Walmart and Microsoft partnership is part of a growing trend of strategic tech-retailer collaborations to take competition to Amazon and other global retail titans.
Walmart and Microsoft announced a five-year technology partnership on Tuesday 17 July, as the US-based supermarket chain looks to ramp up its digital transformation.
The grocer is already using Microsoft services for internal applications and processes, but it said it will now embark on a broad set of cloud innovation projects that use machine learning, artificial intelligence (AI), and data platform solutions to evolve customer-facing operations and other back-end systems.
Under terms of the deal, Walmart aims to use Microsoft’s public cloud to innovate faster and better manage costs. It has invested in the full range of solutions from the software company, including overarching Microsoft Azure and Microsoft 365, and day-to-day technology for colleagues such as Workplace Analytics, Microsoft Stream, and Microsoft OneDrive.
The two companies said their respective engineers will team up to assess, develop, and support the moving of hundreds of existing applications to cloud native architectures. For example, a significant portion of Walmart.com and Samsclub.com will migrate to Azure, giving those platforms a cloud-powered check-out that is expected to improve the customer experience.
Satya Nadella, CEO of Microsoft, said: “Walmart is a pioneering retailer, committed to empowering its employees and delivering the best experience for its customers wherever they are
“The world’s leading companies run on our cloud, and I’m thrilled to partner with Walmart to accelerate their digital transformation with Microsoft Azure and Microsoft 365.”
And there’s no denying that Amazon’s continued rise to prominence is a key factor in the decision for Microsoft and Walmart to join forces in such a strategic manner.
Nadella told the Wall Street Journal that the battle to compete with Amazon “is absolutely core” to the formation of the alliance.
If the Walmart and Microsoft arrangement has been agreed in this way, it would suggest Marks & Spencer is thinking similarly as it embarks on its own AI journey with Microsoft. The Amazon factor could arguably have played a part in JD.com’s Google partnership announced in June and the recently-agreed Carrefour-Google Cloud collaboration, as well as the Tesco-Carrefour supply chain alignment deal that is currently under competition authority scrutiny in France.
With Asda and Sainsbury’s moving towards a merger and many international supermarket chains choosing UK online grocer Ocado to develop their e-commerce operations, it appears the key market players are choosing their sides before Amazon makes more significant strides into grocery. Amazon’s role as a disruptor appears alive and well in the supermarket space.
One area where Walmart is looking to gain by working with Microsoft is through building what it describes as a global internet of things platform on Azure. This will include, among other initiatives, developing connected heating, ventilation and air conditioning, and refrigeration units to reduce energy usage in thousands of US stores.
There are also plans to apply machine learning when routing thousands of trucks across the Walmart supply chain.
Doug McMillon, Walmart CEO, said: “Walmart’s commitment to technology is centred around creating incredibly convenient ways for customers to shop and empowering associates to do their best work.
“Walmart is a people-led, tech-empowered company, and we’re excited about what this technology partnership will bring for our customers and associates. Whether it’s combined with our agile cloud platform or leveraging machine learning and AI to work smarter, we believe Microsoft will be a strong partner in driving our ability to innovate even further and faster.”
Retail Connections director Chris Field recently reflected on retailers’ choices when it comes to either buying in or building their own technology. The partnership model that is growing momentum across the globe, illustrated by this week’s Walmart-Microsoft deal, suggests the way forward for some of the bigger players in the industry is to choose a technology house and develop in unison.