Dive Brief:
- Kroger is investing in cross-channel experiences to drive sales in the coming year, CEO Rodney McMullen said during a Thursday Q4 2023 earnings call. He noted customers who shop both in-store and online spend three to four times more than in-store only shoppers.
- The grocer is piloting a slew of initiatives to improve pickup. Plans include testing customer pickup lockers and drive-thru lanes to make digital pickups easier, according to interim CFO Todd Foley. Kroger will also introduce AI-enabled store routing technology to help associates fulfill pickup orders more efficiently.
- Kroger is also increasing wages and benefits to improve staff retention. “We firmly believe that by investing in associates and being an employer of choice, we can facilitate an outstanding customer experience,” McMullen said during the call.
Dive Insight:
Kroger sees digital sales as an important growth accelerator for the overall business, and the company is making investments that will increase the number of omnichannel customers.
One of the key initiatives is ensuring digital customers can receive their orders however they want, whether through same-day pickup or next-day delivery, according to McMullen.
“Customers value the ability to shop on their own terms with zero compromises,” he said.
Lockers and drive-thru options will help Kroger keep up with customer demands. Speed and convenience were two benefits of omnichannel shopping highlighted in a report released last month by 84.51°, Kroger’s data and analytics unit.
Nearly half of omnichannel shoppers say they spend less time ordering online than they do shopping in-store, according to the 84.51° survey of 400 Kroger customers. Among this cohort, more than 4 in 5 who use pickup or delivery options cite convenience as the reason for doing so.
Kroger’s automated fulfillment centers, called sheds, are also playing a role in seamless digital options. Net promoter scores for deliveries made through these fulfillment centers reached their highest-ever level in Q4 2023, according to McMullen.
The NPS improvements are a sign that Kroger has faith in its sheds despite putting expansion on hold in September. The automated warehouses utilize a network of robots to fill orders and lean on technology to optimize everything from delivery routes to customer service.
