Kroger, Microsoft Team for 'Connected' Stores, Industry-Wide Services

Cyndi Loza
Managing Editor, Member Content, P2PI
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Kroger CEO Rodney McMullen (left) and Microsoft CEO Satya Nadella (right)

Kroger has joined with Microsoft Corp. to pilot two data-driven, "connected experience" stores and jointly bring to market a commercial retail-as-a-service product for the industry at large.

Kroger's internal team has developed a smart technology system, powered by the Microsoft Azure cloud platform and connected by Internet 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 the stores, near tech-enabled smart shelves and through Kroger's mobile application, the pilot stores will provide “never before seen” shopping experiences. Those include the EDGE (Enhanced Display for Grocery Environment) Shelf, a system that uses digital displays to communicate everything from prices and promotions to nutritional and dietary information. The system was originally unveiled last January at the NRF Show in New York.

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 (near Microsoft HQ) have been converted into digital displays that light up with a personalized icon, Bloomberg reported. 


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 partnering 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, along with temperature sensors every few feet in a refrigerated meat case to automatically flag workers if the case warms up too much.) 

The EDGE Shelf will also allow Kroger to generate new revenue by selling digital advertising space to packaged goods vendors. Kroger can deploy personalized offers and target ads to specific shopper segments using video analytics.

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

Retail as a Service Offerings

Meanwhile, the partners' commercial product is a Kroger solution again powered by Azure that offers a suite of capabilities to support retailer KPIs and merchandising plans, collect customer insights, enhance employee productivity, improve out-of-stocks, better the customer experience, and allow for hyper-personalization using EDGE and other proprietary technology.

The companies describe the product as “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; a sensor network and connectors to corporate systems like point-of-sale; and inventory management, tag and merchandising systems.

About the Author

Cyndi Loza is managing editor, member content, for the Path to Purchase Institute. She has been a member of P2PI's editorial team for more than seven years, covering retailers including Target, 7-Eleven, The Home Depot and Dollar General. Read More