Data crunching now in aisle 9!
Nadella.
The two companies have worked on projects before but deepened their collaboration over the last 18 months. The digital shelving system debuted in the fall and can now be found at the end of the aisles at 92 Kroger locations. At the two test stores, located near Kroger and Microsoft’s respective headquarters in Cincinnati and Redmond, Wash., customers using Kroger’s self-checkout app will be guided through the store to items on their shopping list. When they enter an aisle, the digital shelf will display a personalized icon chosen by the shopper — a banana, say, or a pumpkin — below the relevant product.
Amazon already grabs about 50 cents of every dollar spent online, but that dominance doesn’t yet extend to groceries, which are still mainly bought in stores. To break into the market, Amazon acquired upscale grocer Whole Foods Market, a deal that sent Kroger’s shares plummeting. The e-commerce king now offers free grocery deliveries from Whole Foods stores for its Prime customers in 60 U.S. cities, and its growing network of cashierless Go convenience stores have also taken a bite out of supermarket sales.
At the test store 10 minutes from Microsoft headquarters, a little more than half of the shelves have been converted into digital displays that light up with a personalized icon when shoppers reach an item they put on the shopping list in the Kroger app. Ellipse-shaped black-and-white devices that look like a cross between a camera and a smoke detector are mounted on ceilings, crunching data and monitoring for out-of-stock items. In a refrigerated meat case, temperature sensors appear every few feet, automatically flagging workers if the case warms up too much, helping prevent the roughly $10,000 worth of meat inside from spoiling.
The smart shelves light up to help store employees pick orders for Kroger’s curbside grocery pickup service, where customers order online and then later in the day have their bags brought out to their car in the parking lot. The companies say this “pick-to-light” system can cut in half the time required to pick each order, a possible advantage as rivals such as Walmart and Target perfect their own curbside pickup services.
Microsoft artificial intelligence software can predict a shopper’s age and gender, data that will help the likes of Procter & Gamble, PepsiCo and Kraft Heinz tailor ads to particular customer segments. Kroger also plans, with a user’s permission, to more specifically target products and ads to a shopper’s preferences, highlighting products for glutenfree eaters, say. Video trailers for upcoming Hollywood movies could also be part of the advertising mix.
Kroger isn’t the first big retailer to entrust valuable data and tasks to Microsoft’s Azure cloud service. Microsoft has also signed up Macy’s, Walmart and European grocer Ahold Delhaize, which would prefer not to pay Amazon for critical technology.