Dive Brief:
- More personalized discounts and efficient delivery options are at the forefront of Kroger’s customer experience strategy, executives said on a Q3 2023 earnings call last week.
- Improvements to the grocer’s pickup program have resulted in higher NPS for the service, according to CEO Rodney McMullen. Timely deliveries have encouraged the at-home delivery of refrigerated items as well as nonperishables, providing consumers with more convenience.
- Kroger also saw the number of digitally engaged households grow 13% during the quarter, according to McMullen. These customers spend nearly three times more with Kroger compared to those who only shop in-store.
Dive Insight:
Kroger is doubling down on its digital CX with the prediction that digital offerings will match or surpass its brick-and-mortar profitability.
In the meantime, offering omnichannel options creates more loyal customers — those who shop online and in-store engage more with Kroger overall, according to McMullen.
“We believe that digital is a growth engine for the company, and I think everything we continue to see gives us that belief it will continue to be an opportunity to drive deeper customer engagement and growth,” said Gary Millerchip, CFO at Kroger.
Kroger is also benefiting from higher NPS year-over-ear for its pickup options, according to McMullen. Increased order fill rates and reduced wait times were two of the most important metrics for better experiences.
Kroger is further encouraging digital engagement with better personalized promotions. The company is using loyalty members’ purchase data to tailor the deals they receive, which has improved redemption rates, according to McMullen.
The goal is to create a personalized experience that rewards loyal customers over “cherry pickers” who only look for the deepest discounts, he said.
“We believe the reason why our loyal households continue to grow … is once you become a Kroger shopper, you're getting those loyal customer mailings, which will allow you to stretch your budget more,” McMullen said.
This digital-focused strategy has helped Kroger return to profitability despite same-store sales — which only take into account sales from stores that have been open at least one year — slipping into the negatives during Q3. Digital sales were up 11% despite year-over-year sales at stores open for more than 12 months dropping 0.6%, according to its earnings report.
The final piece of Kroger’s CX push is associates. The company has been focusing on initiatives such as Feed Your Future, its continuing education benefit, to improve employee retention. This in turn leads to a more consistent customer experience, according to McMullen.
“Our associates are the driving force behind our success by delivering an outstanding customer experience and helping make the holidays even more special for our customers,” he said.
