Digital Transformation of Retail Industry in Asia Pacific to Redefine Customer Experiences and Improve Revenue

• 
  Kroger and Microsoft will jointly bring to
  market Retail as a Service product for retailers, aiming to reinvent the customer
  experience. The partnership brings together Kroger’s world-class expertise in
  the grocery industry with the power of Azure and Azure AI.
• 
  Microsoft Asia’s Unlocking the Economic Impact
  of Digital Transformation in Asia Pacific
  [1]
  study predicts that the retail industry is expected to add
  US$272 billion to the region’s GDP by 2021, should all retail organizations
  embrace digital transformation initiatives.
  

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SINGAPORE - Media
OutReach - 9 January 2018


– The Kroger Co. (NYSE: KR), and
Microsoft Corp. (Nasdaq: MSFT) announced a collaboration to redefine the
customer experience using Kroger Technology products powered by Microsoft Azure,
the retailer’s preferred cloud platform for Retail as a Service (RaaS). Through
this innovative partnership, Kroger together with Microsoft, will jointly
market a commercial RaaS product to the industry, as well as pilot a connected
store experience.

 

Retail
as a Service Commercial Product

The introduction of the commercial RaaS
product, a Kroger solution powered by Microsoft Azure, offers 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.

 

The RaaS product is enablement software built
by a retailer for retailers, supporting modern retail
experiences and harmonizing customers’ digital and physical shopping
experiences. The rapid transformation platform enables industry players to
prioritize their most desired initiatives. Future commercial products include:
Scan, Bag, Go; Virtual Store Manager; sensor network; and connectors to
corporate systems like point-of-sale, inventory management, as well as tag and
merchandising systems.

 

Connected
Store Experience Pilot

The Kroger Technology team has developed a
smart technology system, powered by Microsoft Azure and connected by IoT
sensors, to transform two pilot stores. They will leverage RaaS, establishing a
way to quickly add innovations to create new customer experiences, enable
higher levels of personalization through insights, and enhance store associate
productivity.

 

“Kroger, the world’s third-largest retailer,
is embracing next-level digital strategies to redefine shopping experiences and
provide personalised services, leveraging the power of Azure and Azure AI,” said
Raj Raguneethan, Asia Lead, Retail and Consumer Industries, Microsoft. “We
believe it is time for industry players in Asia to accelerate their
digital transformation journeys. While 64% of Asia
Pacific retailers have a full or progressing digital transformation strategy in place, they must
move more aggressively towards an Intelligent Retail approach, where
customer-centricity and new omnichannel experiences are keys to success.”

 

Digital
Transformation Improves Retailers’ Profits and Revenues through
Customer-Centricity

Microsoft Asia’s
Unlocking the Economic Impact
of Digital Transformation in Asia Pacific study, which polled 240 business leaders from
the retail industry in the region, found that half of the
respondents will focus on transforming customer service and support as part of
their digital transformation journey to deliver customer-centric
offerings. 

Top business priorities included improving business agility to respond quickly to market trends and opportunities; employee productivity, along with integrating digital channels to deliver omnichannel experiences. To address the latter, respondents will also focus on sales and IT operations for the year.

More significantly, the Study predicts that
the retail industry is expected to add US$272 billion to the region’s GDP, or
1.5% CAGR by 2021, should organizations embrace digital transformation
initiatives.

In addition, respondents
identified improvements to profit margins; revenue from new products and
services; customer advocacy; productivity and revenue from existing products
and services as a result from their digital transformation initiatives.

 

Accelerating Digital Transformation Journeys with Data

Part of the reason why retailers like Kroger have been
able to reap immediate benefits from their digital transformation journey is
the realization of data as a key asset for growth.

 

Close to 50% of respondents are already using data
capitalization, or how data is being leveraged as an operational asset, as a
metric to measure digital transformation success. Additional metrics tracked for
their respective digital transformation journeys include non-traditional
business KPIs such as customer advocacy and process/service effectiveness.

 

“We see the opportunities for the region’s
retailers to zoom into four key areas to build a customer-centric operation for
the future. First, they must exceed customers’ expectations both in-store and
online. Second, they need to start creating actionable insights for intelligent
operations to deliver customer-first offerings. In order to do so, retailers
need to empower employees to deliver in a digital and data-first retail
environment with the right tools. Lastly, they need to acknowledge the
competition by competing with innovation in a global marketplace,” added
Raguneethan.

 

With data,
organizations can accelerate their digital transformation journey via a
three-step process:

1.    



Collection
of data to improve decision-making processes

Retail organizations need
to have a data strategy in place in order to manage the streams of data
available. By doing so, and applying big data analytics, they will be able to
develop real-time insights that can deliver personalized experiences while
simplifying the decision-making process for employees.

 

2.    



Optimizing
existing products and services with data

Data can be used as an
asset to optimize existing processes and for developing predictive analytics to
improve delivery of services and products across channels. Retailers can also
tap on artificial intelligence (AI) to deliver personalized experiences, while
reducing time spent on menial work.

 

3.    



Creating
new business models with data

Data can also be used to develop new
products, services and experiences, as well as new business models, like RaaS
product by Kroger.

In Kroger’s case,
its RaaS offering will also see a pick-to-light productivity solution
for store associates. The solution reduces time taken to fulfil curbside pickup
orders by using visual cues to help store associates quickly find items.
Additionally, solutions like Microsoft Azure-powered video analytics will help
store associates identify and address out-of-stocks to ensure customers can
locate products on their shopping list.

 

“Through
2021, retailers that leverage AI, AR, and IoT for employee and
customer engagement will see customer
satisfaction scores rise by up to 20%, employee productivity rise by up to 15%, and inventory turns rise by up to 25%,” said Victor Lim, Vice President IDC Asia/Pacific. “This will be the result of building upon existing and
new data streams to transform their business models, whereby employees are more
empowered to make real-time decisions, and customers more engaged on a digital
front.”

 

To learn more about Microsoft’s
participation at the National Retail Federation (2019) visit https://www.microsoft.com/en-US/enterprise/events/intelligent-retail-2019 

 

To view photography
and video of RaaS and Kroger’s connected store experience, visit here.

 

About
The Kroger Co. 

At
The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: to Feed the Human
Spirit™. We are nearly half a million associates who serve over nine million
customers daily through a seamless digital shopping experience and 2,800 retail
food stores under a variety of banner names, serving America
through food inspiration and uplift, and creating #ZeroHungerZeroWaste
communities by 2025. To learn more about us, visit our newsroom and investor relations site.

 

About
Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital
transformation for the era of an intelligent cloud and an intelligent edge. Its
mission is to empower every person and every organization on the planet to
achieve more.