Kroger (KR) revamps digital marketing efforts, hopes to accelerate growth by recruiting outsiders

Macy's, Sears and Amazon execs join Kroger team

CINCINNATI - The Kroger Co. is recharging its digital marketing efforts with a cluster of new hires that bring fresh perspectives to the company from other big retailers, including Macy’s, Sears, Luxottica and Amazon.

The talent infusion comes as Kroger faces a new competitive threat from Amazon and Walmart, each ramping up grocery home delivery services that could claim market share from traditional grocery stores. Kroger Chief Operating Officer Rodney McMullen announced the management changes in response to a question about home delivery in a conference call with analysts June 20.

“We've actually changed our team – our complete digital team in terms of bringing some talent from the outside to help us accelerate our growth,” McMullen said. “We feel very good about where we are headed.”

Kroger spokesman Keith Dailey said the new recruits include:

·      John Moritz, vice president of digital. He joined Kroger in the first quarter of 2013 from Amazon, where he was director of product management and marketing.

·      Anne Maness, senior manager of digital personalization. She joined Kroger last October from Macy’s, where she was director of loyalty and digital marketing.

·      Matt Thompson left Sears in 2011 to become an eCommerce manager at Kroger. He was promoted to director of digital and eCommerce at Kroger last November.

“They’re all terrifically talented people,” Dailey said. “These folks are working non-stop to improve our digital presence.”

Even beyond the managerial ranks, Kroger has deepened its bench in the last several months by recruiting new talent from other companies, based on a Linked In search for new digital team members.

  • B.J. Schmidt joined Kroger’s digital team in March after 18 months as a director of eCommerce for Luxottica Retail.
  • Cassidy Hamilton became a Kroger digital promotions manager at Kroger in December after two years as a brand marketing specialist at Chiquita.
  • Chris Ainsworth was hired in January as digital product manager for banner sites and mobile. He came from Triton Digital in Cincinnati.

“We're having huge growth in terms of the use of our website, the use and download of our apps, and we're also partnering with Dunnhumby to improve those from a relevancy standpoint. So, we actually are looking at digital much broader than just what you sell online,” McMullen said.

Dunnhumby is a U.K. –based data analytics firm. Kroger owns 50 percent of its U.S. subsidiary, which is based downtown. The companies have been using data from Kroger Plus cards since 2003 to better understand consumers and target marketing efforts.

When shareholders gather for Kroger’s annual meeting at Music Hall Thursday, they will get an update from CEO David Dillon on a couple of digital milestones. Dillon will report that Kroger customers have now downloaded more than 500 million digital coupons. Downloads of Kroger’s two-year-old shopping app now exceeds 2 million.

“The strategy has been to leverage our customization in the digital space,” said Dailey. “There are lots of features on the app, including digital coupons, a shopping-list function that syncs with the coupons. We developed the app in such a way that you can tie your loyalty card to it. You can find out how much you have on your fuel card, refill prescriptions. One of the newer functions on the Kroger app lets you sort coupons by relevance to you.”

Kroger tries to update its app with new features every six weeks, Dailey said. The latest customization upgrade uses shopping history tied to your Kroger card to find which coupon you’re most likely to use.

“It adds a layer of personalization,” Dailey said. “Its very consistent with what we’ve been doing with Dunnhumby for over a decade.”

Cultivating loyal shoppers will be one of the best defenses traditional grocers will have against home delivery services, said Eric Clemons, a professor of operations and information management at the University of Pennsylvania’s Wharton business school. Clemons is a global expert on the ways information technology reshape the business landscape. He first wrote about the potential for online sales of grocery products in the mid-1990s.

He predicts Walmart, Amazon and Costco will emerge as major players in home delivery. He thinks those rivals will start a grocery price war that could prove difficult for traditional retailers to navigate.

But Clemons also thinks it will take several years for home-delivery merchants to learn how to operate profitably on a national scale. He predicts they will likely be in big cities where millions of consumers can be reached quickly from a mechanized warehouse that is cheap to operate.

“I don’t think adoption is going to be super fast. It’s not like the traditional store will be gone two or three years from now,” Clemons said. “There will always be room for regional players with superior product, as long as they have loyal customers.”

In the June 20 conference call, Kroger executives described how they are slowly developing home-delivery services in the Denver area with a website and marketing campaigns under the King Soopers banner.

McMullen said Kroger is “testing almost everything that you can imagine,” including home delivery and in-store pickup of goods ordered online. “At the end of the day,” he added, “there will be something that will be a combination of a lot of different pieces together.”

McMullen said the King Soopers delivery business is growing “at a modest rate” and is not yet profitable. He declined to offer a timetable on when the program could expand nationally.

“When we find something that makes money, we'll move very aggressively,” he said.  “And until then, you'll see us continuing to test to make sure we're involved and aware, but we don't see a benefit of rolling something out that doesn't create value for our customers and our investors as well.”

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