Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a “BrainTrust” panel of retail industry experts.
Kroger is keeping close tabs on its customers and that more than anything may explain how the grocer has managed to achieve significantly higher same-store gains than rivals Safeway and Supervalu. David Dillon, Chief Executive of Kroger, told the Los Angeles Times that the company’s work with dunnhumby has given it greater insights into the shopping behavior of its customers.
One advantage of the dunnhumby system, according to the LA Times report, is it allows Kroger to identify items that will continue to sell at higher prices. “Ten years ago we paid too much attention — almost every day — looking at what our competition was doing,” Dillon said. “We can’t ignore our competitors, but we have to pay more attention to what our customers want in our stores.”
BrainTrust panelists agree that Kroger is a top player in the game, and will continue to outpace competitors due to its focus and strategy. “Kroger seems to be succeeding where many other retailers have failed–targeting, precisely, what their customers want where they shop,” said Charles Walsh, President, OnmiQuest Resources, Inc. “There are other notable retailers who have long placed an emphasis on ‘store of the community’ but whose goal of identifying with the local customer base in product and services was largely unrealized.”
One analyst says Kroger’s work with dunnhumby is pioneering for US grocery retailers. “Only Stop & Shop has appeared as a peer in the area of leveraging customer data to customize the experience for Best Customers,” said Mark Price, Managing Partner, M Squared Group, Inc. “By focusing on understanding Best Customers, Kroger is embarking on an effort that can significantly improve their margins as well as the long-term growth viability of their business. Personalized coupons are a good start–but they are not the destination.”
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On the converse, another analyst says it is also important for Kroger to focus on consumers who are not shopping with the Kroger brand. “Keeping your current customers happy is always a good idea,” said Stephen Needel, Managing Partner, Advanced Solutions. “But focusing only on those customers misses a large part of the picture. They should also focus on those who do not shop in Kroger, understanding what it is that keeps them away. If changes can be made to attract new customers while retaining the old, that is a huge win.”
