Speaking at the Groceryshop retail conference in Las Vegas, Kroger’s Chief digital officer, Yael Cosset, outlined how its ecommerce customers spend more in-store.
Expansion of services drives sales towards $5bn
Ecommerce has been a major focus for Kroger over the last year, developing its partnerships with Instacart and Ocado to accelerate progress in the channel. The retailer has also been expanding its store pickup model and Kroger Ship next-day delivery program, while its acquisition of Home Chef has enabled it to develop a multi-channel meal kit offer. However, despite the retailer approaching annualised sales of almost $5bn, delivering a profitable model has been a key challenge.
Source: IGD Research
Driving improved online profitability through efficient operations
The retailer has tackled this in two parts; improving the efficiency of its operations and the relevancy of its offer for its customers. In addressing the issue of efficiency, the retailer has looked to learn from other operators globally, including Ocado. In Europe, Kroger focused on how other retailers have developed more seamless integration between their stores and online operations, while in Asia, payments and social integration have been a focus. The retailer has also been looking at how it can bring fulfilment closer to its customers, optimising its significant store assets.
Improved relevance drives higher spend
The other part of its focus on profitability has been about becoming more relevant for its customers and changing the nature of its engagement with them. For Kroger, this means increasing visit frequency. It has identified that its online customers end up visiting its stores more frequently because they have a deeper relationship with the retailer. This leads to higher incrementality as it is not shifting sales between its physical stores and online businesses but gaining share from its competitors. The focus for Kroger is to deliver the most relevant experience for its customers to ensure it continues to be their online retailer of choice.
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