Kroger & Microsoft Are Building Smart Supermarkets To Beat Amazon

With Amazon now making serious moves into the grocery market, supermarket brands are being forced to up their game to remain competitive.

Since launching its flagship beta-test store in Seattle in late 2016, Amazon's Amazon Go stores have sprung up at a rapid pace. In 2018 - after the Seattle store went public in January - three more opened in the same city, followed by two in San Francisco, and three in Chicago. In 2019, Amazon has plans to open another branch of its cashierless convenience stores in Chicago as well as penetrating the New York market.

In total, the ecommerce giant intends to open 3,000 Amazon Go locations by 2021, including stores in London, UK, in airports, and on college campuses.

Naturally, whenever Amazon delves into a new market, existing brands in that space break into a cold sweat and the fight or flight response kicks in. Supermarket chain Kroger has opted for the former and is turning to software giant Microsoft to back it up.


Kroger's response to Amazon Go is taking the form of a concept it's calling the "smart supermarket".

"Kroger is building a seamless ecosystem driven by data and technology to provide our customers with personalized food inspiration," said Kroger's Chairman and CEO, Rodney McMullen. "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."

The smart supermarket may sound like a complicated affair which will take a lot of time and money to put into place. However, a big part of the genius of the idea is that it's a simple matter of retrofitting existing Kroger stores with the technology needed to realize the concept.

The main principle behind the idea revolves around smart shelves. Each product label on Kroger shelves will be replaced with a small digital screen. Ahead of their shopping trip, Kroger customers create a shopping list in the Kroger smartphone app. They then choose an emoticon icon from a list which is attached to their profile.

When walking around the store, the digital shelf tags use advanced communication technology to "read" the customer's shopping list. The shelves containing a customer's listed items then light up with the customer's chosen emoticon when the customer stands in front of them. For example, if your emoticon is a banana and orange juice is on your shopping list, when you pass by the orange juice in-store, the tag underneath that product will change to your banana icon, making it easy to spot the items you need amongst the range on display.

Smart Supermarkets

As well as lighting up with emoticons, the smart shelves also display other data, such as nutritional information, and information on whether the item is suitable for those with special dietary requirements, such as celiac sufferers or vegans. Prices can also be changed dynamically with the technology through applied discounts, and it also helps with restocking.

"The Kroger Technology team has developed a smart technology system, powered by Microsoft Azure and connected by IoT sensors, to transform two pilot stores located in Monroe, Ohio and Redmond, Washington, respectively, near each company's headquarters," said Kroger in a press release. "The pilot stores will leverage RaaS [Retail as a Service], establishing a way to quickly add innovations to create new customer experiences, enable higher levels of personalization through insights, and enhance store associate productivity."

Customers can also scan products using their smartphones (or use special wands provided by Kroger) to skip the lines at the checkouts. Microsoft is rumored to also be working on a 100 percent cashierless checkout solution to rival those seen in the Amazon Go stores, so this will be one to watch for the future.

Final Thoughts

As smart shelf technology becomes ever more ubiquitous, we can expect to see it being deployed in more innovative ways to augment and streamline the grocery shopping experience for consumers. Amazon, it seems, is destined to always lead the way, but by providing a baseline, it gives other brands the opportunity to expand on its ideas in unexpected and interesting ways.

"The RaaS product is enablement software built by a retailer for retailers, supporting modern retail experiences and harmonizing customers' digital and physical shopping experiences," concludes Kroger's press release. "The rapid transformation platform enables a retailer to prioritize its most desired initiatives. 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. Microsoft and Kroger will jointly bring the RaaS solution to market."

Smart supermarkets and Amazon Go are set to be hot topics at Digital Food and Beverage 2019, taking place in July at the Hyatt Regency Austin, TX.

Download the agenda today for more information and insights.

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