Kroger CEO Rodney McMullen (left) and Microsoft CEO Satya Nadella - Source: Microsoft News Centre

Published: January 7th, 2019

It seems like almost anything is available ‘as-a-service’ these days and today Microsoft Corp. and major U.S. grocery retailer The Kroger Co. are looking to bring to bring a new retail-as-a-service (RaaS) product to market.

Microsoft announced in a press release today that it is partnering with Kroger to create a connected store experience combining Microsoft Azure and Kroger Technology. The companies plan to jointly market the solution as a commercial RaaS product to the grocery retail industry.

“Our partnership brings together Kroger’s world-class expertise in the grocery industry with the power of Azure and Azure AI,” said Satya Nadella, CEO of Microsoft in the release.

“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.”

This partnership expands Microsoft’s venture into grocery retail and is another example of how technology companies are looking to bridge the gap between online and brick-and-mortar stores. Amazon stepped into grocery retail in a big way a couple years ago with its $13.7 billion (USD) purchase of Whole Foods, that saw it offer two-hour online delivery of groceries for Prime members.

The partnership will bring about two pilot programs located in stores in Ohio and Washington. Kroger Technology, (the innovative arm of the grocery retailer) has created a smart technology system that uses Azure and is connected by IoT sensors that will power the in-store experience.

The plan is to created digitally enhanced “customer experiences, and enable personalization through insights and enhance store associate productivity,” according to the release.

For example, the stores will include a ‘smart-shelf’ system called Edge (Enhanced Display for Grocery Environment) Shelf, which is a shelving system that uses digital displays rather than traditional paper labels to display price, promotions and even nutritional and dietary information.

Edge (Enhanced Display for Grocery Environment) Shelf. Source: Microsoft

According to Microsoft, Edge Shelf will use Azure to connect to Kroger’s Scan, Bag, Go app combines online shopping with the brick-and-mortar experience, allowing customers to scan and purchase in-store items from their phone.

The smart shelf will also allow grocery retailers to increase their digital advertising space. By using video analytics, they can work with advertisers to create personalized offers and advertisements presented based on customer demographics.

The digital experience stores will also offer greater employee insights, according to Microsoft through a pick-to-light curbside grocery pickup up systems that uses visual cues to help them to quickly find items.

“[Also] solutions like Microsoft Azure-powered video analytics will help store associates identify and address out-of-stocks to ensure customers can locate products on their shopping list,” the release stated.

The RaaS product itself, created by Kroger, is a software that it claims will allow retailers to prioritize and customize to reach specific goals. “[It] offers a suite of capabilities to support key performance indicators (KPIs) and merchandising plans, collect customer insights, enhance employee productivity, improve out-of-stocks, better the customer experience and allow for hyper-personalization.”

Edge Shelf technology, guided shopping, personalized ads and pick-to-light will be available in the first version of the RaaS with future features to include sensor networks, point-of-sale (POS) connections to corporate systems and inventory management.

Microsoft and Kroger will debut the service at the NRF 2019: Retail’s Big Show in New York next week and the pilot are already in the works, with plans to expand the tech to all Kroger supermarkets in the near future.

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