Photo: Kroger
Will putting a spotlight on associates help boost Kroger’s business?
At its annual shareholder meeting last week, Kroger formally introduced a new mantra, “Feed the Human Spirit,” that in part focuses on store associates’ connections to local communities.
Displayed broadly on banners, the new slogan was introduced by a “Year in Review” video that largely featured associates. While thanking customers for helping Kroger reach milestones around sustainability and environmental initiatives as well as supporting veterans, the video elaborated on Kroger’s capacity to support local organizations, provide meals to “our neighbors in need,” create jobs, and deliver “countless smiles” through one-on-one engagement.
On its first-quarter conference call on June 15, CEO Rodney McMullen sent a special message to associates who were listening. He said, “We’re focused on executing our Customer 1st Strategy and living our company’s purpose, to Feed the Human Spirit. … Whether it is through providing a billion meals to Feed Hungry Families in our neighborhoods over the last four years, committing to being a zero waste company by 2020 or simply extending a smile or a helping hand to a customer, we and you make the world a better place one associate, one customer, one community at a time.”
At Oppenheimer’s consumer conference last week, Mike Schlotman, CFO, said he personally believes the store will always serve a purpose because people are “social animals” and referenced the new slogan in underscoring the importance of in-store interactions.
“Feeding the human spirit is more than just feeding the human belly,” he said. “8.5 million times a day our associates get to help customers have a better day and it’s through big things and little things. You can only do that with a physical connection with the customer. You can’t do that by coming home and having a box on your front porch waiting for you.”
- Kroger Reports First Quarter Results – Kroger
- Kroger Q1 2017 Earnings Call Transcript – Seeking Alpha
- Kroger stresses ‘human connections’ at annual shareholder meeting – WCPO
- Kroger to ‘feed the human spirit,’ McMullen says – Supermarket News
- Kroger Oppenheimer Consumer Conference Presentation Webcast June 21 – Kroger
Discussion Questions
DISCUSSION QUESTIONS: With so much messaging centered on savings, how can retailers shift the focus to associates’ involvement in community actions? What challenges do chains face in playing up associates in their marketing?
Poll
BrainTrust
Jon Polin
Cofounder and President, StorePower
Mohamed Amer, PhD
Independent Board Member, Investor and Startup Advisor
Merchandising the talent has worked very well and has even been a core promotional approach in medical service, financial services, restaurants, auto repair and other industries. Do we care who our butcher, baker or buyer are in grocery? We sure do. Where value can be added by knowing the capabilities and attitudes of those involved in the product or service process (grocery is both), the consumer and the establishment benefits. Acknowledging staff is an indicator that the firm values its associates. This matters to consumers.
Telling a great story that connects emotionally with your audience is empowering. When brands can humanize the overall brand experience it can only help strengthen the bond and hence the affinity for your brand. Brand storytelling is a powerful art form that needs to be leveraged and used more often in today’s digital world. While storytelling is important, being able to publish and distribute these stories locally and globally is where you need to create meaningful workflows powered by different technologies.
It’s important to build an emotional connection between a store and its customers, and a focus on employees’/associates’ involvement in the community is a great way to do so. Loyalty doesn’t come from low prices and product selection (although those can help). It comes from an emotional connection the customer has with the brand, which includes the employees representing the brand.
It never hurts to acknowledge employees. Feed the Human Spirit is a great message for associates to show that they are valued in the community. It’s also a message targeted towards Millennials, who like to support brands that stand for something.
Grocery stores should be part of the community they serve. I think that is important for social branding. Should that be the main message of a campaign? I don’t think that is going to move the sales needle or separate the company from competitors.
The key to differentiation is to do things that your competitors can’t copy. This is something anyone can do. Additionally, the customer has to believe it.
In my opinion, supermarkets are out of touch with their customers’ needs. That is why Wegmans draws from such a large radius. Customers want convenience, fair pricing, help making meal decisions and inspiration.
If supermarkets understood the needs of their customers, Blue Apron and the meal kit delivery segment would never have been launched by startups. It would have been launched by supermarkets.
While this may be changing due to AI, bots and more — transactions still tend to be between humans, even in e-commerce. In Kroger’s case, even many of their e-commerce transactions are click-and-collect, which involve the customer interacting with Kroger associates at the pickup point. It makes sense for Kroger to use their associates as a key asset in an environment in which human interaction is diminishing (but still existent and real).
The larger the chain the more difficult it is to find quality people to be involved. Ever since the Amazon-Whole Foods acquisition was announced, new messages of hope have been invented. Look for other large chains to get their PR departments working overtime to create happy messages of hope.
