One of most exciting things about the DHI Non-conference last week here in Cincinnati was a session by The Kroger Company, one of our clients at Bridge Worldwide. Through its various banner stores, Kroger is a major player in the retail food business, capturing 10 cents of every dollar spent on food in the United States. The company is not secretive, but it doesn’t go around regularly beating its chest about how it is winning in a very competitive market. In a session titled “Innovation and How to Meet New Expectations for Media Delivery,” RW (Kirk) Douthit and Angie Rose from Kroger shared several nuggets about how they are working to evolve to digital marketing by putting their customers in the center.
The main focus of the discussion revolved around Kroger’s work with its database marketing partner, dunnhumby, to provide personalized messages and offers to its loyalty cardholders. The company has the second-largest database in the U.S., after the Census Bureau. Kirk kicked off the discussion by reframing how Kroger thinks about the loyalty program:
“It’s not about customers’ loyalty to us; it’s about Kroger’s loyalty to its customers.”
This message permeated everything in the company’s session. Kirk and Angie spoke about the company’s use of quarterly coupon magazines (such as the one pictured above) that are personalized for its top shoppers based on their purchase habits. This helps the company drive sales of new products and larger baskets sizes from the 20% of customers who drive up to 60% of total sales.
The Kroger team spoke about how it is gradually embracing digital tools where it makes sense for its customers. They admitted that progress is slower than some customers want, but that it takes time to get things right. And while some shoppers are ready for innovations such as mobile coupons and online circulars, the company still has to provide mailed offers for the many who are not living in the digital future yet.
One of the really interesting digital services that Kroger is planning to release soon is the chance to pull up your Kroger shopping history. It’s a way of giving people a digital receipt and something unheard of in the industry to date. This could help people, say, track their spending on pharmaceuticals over the course of the year so that they can be properly charged back against flexible healthcare spending accounts. It’s a great example of how customers can see additional benefit from using their Kroger loyalty cards.
Finally, I also appreciated the Kroger team’s willingness to share how the decline of traditional media is happening faster than digital is ramping up. For example, a staple marketing tool for decades has been the daily newspaper. When sales needed a boost, Kroger has frequently used newspaper ads to drive traffic to stores on specials. But the decline of newspaper subscriptions is seriously weakening the impact of these ads, and there is no digital solution with the same scale impact. It’s another example Bob Garfield’s The Chaos Scenario come to life.
The entire audience really enjoyed Kirk and Angie’s open and honest communication about the opportunities and challenges in digital marketing. By better understanding their world, those of us who serve them can do much more to help Kroger crack the code.
