Dive Brief:

• Valuable shopper insights gleamed from its wholly owned 84.51° analytics arm enables Kroger to offer personalized shopping experiences resulting in a substantial growth of its digital business, according to RIS.
• During its recent earnings call, Kroger said it had more than 30% growth in new digital customers and a more than 30% increase in digital visits in the first quarter of 2017. But while digital revenues are increasing, short-term performance is taking a hit as Kroger continues to heavily invest in improving the user experience.
• An example is the investment the retailer is making to personalize offers and tailor pricing through its My Magazine direct marketing vehicle. By leveraging 84.51° analytics expertise, Kroger delivered more than 6 million unique and customized offers to its Plus Card members through My Magazine in Q1.

Dive Insight:

Kroger’s best-in-class loyalty program and application of shopper analytics is often lauded as the industry standard and an envy of many retailers. By teaming with its 84.51° analytics arm (formerly part of dunnhumby), the grocer applies predictive behavior modeling to segment shoppers and creates individualized experiences —including personalized promotions and tailored pricing — for its Plus Card members. This kind of customized user experience has contributed to growth in Kroger’s digital customer base and interactions with shoppers.

Kroger, which for a long time lagged behind other retailers in the e-commerce and digital space, has made rapid strides in recent years. Its ClickList service, which allows customers to order online and pickup at the store, has scaled quickly and gotten ahead of competitors, with hundreds of the company’s stores now offering it.

But perhaps most compelling among Kroger’s digital achievements is its mobile app. During its Q1 earnings call, the company said its growth in mobile visits is outpacing overall digital growth. It's not surprising since the mobile app is where Kroger really excels in its use of data mining and shopper analytics to personalize promotions and deliver great value and relevancy to shoppers on a one-to-one basis.

Coupled with price-cutting initiatives, Kroger’s focus on personalized pricing through e-coupons and mobile app offers — Best Customer Bonuses and Free Friday Downloads among others — helps keep it price-competitive against Walmart and a host of value retailers like dollar stores as well as Aldi and Lidl. The personalized deals also strongly resonate with shoppers and help the retailer not only retain its best shoppers, but keep them loyal and spending more in its stores.

From a competitive perspective, the increasingly personalized pricing scheme throws off the ability to comp-price when one can’t truly determine the ‘real’ price shoppers pay once digital coupons, loyalty rewards and other perks are taken into account. So Kroger’s ability to turn shopper analytics into actionable insights enables it to not only stay ahead of the pack, but actually gain ground on the competition.

As some analysts have noted in the past, more and more grocers are catching up to Kroger’s data-focused retailing model. This provides just enough incentive for Kroger to continue investing in pricing, digital, e-commerce and other user experiences that will help it sustain its leading position in the supermarket sector. With Amazon set to complete its $13.7 billion takeover of natural and organics pioneer Whole Foods, the country's largest supermarket chain will need every advantage it can muster to compete.