. “Together, we will redefine the shopping experience for millions of customers at both Kroger and other retailers around the world, setting a new standard for innovation in the industry.”
The new digital stores will work to utilize the data processed and stored by Microsoft Azure, in combination with the Kroger app and smart shelves, to create a never-before-seen shopping experience for customers. Microsoft’s artificial intelligence software can predict a shopper’s age and gender, data that will help the likes of Procter & Gamble, Pepsi, and Kraft Heinz tailor ads to particular customer segments. Kroger also plans to target products and ads to shoppers’ specific product preferences, such as gluten-free or vegetarian.
The stores will also include the latest generation of EDGE Shelf (Enhanced Display for Grocery Environment), a shelving system that uses digital displays, instead of traditional paper tags, to indicate everything from prices and promotions to nutritional and dietary information. The shelves light up to help store employees pick orders for Kroger curbside grocery pickup service, where customers order online and then have their bags brought out to their car in the parking lot. The companies say this “pick-to-light” system can cut the time required to pick each order in half, a possible advantage as rivals such as Walmart and Target perfect their own curbside pickup services.
“The marketplace has witnessed the continued convergence of digital and brick-and-mortar retail,” says Daniel Kahan, Consultant for W. Capra Consulting Group. “While this evolved consumer experience may serve as a competitive advantage in today’s marketplace, the digitizing of the physical store will soon become a prerequisite to compete. Kroger’s partnership with Microsoft Azure is a signal that they plan to do more than merely remain competitive as a market leader— they plan to innovate.”
Based on the success of the two pilot stores, Kroger may eventually roll out the cloud-based system in all of its 2,780 supermarkets.