Kroger exec reveals what's in the test kitchen for ClickList service

Same-day service now being evaluated
Posted at 10:31 AM, Nov 03, 2016
and last updated 2016-11-03 10:31:20-04

CINCINNATI - The Kroger Co. opened its 500th ClickList location in Delhi Township this week, bringing to 25 the number of Cincinnati-area locations where customers can buy online and pick up at the store.

But that’s just one new development involving the service that Kroger debuted in Liberty Township 16 months ago.

Behind the scenes, Kroger is refining its search engine to help ClickList shoppers get through the online-ordering process more quickly. It’s improving the profitability of the new service by helping employees pick several orders at the same time.

And it’s testing same-day service, allowing shoppers in other cities to pick up their groceries within hours of ordering. That service is not currently available in Cincinnati but could be expanded here if tests go well, said Kevin Dougherty, group vice president and chief digital officer for the Cincinnati-based grocery chain.

“We continue to see very strong customer acceptance,” Daugherty told Wall Street analysts in Cincinnati Wednesday. “Customers who engage in this service tend to like it a lot and tend to reward us with more of their needs.”

ClickList was a recurring theme at the analyst conference, which included presentations from Kroger’s highest-ranking executives at its 84.51 market-research office Downtown and a tour of its Oakley Marketplace store.

The analysts were looking for evidence that Kroger can continue its streak of 51 consecutive quarters of identical-store sales growth, even as it faces increasing competition from Amazon Inc. and Lidl, a European discount-grocery chain that’s planning a major U.S. expansion.

The answer is a mix of data-driven marketing promotions, digital innovations that increase convenience and an in-store environment that inspires shoppers with new menu items and healthier food.

“Pricing is just one element of how people decide to shop,” Kroger CEO Rodney McMullen said. “Customers tell us it’s as important the way they’re treated, how long they’re in line, the freshness of the produce, the freshness of the meat and getting the products they want. That’s just as important as price.”

ClickList is addressing many of those options with a service that’s evolving as the company expands it. While it’s not as profitable for Kroger as getting a customer into a store, Chief Financial Officer Mike Schlotman said that is changing as customers – and stores – get used to that kind of shopping.

“There is a headwind when you first open them,” Schlotman said. “As they gain momentum and the size of the orders changes and as the store gets comfortable with the process … you get faster picking, you get faster delivery. It’s something we can see clear (to) where it’s a contributor to the bottom line versus something that’s a lot closer to neutral.”

In an exclusive interview with WCPO, Dougherty said Kroger is testing lots of new ideas that could boost the popularity of ClickList. He wouldn’t say how many Kroger customers use the service, except that it’s “a noticeable percentage.”

One major area of emphasis is “enabled personal search,” a data-driven search engine that reminds shoppers of items they bought previously and suggests new items they may be ready to try. Dougherty said the idea isn’t to sell you more, but give you more options in a way that speeds up the ordering process.

“If we do a good job of connecting with your household, getting down to a few seconds per item isn’t at all unreasonable,” he said. “A lot of the products you buy, you’ve bought before and you just need to be triggered to say, ‘I do need that,’ or ‘I don’t’ and you shuffle right past it.”

At the store, Kroger has deployed nine different models to fit its ClickList pickup stations into parking lots, from the canopy-covered loading docks at its Oakley store to the re-striped parking spaces in White Oak. Inside the store, it’s experimenting with different ways to pick orders more efficiently and it’s testing same-day service and home delivery, although Dougherty won’t say when those options could arrive in Cincinnati.

For now, Kroger is content to learn from ClickList as it grows. Dougherty said 200 of its ClickList stations are less than four months old, so there’s not enough operating history to know what truly works and what doesn’t.

Liberty Township, which was Cincinnati’s first ClickList outpost, remains the busiest. But that could be just because more customers there are familiar with the service.

Now at 25 ClickList locations in Cincinnati, Dougherty said Kroger will probably add about 10 more in the foreseeable future. Then, it will study whether every Cincinnati store should be equipped with the option, just as Harris Teeter did with its Express Lane service.

“I think customers want to have their local store enabled with this kind of convenience,” he said. “Over the long haul, we’d like to be able to serve all customers as close to their home as we can get. But we’ll have to grow into that.”