Kroger pushes its tech advantage

Photo: 84.51°
Aug 09, 2016
George Anderson

You may be familiar with the adage that all businesses are selling organizations. Something similar can be said today of all companies being tech firms. Examples abound across retailing. In grocery, it would be hard to identify any company that has an edge over Kroger. Last week’s announcement that Kroger’s 84.51° division had acquired the predictive analytics firm Market6 is just another indication that the company sees technology-driven consumer insights as its edge in the marketplace.

“Every decision we make focuses on engaging customers where, when and how it matters most to them. Market6’s technology and people will be key to further enhancing how we communicate with Kroger customers in the most personalized and relevant ways,” said Stuart Aitken, CEO, 84.51°, in a statement.

In making the deal to acquire Market6, 84.51° had the advantage of seeing what the firm could do through its association with Roundy’s, acquired by Kroger in December of last year.

Market6 had an exclusive deal to develop a collaborative portal between Roundy’s and its consumer packaged goods suppliers to focus on optimized assortment and inventory levels, reducing out-of-stocks, and more effectively executing promotional programs and new products launches.

“Our company vision has always been about enabling collaboration between retailers and suppliers in order for them to better serve their customers. We believe that the combination of Market6’s collaboration platform and 84.51°’s customer insights will be a catalyst to help Kroger and its suppliers to realize this vision,” said Dave McLean, executive chairman, Market6.

Kroger created 84.51° in April 2015 after it purchased the remaining fifty percent of its joint venture with dunnhumby/Tesco PLC. The tech firm, which is operated independently, is a wholly owned subsidiary of Kroger.

DISCUSSION QUESTIONS: How critical has the use of technology become in coordinating collaborative efforts between CPG suppliers and grocery accounts? How do you think Kroger’s retail businesses plan to use the technology acquired in the Market6 deal and combine it with existing capabilities to achieve higher levels of performance?

"Every decision maker wants a dashboard that can take them up levels of abstraction from data to statistics to information to knowledge to wisdom. "
"The sooner that retailers learn that they are in the information business, the better. "

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14 Comments on "Kroger pushes its tech advantage"

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Kim Garretson

There has long been tension between CPGs and grocery retail over couponing, with fraud and chargebacks at the top of the list. Digital couponing still is evolving, but innovation is coming there. I think one of Kroger’s smartest moves was to hire Alex Tosolini in 2014. He spent 24 years at P&G, and launched and ran its digital and e-commerce businesses and pilots. I think this news and other moves by Kroger are being driven by Tosolini and his team, with an eye to being better partners with CPGs.

Dr. Stephen Needel

When we built the Retail Alliance 23 years ago (GTE and D&B), it was designed to do exactly what we’re finally seeing start here — we thought it was critical then and we still think so today. It would be interesting to know if Market6 has proven how to do optimized assortments — I’ve yet to see a model that does this well.

Cathy Hotka

The sooner that retailers learn that they are in the information business, the better. Kroger’s ultra-aggressive stance on technology should produce valuable insights and key differentiators that other grocers can’t touch.

Years ago my friend CIO Paul Singer moved to a grocery chain in Minnesota and pronounced that there, it was 1973. At Kroger, it’s definitely 2016.

Camille P. Schuster, PhD.

This is the type of analytics the industry needs.

Lyle Bunn (Ph.D. Hon)

Every decision maker wants a dashboard that can take them up levels of abstraction from data to statistics to information to knowledge to wisdom. Drowning in a sea of data is as much torture as determining how to use the data and through what engine.

Data ownership and corporate privacy compound this retail challenge, and the energy put into discussions between suppliers and merchants tends often to generate more heat than light.

As business dies or thrives on data, its use is a natural cornerstone of every business. So does an acquisition that enables the exploiting and creation of information assets make sense? Absolutely.

The real breakthrough is that Kroger’s has elected to “in-source” this corporate function, (as others have done), which will have the natural impact of better integrating analytics into management, operations and, most importantly, change management.

Hats off, Kroger. You are declaring to your suppliers that you are “in it to win it!”

