Microsoft is fighting Amazon on its home turf: Retail!

Microsoft is teaming up with
America’s second-largest grocery chain to fend off Amazon (The Verge)

• Microsoft is collaborating with Albertsons to create a more ‘frictionless’ shopping experience to compete with Amazon Go stores.
• Using AI, cognitive technologies and data science, the collaboration aims to reduce waiting times, help employees track inventory and assist when they may need additional stock.
• Albertsons aims to expand its technology integration, e.g. last year they implemented the ‘one-touch’ app allowing consumers to pay for their petrol using the app. Microsoft also is partnering with a number of supermarkets such as Kroger to provide digital signs and apps to allow customers to find items more quickly.

Analysis & Comments

• While Amazon’s exposure to the grocery channel is small (Whole Foods + plans to open “thousands” of Amazon Go stores), one fear is that this is just the wedge for a more concerted attack.
• Recent research from Bain suggests that US grocery store customers tend to stick with their preferred physical store brand when they initially shift to online – giving incumbents an initial advantage.
• Plus, food retailers have been working with new technology for a number of years (Pea Pod, Ocado etc.) & so this move should be seen as incremental rather than innovative and/ or reactive.