Kroger Transformation is All About Redefining the Customer Experience

Following a less than spectacular first quarter−when its stock tumbled to its largest one-day loss since 1999 after same-store sales dropped for the second consecutive quarter−Kroger, the largest U.S. supermarket chain by revenue and the second-largest retailer (behind Walmart), registered a much more positive fiscal result in the second quarter.

Total second-quarter sales increased 3.9 percent, to $27.6 billion, up from $26.6 billion for the same period last year. 

Kroger CEO Rodney McMullen said during the company’s first-quarter earnings call that a “relentless focus on the customer” allows the company to “deepen our connection with customers and create shareholder value. The customer remains the center of everything we do. How we invest each year to drive customer engagement changes regularly based on customers’ changing needs and wants.”

Based on its second-quarter results and expectations for the balance of the year, Kroger confirmed its annual net earnings guidance.

“Kroger has a history of successfully evolving to meet our customers’ changing needs because we put the customer at the center of everything we do,” McMullen said. “We are transforming today, too. We are reprioritizing and accelerating investments in our Customer 1st Strategy to anticipate and meet rapidly-evolving consumer demands to shop with us for anything, anytime, anywhere. Our transformation is all about redefining the customer experience.”

How is Kroger redefining the customer experience?

“We’re doing this by combining our knowledge of food and our ability to personalize through the use of data analytics; we’re doubling down on digital, and we’re leveraging new and ongoing partnerships to deepen our connection with customers and drive revenue,” McMullen explained.

Kroger, McMullen noted, is uniquely positioned to be the partner “our customers turn to for their meal needs because we know food and we know our customers better than anyone. Meals have always been our expertise. Kroger is often the one driving change and innovation behind the scenes.”

McMullen said Kroger prides itself on the role it’s played for the past decade in making natural and organic products more affordable and accessible to shoppers.

“We’ve always believed that our customers shouldn’t have to pay higher prices just because a product is natural or organic,” he said. “We developed our Simple Truth, brand to be honest, easy, and affordable because our data told us this was a great customer need in the marketplace. Today, Simple Truth is the biggest natural and organic brand in the country by volume. This market continues to provide a robust opportunity for Kroger.”
What’s more, McMullen is supremely confident in Kroger’s knowledge of its customers.

“Across Kroger, we know our customers better than anyone,” he said. “We have a 13-year advantage of using data insights to connect with customers. Data analytics are fully integrated into our business, as 84.51° helps us make merchandising, operations, and marketing decisions. In the last year alone, Kroger has made more than 3 billion personalized recommendations to customers through product offers, promotions, recipes, and more.”

Jen Gray, SVP, Brand, Marketing & Creative Services, HelloWorld, told Loyalty360 that, as Kroger looks to invest in its digital channels to enhance the customer experience, there is also a great opportunity to partner with manufacturers to deliver digital surprise and delight experiences, which helps to gain more knowledge about specific shopper behaviors.

“Today’s digital solutions allow retailers and manufacturers to execute and analyze quickly together to optimize their businesses,” Gray explained. “It will be interesting to see how Kroger leverages its data insights as it looks to double its digital spend and personalize the customer experience, and what it does today may look vastly different from a year from now.”

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