Joel Rubinson

Data-driven marketing gives repeatable advantages to those who master it. Better first-party data assets will result in better productivity from programmatic advertising and personalized promotion. As the retailer sees the magic, they will then understand the power of unified IDs which helps to solve omnichannel and the question of how to enrich with third-party data. Competing on data brings any marketer, including retailers, to a different place and playbook.

Dan Frechtling

Collaboration between retail and CPG starts with a common platform and common goals. The platform should combine multiple feeds, including point-of-sale, loyalty, inventory, promotional planning and alternative sources like web and social. Market6 has been successful with its model of pulling together data from different systems.

But organizational objectives sit above the platform. CPG and retail can’t maximize convergent data without committing to the same goals and standardizing on consistent information sources and formats across enterprises. Cooperation must go beyond short-term promotions and merchandising to longer-term and lifetime measures of value.

As far as integrations go, this one should be less fraught than most with only 55 Market6 employees, many of whom will simply switch Cincinnati offices, and the cultural commonalities between 84.51 and Market6.

Adrian Weidmann

Technology will be required by retailers of all goods and services in order to remain relevant, viable and competitive in an Amazonian (and now Walmart/Jet) landscape. Retail is a consignment business. This fact has been obscured for years behind veils of agreements and business arrangements. I believe RFID merchandising is the future of brand and retailer retailing. As such, brands and retailers will need to embrace the technologies and processes required to create a 100 percent consignment business model built around RFID tagging.

Patricia Vekich Waldron
Patricia Vekich Waldron
Retail and Marketing Expert; Former IBM Executive
1 year 4 months ago

Amazon is a tech company, why not Kroger?

Mark Heckman

Kroger has been operating in the rarified air of growth and profitability for a record number of financial reporting cycles. Much of their past success can be tracked to their penchant for technology and progressive solutions, whether they be for labor scheduling, pricing strategies or providing customer-centric content to their frequent shoppers.

Going forward, predictive analysis and other companion intellectual property resources will help them determine optimal variety, selection, omnichannel communications and store design as they face the same issues that other brick-and-mortar retailers must deal with. These issues range from right-sizing their stores and their offerings to updating their customer touch points as the consumer changes their priorities and expectations. Kroger will no doubt handle these issues much more empirically and accurately than their less-equipped competitors.

Sterling Hawkins

There’s a reason that Kroger has 50+ quarters of same store sales growth, improved price perception and significant growth in premium, loyal shoppers. They’re very good at gathering, understanding and using customer (and logistic) data. Integrating that data with suppliers was started with dunnhumby/Tesco and taking the next step in collaborative efforts will include not just logistical details, but promotional programs, including personalized marketing. Just as we saw in the early days of dunnhumby, there’ll be first mover advantages as gains are made here in terms of efficiency and trade dollars available.

Peter Charness

This kind of capability did’t happen overnight, and it’s absolutely vital. Kroger has been at this for quite some time. The lesson for retailers on applying technology is, it’s not a magic bullet overnight success, but something that can take years of persistence and fine tuning to get to benefit. Too many retailers look for magic pills and expect instant paybacks or the capital isn’t designated.

Dave Wendland

Let’s be clear. There is a vast difference between information derived from technology and genuine knowledge. I have spoken to many who suggest that they have terabytes of data. To that I say, “so what?”

The key is translating data into meaningful insights which can then be used as knowledge to drive higher performance. If it’s simply data, I’ll pass.

Sounds to me like Kroger’s deal with Market6 will lead to significant retail insight. Hats off to this business-leading retailer for once again reaching beyond the limitations that others may face.

Dave Nixon
Dave Nixon
Data Analytics Solutions Executive, Teradata
10 months 24 days ago

Insights and data should always drive downstream outcomes. This investment is exactly what retailers need to model to understand what the shopper wants from their brands. If they get the right inputs, they can make better outputs, and remove “preference or bias” from the equation and rely on data to inform the experience. Bravo!

"Every decision maker wants a dashboard that can take them up levels of abstraction from data to statistics to information to knowledge to wisdom. "
"The sooner that retailers learn that they are in the information business, the better. "

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