Five Ways Kroger is Driving the Store of the Future

Kroger is the largest U.S. grocer and second largest U.S. retailer, but with enormous presence, comes enormous responsibility to drive the future of grocery. Fortunately, the mass supermarket chain is not disappointing, in fact, they’re exceeding on many accounts. In October of last year, they announced their “Restock Kroger Plan,” and while it’s only January, results have already surpassed expectations. The plan consists of four pillars: Redefine the Food and Grocery Customer Experience, Expand Partnerships to Create Customer Value, Develop Talent, and Live Kroger’s Purpose. Below are five of the ambitious steps Kroger has courageously taken to drive the store of the future as part of their plan.

Integrating Shoppable Recipes Platform

In January of 2018, Kroger announced that it had integrated the Myxx shoppable recipe platform with more than 1,300 stores across 17 states. The platform allows users to search through more than 50,000 shopable recipes that are connected to their local retailers. Users can select the recipes they want to make and with just a click, all of the items needed auto-populate into a dynamic shopping list. The smart shopping list can be used in-store with an aisle-by-aisle guided list or the the user can send the list to one of their local retailer’s online cart for curbside pickup or at-home delivery. The platform is free for users and even allows for filtering by food preference or dietary restriction. In offering this platform to its customers, Kroger is able to compete with the convenience of online grocery shopping and the rapid adoption of meal kit programs. The platform also offers more choice to the consumer, with the ability to purchase in-store or online, compare product prices across brands and receive promotions for local Kroger stores and the CPG brands they partner with. Myxx plans to expand functionality across the entire Kroger family of retailers this year.

Growing Mobile Payment & Couponing Capabilities

In December of 2017, Kroger teamed up with Chase Pay—the digital engagement wallet from JPMorgan Chase & Co.— to offer mobile payments with select retail markets and e-commerce programs. Through the partnership, Chase’s 65 million customers will have an opportunity to use Chase Pay at Kroger for online and in-lane purchases. The Chase Pay app creates a secure, scannable QR code that can be scanned at the register or via in-aisle scanning devices that allow for entry of mobile payment credentials. With mobile wallets, Kroger is creating a seamless shopping experience for their customers, reducing lines and time, while at the same driving down the cost of checkout for re-investment in strategic growth. But offering mobile payment was just the first step for Kroger in their mobile plans. Kroger also acquired digital coupon and promotions provider, YOU Technology Brand Services, in order to expand upon their ten year relationship with the company that has long powered the incredibly popular Kroger app. Part of the goal was also to establish a presence in YOU headquarters and technology innovation hub—Silicon Valley. Now operating as an independent company within Kroger, YOU Tech is helping to provide hundreds of millions of personalized digital coupons to Kroger customers, with digital coupon downloads having recently reached 1 billion downloads and digital revenue having grown 109% in the third quarter of 2017 as a result.

Expanding Home Delivery & Curbside Pickup Options

In addition to the announcement of partnership with Chase Pay in December of last year, Kroger also announced that QFC, a division of the company, would offer home delivery options to QFC stores in Puget Sound and Portland. Home delivery was made possible through partnership with Instacart, an on-demand retail delivery service. Their service would serve as a complement to ClickList, an online ordering service for curbside pickup where online orders are streamed into tablets mounted atop grocery carts that Kroger employees use to shop their way down grocery aisles to fulfill online orders. Instacart was a natural partner for Kroger because Instacart is designed for customers who prefer doing their online grocery shopping from local stores, where they know the products. Similar to ClickList, Instacart “shoppers” (aka store associates), fulfill the orders by hand-picking the items from the store and delivering them to the customer within a scheduled one-hour time frame. By expanding ClickList and offering home delivery to the shopping option mix, Kroger is meeting consumer demands for the convenience of shopping anyway they choose. And, by using its grocery stores as fulfillment centers, Kroger is transforming its retail showrooms into multi-channel shopping environments.

Creation of Cloud Enablement Team

As an additional effort to accelerate their digital initiatives, in November of 2017, Kroger expanded their cloud computing portfolio with Google Cloud Platform (GCP). While Kroger formerly operated  with Google, Microsoft and Pivotal, the portfolio expansion brought a new level of capability that has accelerated the delivery of technology-based innovations. To manage the portfolio, Kroger created a cloud enablement team. Comprised of Kroger Technology associates and external recruits, the team focuses on different aspects of cloud computing: product management; private and public cloud engineering and operations; cloud architecture; code infrastructure; automation; and security architecture.

Development of IoT Inspired Infrastructure

Kroger has developed RSI (Retail Site Intelligence), an interconnected, enterprise IT architecture that leverages a multi-protocol approach of ZigBee radios, Wi-Fi, and Bluetooth access points, strategically mounted onto IP video cameras that number anywhere from 120 to 200 per store. Every camera in the store equates to a supercomputer of its own, and every camera is feeding data to the company’s operations, merchandising, LP and shopper marketing teams. The system enables both consumer-facing shopping tools, such as POS solutions and mobile shopping apps, as well as key facets of operations, primarily loss prevention, inventory management and security. On the operations side, a temperature-monitoring solution allows for remote temperature control of refrigerated foods, while on the consumer-facing side, sensor-laden shelves activate digital displays and mobile push notifications of production suggestions. The system also supports a video analytics application that is being used to log, study and determine customer behavior based on sentiment, allowing for real-time store associate intervention when customer disappointment is detected. The RIS system has already saved the company millions in redundant equipment, labor and cost, while enabling consumer behavioral analytics to be collected and acted upon in real-time…a capability no other grocery retailer has achieved.

It is clear that through ongoing steps such as these, Kroger is determined to win the omnichannel arms race and transform from a retail store—to a shopping experience that transcends the bounds of channels and meets the consumer when and where they choose to shop.

“Our efforts are all about making things easier for our customers and providing personalized, affordable and exclusive options that fit their needs,” said Mr. McMullen , Executive Vice President and CFO of Kroger. “Seamless will play a major role in redefining the grocery customer experience. Our hypothesis has always been that our customers will want to have options on how they engage with us. This hypothesis shaped our strategy, and we’ve been executing that strategy by accelerating Kroger’s digital and e-commerce efforts for the last several years.”

Retailers looking to Kroger as a source of inspiration should recognize that omnichannel innovation depends on building a network of collaborative partnerships, investing in data and analysis capabilities, supporting internal IT and client associate development, and migrating operations to agile, cloud-based systems that can integrate in-store and online into cohesive experiences.

 

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