Kroger and personalization: A grocery retailer becoming a media player?
By 2021, 90 percent of Kroger’s in-store sales are expected to be influenced by digital in some way, Michael Wilhite told attendees at the Mega-Conference last Tuesday.
Wilhite is vice president of data strategy for 84.51° – the analytics arm of Kroger. This division employs a sophisticated, proprietary suite of tools and technology to turn customer data into knowledge. Its aim is to put the customer at the center of every business decision.
Kroger’s advertising strategy is centered on using big data and knowledge about its customers to cut through the clutter to drive real connections and sales.
While Kroger’s heritage is that of a grocery retailer, Kroger Precision Marketing, which launched in the Fall of 2017, is giving the company the opportunity to expand its business through exclusive touchpoints: advertising on Kroger channels, word-of-mouth advertising and advertising across the web.
The four principles that anchor that path:
- Understand the journey – This means knowing the customer: (1) discovering what they need or want, (2) their shop mindset, (3) buying mode and (4) the reflect mindset (when they are reflecting on their experience).
- Always deliver relevance and build trust
- Amplify the impact by layering channels for greatest impact
- Keep the message clean and simple across all channels
Today, Kroger employs more than 450,000 associates who serve nearly 9 million customers every day in about 2,800 retail food stores under a variety of local banner names in 35 states and the District of Columbia.
Wilhite said Kroger has been fortunate, versus some of the other retail verticals, in that its customers have been a little bit slow on the digital adoption curve. Today, the challenge for Kroger is to view digital as an opportunity, not as a disruption.
As a result of fragmentation, Wilhite said customers are actually being exposed to a lot more media than they have before. The problem, he said, is that many of the messages customers are being exposed to are systematically ignored because customers don’t see the relevancy. Ad blocking software also is contributing to this. Being able to reach them and creating an experience through digital channels is key to success, Wilhite said.
He said it’s not a question of whether customers are shopping in stores or shopping online; they’re doing both. With mobile, Wilhite said Kroger has the ability to enable a completely different experience for customers that it wouldn’t be able to do otherwise. “That growth in mobile is a massive opportunity for us,” he said.
Previously, Kroger relied on analytics to determine the best time to target customers with a message. “The opportunity we have with digital,” he said, “is to move from monologue to dialogue. We can enable and empower the customer to have a completely different experience, to actually interact.”
He told publishers at the Mega-Conference that Kroger is always seeking ways to leverage the combination of data, science and customer experience in more meaningful ways.
And, the proliferation of channels and the opportunities available today have created two amazing things. He said, “We have an expansion of channels that leads to an expansion of experiences.”
Instead of longing for the good ole days when customers shopped a certain way, he said 84.51° is focused on opportunities for more touchpoints, more opportunities for data than the company ever had before. This equates to exponential growth, Wilhite said.
But, he warned: “More data does not mean better in a lot of instances. As a matter of fact, it creates complications.” He said it is important to focus on data strategy. “If there is nothing else that you take away from this talk,” he told publishers, “focusing on experiences and building trust with your subscribers may be the most important thing that you can do.”
A simple personalization example
To show the types of personalization that Kroger is focusing on, Wilhite gave this example of a message that Kroger might send to “Cassie,” a Kroger customer. Knowing that the weather is chilly where Cassie lives and that Cassie regularly buys soup for lunch and uses her phone for promotions, Kroger might engage Cassie about 11:30 a.m. on her smartphone with a promotion for her favorite brand of soup.
To execute this, Kroger needs things like simple GPS location data, channel relevance to know the best way to reach a given customer, active balance-on-hand data so it doesn’t activate an offer on a product that is unavailable, and analysis to shape the most meaningful experience for her.
While the rich data Kroger has is valuable, Wilhite also talked about the need for a more robust digital ecosystem that will serve up the most relevant experience customized to each user.
He hinted at publishers that Kroger might be interested in a partnership with “certain companies in this space that might have a subscriber base and could get a lot of information about the type of interests in topics that people have.” Currently, he said Google seems to be the furthest along in this area.