There is a fine line here. I think it’s great to support associates who are interested in local community activities. If the associates receive company acknowledgment and kudos from peers, it makes them feel better about their jobs and themselves and no doubt that helps them provide better customer service. However if stores are not up to customer expectations with cleanliness, overall associate friendliness and assistance when needed — and nicely merchandised with attractive prices and fast check out — the good-will falls on deaf ears. Moreover, it’s not that customers don’t care about others, it’s hard for them to grasp what employees and their employers are involved with without a tremendous amount of marketing support which is expensive and typically does not happen. So it’s fine for Kroger to help local communities through associate involvement but they need to make sure that all the essential elements for customers come first.
It’s where the company chooses to shine the spotlight. Kroger appears to be saying their success turns on how well the company is connected through each associate and store in the communities they serve.
The key operational concept, highlighted already by other BrainTrust colleagues, is storytelling. This transcends specific strategies and is as old as humanity. Storytelling represents the basic means by which we connect with each other regardless of the medium. The acknowledgement and reliance on the associates to be the conduit of the stories is a tremendous first step. The stories need to be real, local and genuinely told and can’t come across as traditional marketing.
It you want your staff to treat your customer well then you need to treat the staff well. Kroger’s approach is an acknowledgement of the value of the staff to both the retailer and the customer. I believe this can resonate with current and potential customers.
Will it entirely replace pricing as a reason to shop Kroger? Probably not. However it may reduce the emphasis on price for many shoppers.
In the age of social consciousness, earning consumers’ trust via transparency is key to long-term retailer and consumer engagement. In addition, despite all the technological and innovation advancements, the human side and empathy go a long way to resonating with your customers. Showcasing store associates is an outstanding first step to gaining their trust, beyond a good shopping experience.
The key differentiators between pure-play e-commerce businesses and in-store shopping are the multi-sensory experiences and, even more importantly, the emotional connection between the consumer, the product, the brand and the store. Empathy goes a long way!
At the end of the day, I have a choice to make about the grocery store in which I shop — Walmart, Kroger and Publix are all within a block of each other. The last factor in my selection criteria is whether they make me feel warm and fuzzy about their associates. Price and selection will always come first given an acceptable in-store experience.
Pffft. This idea always sounds great but it does nothing to increase preference. Why? Because it’s all about Kroger. Not about the customer. People say they would prefer a brand that’s involved in the community. But that’s not the reason why they go into a preferred store to buy groceries. Good intentions are sweet. But don’t mistake them for the reasons shoppers choose.
Kroger has had employees and their stories as part of its strategic pillars for years. How is this different? It could be if I see “Kroger-branded” employees out in the community doing good and helping feed those many hunger-challenged families. But that’s been the job of other types of organizations for so long that shoppers may not even notice Kroger people being involved directly. BOPIS offers a more direct opportunity for employee-customer interaction but moves the long-term needle in the online direction, potentially defeating the purpose. I’m not sure I “get” the strategy.
Corporate Social Responsibility (CSR) is extremely important as customers now hold companies to a higher standard. There is so much competition so customers can be very selective about where they shop and have been proven to value CSR. Strong PR initiatives can position this shift to give the public more visibility (social media, events, press, etc.). Retailers must tell a compelling story, one that speaks to genuine human emotions. If customers believe there is a community of real, compassionate people behind a brand, they will feel connected and loyal to the brand as a whole.
Building a sense of community must be accomplished within the four walls of the store in order for the business model to work. Shifting from just selling product to engaging with customers is critical. So how does a grocery store format do this, especially with tight margins? It requires enabling associates to not only better understand the customer and their needs (through personalization, loyalty data, etc) but to also streamline operations so that the associate has more time to engage and build relationships with customers. Technology that can enable the associate to do tasks more efficiently AND allow them to engage with customers is required to drive the engagement model to operate profitably within the low margins of the grocery store.
At first, I thought like chicken soup, Kroger’s strategy can’t hurt. That’s not entirely true. If they put strategy and dollars behind ineffective communications, i.e. an execution that doesn’t engage and doesn’t make shoppers more committed to Kroger, then it’s just out there with no impact. A compelling story aka message is not sufficient. It must be heard, seen and generates a more positive relationship with Kroger’s. So, I caution Kroger’s to invest in the execution and not just rely on having found a differentiating and feel good message.
I believe the “human” strategy is exactly right. If you get in a price war with Walmart, Aldi, AMZN and the like, it’s not going to end well. But by focusing on an area the aforementioned do not excel at -like people – you’ve got a much better chance to succeed, long and short term.
Problem for Kroger though is twofold. 1) As stated, they’ve been hitting the price factor for so long it’s tough to think of them in any other light and 2) if they’re going to focus on their humans, they need to check their hiring practices, as I would not call their in-store associates top notch, or even close. They should look at Whole Foods for the emulator there. That’s best in class, IMO.