Kroger is teaming with Microsoft Corp. to pilot two data-driven, "connected experience" stores and jointly bring to market a commercial Retail as a Service (RaaS) product for the retail industry.

The Kroger technology team has developed a smart technology system, powered by Microsoft’s Azure cloud platform and connected by Internets of Things sensors, to transform two pilot stores — one in Monroe, OH, and another in Redmond, WA — located near each of the companies' respective headquarters.

The partnership is part of Kroger's ongoing initiatives to modernize stores and remain relevant to omnichannel shoppers. It also helps Microsoft in its efforts to build Azure as the leading public cloud platform. The shared adversary for the two companies is Amazon, which continues to grow as both a retailer and a technology solutions provider (the latter through its AWS division).

By using Microsoft's cloud platform to store and process the data generated in stores, near the smart shelves and through Kroger's mobile application, the pilot stores will introduce “never-before-seen” shopping experiences such as the latest generation of EDGE (Enhanced Display for Grocery Environment) Shelf, a shelving system that uses digital displays, instead of traditional paper tags, to communicate everything from prices and promotions to nutritional and dietary information.

The shelving system will also be able to connect with Kroger's “Scan, Bag, Go” program to create a guided shopping experience for customers using the program's designated handheld devices or mobile application. For example, when they enter an aisle, the digital shelf will display a personalized icon chosen by the shopper — such as a banana or a pumpkin — below a product they added to their digital shopping list via the Kroger app, according to Bloomberg. (See video below.) A little more than half of the shelves at the Redmond, WA, pilot store, located near Microsoft's headquarters, have been converted into digital displays that light up with a personalized icon, Bloomberg reported. 

“Pick-to-light”

Shoppers are not the only ones benefiting from this new technology. The smart shelves can light up to help store employees fulfill orders for Kroger’s curbside grocery pickup service. The companies say this “pick-to-light” system can cut in half the time required to pick each order, Bloomberg reported. Additionally, solutions like Microsoft Azure-powered video analytics will help store employees identify and address out-of-stocks. (At the Redmond store, Bloomberg reported spotting “ellipse-shaped black-and-white devices that look like a cross between a camera and a smoke detector" mounted on ceilings, crunching data and monitoring for out-of-stock items, and temperature sensors every few feet in a refrigerated meat case to automatically flag workers if the case warms up too much.) 

EDGE Shelf will also allow Kroger to generate new revenue by selling digital advertising space to consumer packaged goods brands. Kroger can deploy personalized offers and target EDGE Shelf advertisements to specific customer segments using video analytics.

"Kroger is building a seamless ecosystem driven by data and technology to provide our customers with personalized food inspiration," said Rodney McMullen, Kroger's chairman and chief executive officer, in a media release. "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." 

RaaS

The partners’ commercial RaaS product is a Kroger solution powered by the Azure cloud platform that offers a suite of capabilities to support KPIs and merchandising plans, collect customer insights, enhance employee productivity, improve out-of-stocks, better the customer experience, and allow for hyper personalization using proprietary technology including EDGE Shelf. The companies describe the RaaS product as an “enablement software built by a retailer for retailers, supporting modern retail experiences and harmonizing customers' digital and physical shopping experiences." Future commercial products include: Scan, Bag, Go; Virtual Store Manager; sensor network; and connectors to corporate systems like point-of-sale, and inventory management, tag and merchandising systems.