Microsoft challenges Amazon in partnership with largest US supermarket: Kroger and Microsoft are joining forces to bring the ease of online commerce to traditional supermarkets. Kroger, the largest supermarket chain in the USA, reformed two units to test the novelties, which include “digital shelves” that show ads and automatically change prices, in addition to sensors that monitor products and help the public to move faster through the aisles.
Kroger can launch the cloud-based system developed with Microsoft in all of its 2,780 stores.
The alliance is yet another example of the use of data technologies by American retailers to improve the routine of buying food – and to face Amazon.com, which is committed to expanding its share of US $ 860 in US food retail. billion.
For Microsoft, it is an opportunity to expand the cloud business, which is behind Amazon’s but has won over customers like Kroger and Walmart, who refuse to further enrich the online giant’s founder, Jeff Bezos. Kroger hopes to sell the technology to other retailers, creating a new source of revenue, with a higher profit margin than that obtained from the sale of food.
“Together we can create something that we couldn’t separately,” said Kroger President Rodney McMullen, alongside Microsoft President Satya Nadella, during a news conference.
At the two stores participating in the tests, located near the headquarters of Kroger and Microsoft, in Cincinnati and Redmond, respectively, consumers using the Kroger self-service application are guided to find the items on their shopping list. When they reach the aisle, the digital shelf shows a personalized icon below the chosen product. On the ceiling, there are devices that process data and monitor missing items. Sensors alert employees if the temperature of the refrigerators warms up.
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Smart shelves light up and help employees collect items ordered through the online service that allows consumers to receive purchases in the store’s parking lot. According to the companies, this system halves the time it takes to process an order.
Microsoft’s artificial intelligence software predicts the age and gender of the consumer, helping companies like Procter & Gamble, PepsiCo, and Kraft Heinz to tailor ads to specific profiles. Kroger also intends to adjust products and ads to users’ preferences, such as gluten-free foods, if allowed. The advertising mix can include movie trailers.
Kroger is not the first major retailer to put valuable data and tasks in the hands of Microsoft’s Azure cloud division. Macy’s, Walmart, and European supermarket chain Ahold Delhaize have also scaled Microsoft, preferring not to buy critical technology from Amazon.
A unique aspect of the partnership is Kroger’s plan to sell the technology to other retailers, many of which are already in the testing phase. The revenue could help Kroger achieve its goal of generating an additional $ 400 million in operating profit by the end of 2020. The plan includes renovating stores, changing product offerings, and strengthening online initiatives. The company’s technology investments include warehouses operated by robots and automatic food delivery.
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