Zabka Group launches autonomous Nano stores powered by AiFi and Microsoft Cloud for Retail, gains high customer ratings

Making customers’ lives easier

With the popularity of digital touch points, and the priorities and buying habits of people changing dramatically in recent years, the retail landscape is in a state of transformation. “People need to shop, but they want to spend more time doing things they want to do, rather than what they have to do,” says Tomasz Blicharski, EVP of the Management Board of Żabka Group, operating the largest modern convenience store chain in Poland. “Our mission since we started is to understand what the customer needs and find ways to make their lives easier.“

With the launch of its first location more than 20 years ago, the company’s aim was to establish physical stores within a few minutes walking distance of most people living in urban areas. Now, an estimated 15.5 million consumers live within 500 meters of the nearest Żabka store and, recently, the chain opened its 9,000th store. Żabka was also early to release a grocery shopping app which helped establish its online food shopping and quick commerce delivery service—something that proved critical for Żabka customers during the COVID-19 pandemic. 

Now, the company is taking shopping convenience to the next level and catalyzing a rapidly growing footprint across Europe. With the help of Microsoft and AiFi, a Microsoft Cloud Partner Program member and global independent software vendor (ISV) partner, Żabka Group is launching Nano stores. Offering an autonomous retail experience, Nano stores enable a seamless walk in, walk out approach to food shopping—no checkout lines, clerks, or cash—24 hours a day, 7 days a week.

Going “phygital”

Just as e-commerce has advanced the way retailers collect information and optimize the shopping experience for customers, physical Żabka Nano stores offer something similar, with AI-powered computer vision technology collecting and processing data as customers shop. Based on Microsoft Azure, the AiFi deep learning solution tracks the entire customer shopping funnel in real-time—how customers interact with the products on the shelves, how they react to promotions and communications, and what they choose to take off the shelf and purchase. 

The data collected can activate signals in the store to further enhance the customer experience with suggestions or exclusive offers. In addition, the technology automatically informs inventory tracking and eliminates the checkout process. "This is the so called phygital experience,” says Patryk Powierża, Nano Growth Lead at Żabka Future “We are unifying the physical and online retail experience.” 

“Data collected by AiFi gives Żabka a unique deep dive into customer behavior in this new context of autonomous retail–we are gaining completely new understandings and customer insights,” Powierża explains. “With Microsoft Cloud for Retail Smart Store Analytics we can pull the different kinds of data together, analyze it, and use it to create new ways to elevate the shopping experience for customers.”

In addition to analyzing customer data, Microsoft Cloud for Retail helps Żabka track inventory data, sales data, and operational metrics in real-time to give Żabka end-to-end business views on the performance of individual stores and the company as a whole. 

This helps Żabka manage its supply chain in real time and quickly react when a product is nearly out of stock. The technology also enables the company to precisely predict the demands in each store to easily build ordering schedules for replenishment. “This insight through [Microsoft] Cloud for Retail is helping us become more operationally efficient—and it’s driving smarter, more strategic decision making,” says Powierża. “And it means we are more resilient; we can anticipate potential supply chain disruptions or market changes, and quickly adapt—shaping expectations with our customers in a personalized way.” 

Increased cost-savings, customer loyalty, and foot traffic

Because profit margins are notoriously low in the grocery industry, being able to streamline operations with a single unified solution has led to an even lower overhead for Żabka. This is bringing significant cost savings to Żabka Nano stores that can be passed on to customers. “The ease of shopping paired with affordable prices means customers often come back to the store on a daily basis,” says Paweł Grabowski, Head of Unmanned Solutions at Żabka Future.

When a normally reoccurring customer is not seen for a month’s time, Microsoft Cloud for Retail helps initiate personalized offers to their phone to invite them back in. For people who come in every day, Żabka develops lifetime value through a loyalty program, offering free products and discounts on new items via the Żappka app. The aim is to use real-time communications to shape highly personalized customer journeys, even helping guide new or disabled customers through the store. 

It’s also proven to be a solution for labor shortages in the retail market. From direct customer communications to autonomous check-out, technology can now fill the gap, providing many of the services a store clerk might have provided in the past. 

Grabowski says all of this helps Żabka build even more customer loyalty. “Going to our stores should be as easy, as quick, as enjoyable as opening the fridge—something you do every day,” says Grabowski. “With Microsoft and AiFi we’ve created this. The experience is consistent, it is repeatable, scalable, and adapts to the changing needs of our customers. People know they can count on us to get what they need.”

Doing more with less, driving high customer satisfaction

With nearly 50 Nano stores already launched, Żabka is now the largest chain of autonomous stores in Europe. “We've sold close to 2 million products using autonomous technology over the last year. Right now, we're one of the global leaders in that space,” says Grabowski.

Żabka Nano stores are also seeing high approval ratings with customers. The company’s recent Net Promoter Scores (NPS) show an 80- points customer satisfaction rate, compared to 50 points for average retail stores. 

With customers enjoying the Nano store experience, Żabka sees exciting growth opportunities. “The other aspect of this story is that the technology from AiFi and Microsoft makes the Nano store easy to scale and expand,” says Grabowski. “Again, the low overhead and the repeatable, streamlined operations make it easy to drop Nano stores into both traditional and also nontraditional places—the gym, the university dormitory, in a hospital, or bus station, really there are no limits.” 

Currently, the company is, on average, opening more than 1,000 regular stores per year. With the Nano stores, Grabowski says the company can embark on a much more rapid rollout in the coming 12 to 24 months. He adds that Żabka is already maximizing the value of its investments in this technology—and there is more to come. “We started with opening unmanned stores, but our ultimate goal is to achieve truly autonomous retail operations by removing the silos between different systems and data resources to leverage the power of AI at the full extent.”

Blicharski agrees, adding, “We feel the Żabka, Microsoft, and AiFi partnership will help bolster Żabka expansion as we continue to scale our solution to more new store formats, venues, and locations. We are excited to continue to innovate in the retail space and, even more so, find more and new ways to make our customers’ daily live easier in these changing times.”

Find out more about Zabka Group on Facebook and LinkedIn.