Kroger, Microsoft Team on 'Connected Store' Pilot

Kroger is teaming up with Microsoft to create a connected store experience that it plans to market to the rest of the industry. 

The smart system, created by Kroger Technologies and powered by Microsoft Azure, employs internet of things sensors to create a Retail as a Service (RaaS) experience, which will first be implemented  in two pilot stores in Monroe, Ohio, and Redmond, Wash., near the respective headquarters of Kroger and Microsoft. 

Kroger Chairman and CEO Rodney McMullen called the technology a "seamless ecosystem driven by data and technology that will provide customers with personalized food inspiration."

"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," he said. "We are excited to collaborate with Microsoft to redefine grocery retail."

Since launching its Restock program in fall 2017, the retailer has made numerous technology advances, including launching a fleet of autonomous vehicles to perform grocery deliveries, partnering with Ocado to open automated fulfillment centers across the U.S. and releasing a wellness-focused app. This new integrated shopping experience comes at a time when Chinese companies such as Alibaba and JD.com are aggressively developing retail-based technology solutions that are making their way into the U.S. and Amazon is introducing new seamless shopping solutions in its Amazon Go stores. 

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The pilots will commence using Microsoft Azure to store and process data generated from its app and proprietary Edge Shelf system that uses digital displays to communicate prices, promotions, nutrition facts and other details about products on the shelves, as well as its Scan, Bag, Go program. 

Kroger officials said the Edge Shelf will also provide new revenue streams by enabling the retailer to sell digital advertising space to CPG brands, which will be shared with targeted consumers based on personalized offers and computer demographics. 

Additionally, the system will offer store associates productivity solutions that could reduce the time it will take to fulfill curbside pickup orders through visual cues that quickly guide them to requested items in the store as well as video analytics powered by Microsoft Azure that will help associates pinpoint out-of-stocks. 

The commercial RaaS product is described by Kroger officials as "by a retailer, for a retailer," offering 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 the Edge Shelf."

The first RaaS product offerings will be on display at the NRF 2019 show from Jan. 13-15 in New York, with McMullen set to deliver a keynote on the subject at the event. Future commercial products will include Scan, Bag, Go; Virtual Store Manager; sensor network; and connectors to corporate systems such as point-of-sale, and inventory management, tag and merchandising systems.