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Customer Engagement

Kroger, Microsoft Partner to Create Grocery Store of the Future

Embattled grocer hopes cloud-based, connected store gives it the edge it needs

One retail experience that hasn’t changed much, if at all, over the years is grocery shopping. You walk in, grab your cart, walk the aisles, fill your cart with food, and check out. The only difference today, from a decade or more ago, is you might have the option to self-checkout. It’s essentially the same experience as far back as most can remember.

That is, if one even goes specifically to the grocery store at all anymore. Many consumers already choose to grab their groceries while at Target or Walmart, or have meals or food delivered conveniently at home by Amazon or smaller niche services.

Clearly it is an industry ripe for disruption. With more options than ever available to consumers, conventional grocery stores need to innovate to survive. Cincinnati, Ohio-based The Kroger Co. is no stranger to trying its hand at innovation. Last month TechCrunch reported that the $123 billion retailer launched Kroger Ship, a new online grocery shop-and-delivery service.

This week Kroger teamed with Microsoft to announce a collaboration that both companies hope will redefine the retail customer experience. Using jointly developed technology connected by IoT sensors and running on Microsoft Azure, the two companies aim to jointly market a commercial retail-as-a-service (RaaS) product to the industry. The first step to rolling it out is a new pilot in which Kroger will test the comprehensive connected-store experience.

The pilot will start with two RaaS-enabled stores (located in Monroe, Ohio. and Redmond, Wash.) that are meant to provide customers with new experiences and higher levels of personalization, while enhancing staff productivity in the process.

Over time, Kroger could deploy its RaaS nationwide.

Kroger and Microsoft say the RaaS will store and process data generated in stores, near the smart shelves, and on Kroger’s app, and leverage the most recent generation of EDGE Shelf (Enhanced Display for Grocery Environment). EDGE Shelf is a shelving system that replaces traditional paper shelving tags with digital displays that communicate pricing, promotions, and even nutritional and dietary information.

Using Microsoft Azure AI, EDGE Shelf will connect with Kroger’s Scan, Bag, Go app, and provide what the company hopes will prove to be an enticing guided shopping experience.

Of course, razor-thin margins notorious in the grocery industry means grocers are also interested in taking as big of a bite out of costs as they can. Kroger hopes the new RaaS will boost associate productivity by reducing the time it takes to fulfill curbside pickup orders by using visual cues to help staff quickly find items. Video analytics will help store associates identify and address out-of-stock items to ensure customers can locate products on their shopping lists.

“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 CEO, in a statement.

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