Kroger's Analytic and Digital ROI, Sales and Engagement Soar

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Kroger's Analytic and Digital ROI, Sales and Engagement Soar

By Christopher Mulrooney - 09/29/2015
Despite severe headwinds last quarter due to above average volatility in both fuel costs and inflation, Kroger Chairman and CEO Rodney McMullen announced revenues of $25.5 billion, which beat the consensus estimate by $40 million. With a 5.3% gain in same-store sales (excluding fuel), the news marked the 47th consecutive quarter of identical supermarket sales growth for Kroger.  
 
McMullen attributed Kroger’s consistent performance in large part to the company’s formidable branding and growing technological capabilities. While Kroger’s wholly-owned subsidiary, Harris Teeter, has been offering online shopping in select locations for years, Kroger has just begun to roll out similar programs, such as an order-and-pick-up service in Indianapolis or an online pharmacy delivery service in Michigan.
 
Yet McMullen stressed that strides in web sales technology make up only a fraction of Kroger’s digital strategy. “When we think of digital opportunities, we do not limit our focus to e-commerce,” he said. “Digital, for Kroger, includes a broad range of efforts to interact with customers in increasingly relevant and meaningful ways, whether online or through our mobile app. A key metric is our measure of digital household engagement, and during the second quarter we continued to gain household engagement at record numbers.”
 
Kroger now has its sights set on gathering information from its loyalty cards and personalized coupons as part of a larger effort to map out changes in consumer preferences.
 
In recent months, the company has taken major steps to ensure that it remains one of the most innovative grocers on the market. Back in April, Kroger bought out Tesco’s stake in the 50-50 joint venture data analytics firm DunnhumbyUSA that both companies shared to target their marketing and determine product offerings. By fully acquiring the firm, Kroger not only gained a larger workforce, but also a perpetual license to DunnhumbyUSA’s analytics under its new name, 84.51 Degrees.
 
According to The Wall Street Journal, the company now has grocery preference information on 56 million households that span over 18 years. In his latest earnings call, McMullen hinted that investors should expect more decisions to be grounded in quantifiable consumer trends. “…The talented team at 84.51° is helping us grow and evolve even faster due to their closer daily involvement in our business,” he said. “84.51°’s specialty — helping us make data-driven decisions that truly put the customer first — is a significant competitive advantage for Kroger.”
 
If the acquisition in April showed Kroger’s faith in data analytics, the company’s actions this past month reveal an even stronger resolve in its strategy. On September 10th, the company promoted four employees to the executive vice president slot. Most notably, Chris Hjelm, who has been Kroger’s CIO since 2005, was given a much broader role to play within the company. As EVP, Hjelm now oversees 84.51 Degrees while also retaining his position as CIO and head of Kroger’s R&D. The move signifies that Kroger executives are looking to take a more hands-on approach toward data analytics in hopes of better serving shoppers.
 
“This new organizational structure will help Kroger achieve laser-focus to accelerate growth, improve our connection with customers and deliver value for shareholders,” McMullen said.