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Microsoft CEO Satya Nadella and Kroger CEO Rodney McMullen. (Microsoft and Kroger Photo)

Can Microsoft and Kroger upgrade the grocery experience better than Amazon and Whole Foods can?

That’s the unstated subplot in the news this morning that Microsoft and Kroger are testing new technologies to streamline the process of finding and purchasing items in traditional grocery stores.

The companies today are unveiling new pilot stores near their respective headquarters in Redmond, Wash., and Monroe, Ohio, featuring smart shelves with digital displays that update prices dynamically and show personalized icons to help shoppers find items they’ve put on their shopping lists. The shelves will help also help workers identify items to fulfill curbside pickup orders.

Customers can find items on their shopping lists by looking for personalized icons on the digital shelves, then scan as they shop for a faster check-out experience, with the option to pay on their phones. (Microsoft and Kroger Photo)

The technology could ultimately roll out to Kroger’s 2,800 retail food stores, which include Fred Meyer, QFC, Pick n Save, and other familiar grocery brands.

RELATED: Is this the future of retail? We checked out the new high-tech grocery store from Microsoft and Kroger

But beyond that, the companies say they plan to work together to offer technology to other retailers, as well, by combining Kroger’s grocery experience with Microsoft’s roots in the cloud, artificial intelligence and the Internet of Things. That’s where the partnership is unusual, potentially expanding beyond stores in the Kroger corporate umbrella.

Microsoft CEO Satya Nadella didn’t hold back in explaining their ambitions, saying that the companies “will redefine the shopping experience for millions of customers at both Kroger and other retailers around the world, setting a new standard for innovation in the industry.”

Nadella previously called out Kroger at the company’s annual Inspire partner conference in Las Vegas last year, showing an example of an “edge smart shelf” that Kroger is working on using Microsoft Azure AI.

With today’s announcement, Microsoft solidifies its position as a technology alternative to Amazon and Amazon Web Services for retailers reluctant to do business with Amazon. The Seattle e-commerce giant is the public cloud leader through its Amazon Web Services division. Amazon has increasingly been moving into physical retail with its Whole Foods acquisition and new initiatives such as its Amazon Go checkout-free stores.

In 2017, Kroger made its intentions clear last year that it planned to stay away from AWS as it moved its massive IT operation to the cloud.

Microsoft, meanwhile, announced a separate cloud services partnership in November with Walmart.

High-tech grocery shopping is the latest example of digital technologies coming to the physical world, with many of the same trade-offs when it comes to convenience and privacy. Among other features, the new smart shelves will allow Kroger to sell digital ad space to consumer packaged goods companies, and the companies say video analytics will allow the shelves to show personalized offers and advertisements based on customer demographics.

This past August, Kroger inked a deal with Chinese tech giant Alibaba to sell groceries online in China. It also has been testing a “Scan, Bag, Go” system that lets customers scan items with a handheld device as they shop.

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