Kroger Powers Personalization and Brand Partnerships With Data Science

Liz Dominguez
Managing Editor
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What’s next for Kroger? The grocer's chairman and CEO Rodney McMullen will be speaking at NRF 2023, Retail’s Big Show, on Monday, January 16. Tune in to the conversation between McMullen and Matthew Shay, NRF president and CEO to hear how, in an ever-changing grocery retail environment, Kroger continues to innovate, during "Feeding the human spirit: A conversation with Kroger CEO Rodney McMullen." 

Kroger has been focused on driving digital engagement, and data science is the key. 

According to the company’s latest earnings call, the brand has launched several initiatives focusing on data to increase targeted personalization, get products to consumers faster (without sacrificing freshness), and grow its retail media business with improved insights. 

Rodney McMullen, chairman and CEO of Kroger, said data science is particularly helping in regard to personalization

“Customers are looking for opportunities to save on the products they love,” said McMullen. “Our loyalty programs and personalized promotions allow them to do just that.”

Kroger's storefront

This is where couponing comes in. Digital coupon downloads are 32% higher than last year, and Kroger expects engagement to continue through the holidays. Through highly personalized digital offers, the company expects more than $200 million in savings for customers this season. 

“We continue to use our leading data science capabilities to develop unique customer insights and offer targeted promotions on the products we know they love,” said McMullen. 

As part of this effort, McMullen said Kroger is growing Boost, its membership program that launched nationwide earlier this year. Doing so, he added, should also help grow its delivery service. 

Delivery Gets Data Boost

Kroger ties in its personalized coupon strategy into its Seamless delivery experience. This quarter, the brand launched app enhancements that make it easier for customers to engage with savings opportunities. 

“We launched our first in-app flash sales and enabled our customers to clip digital offers directly from their cart,” said McMullen. “Improving the customer experience is always top of mind for us, and Kroger Pickup now offers three-hour pickup lead times at all stores in our network, with as little as one hour lead time in some areas.”

Most importantly, said McMullen, the company is utilizing data and science to maximize product freshness for customers as well. 

Expanding Retail Media Opportunities

Kroger’s retail media arm, Kroger Precision Marketing (KPM) is allowing the company’s CPG brand partners to build custom audiences by leveraging data to deliver precise ROI. 

As part of this effort, the company recently added Snapchat as a channel in its retail media suite. Advertisers through KPM can tap into Kroger’s capabilities to utilize Snapchat’s immersive ad formats, said Gary Millerchip, Kroger’s chief financial officer. 

“We are constantly innovating to expand our reach, and KPM recently increased its programmatic advertising marketplace capabilities to include video and one of the fastest-growing digital media sectors, connected TV,” said Millerchip. “These new frontiers will provide exciting future growth opportunities for KPM.”

Growth this quarter was led by retail media, according to Millerchip, who added that the traffic and data generated by Kroger’s supermarket business creates a flywheel effect for alternative profits. 

    Kroger’s Q3 Earnings
    • Total sales: $34.2 billion (compared to $31.9 billion for Q3 2021)
    • Excluding fuel, sales increased 6.4% YoY
    • Gross margin: 21.4% of sales 

    "Kroger achieved strong results in the third quarter as we continue to execute our Leading with Fresh and Accelerating With Digital strategy. Our associates are doing an outstanding job delivering a full, fresh, and friendly experience across our seamless store and digital ecosystem. — Kroger Chairman and CEO Rodney McMullen

    "Kroger's focus on delivering value for customers and our disciplined approach to managing costs in an inflationary environment led to another quarter of strong results. Our consistent execution of our go-to-market strategy continues to build momentum in our business results and gives us the confidence to raise our full-year guidance. We now expect identical sales without fuel to be in the range of 5.1% to 5.3% and adjusted net earnings per diluted share to be in the range of $4.05 to $4.15.” — Kroger CFO Gary Millerchip

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