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Recent UBS Group report highlights Kroger’s customer data and analytics work with 84.51°

“Against a tough industry backdrop, we think Kroger’s strategy of consistently investing in price and the overall shopper experience has helped set it apart among traditional food retailers. Further, its best-in-class analytics operation (84.51°) and history of operating a diverse array of formats (traditional grocery, supercenter, and hard discount, among others) help give it a competitive edge in understanding evolving consumer behavior.”

That’s a quote from a recent global research report released Thursday by the UBS Group, a global firm that provides financial services to private, corporate and institutional clients. Among the 32-page document, other highlights about how Kroger and 84.51° work together to invest in the customer experience:

“Kroger's banner diversity allows it to better understand what drives shoppers to upscale (Mariano's & Harris Teeter), mainstream (Kroger, Ralph's), and hard discount (Ruler) formats. Further, its ability to gauge consumer reactions through its best-in-class data analytics organization (84.51°) allows it to stay ahead of the curve by testing new offerings in the rapidly evolving world of food retail.”

“Kroger's deep understanding of its customer allows it to target the most effective categories for price investments. A key competitive advantage Kroger has versus its competition is its best in class analytics operation, 84.51°. Originally a part of dunnhumby USA, Kroger brought most of this operation in house in 2015. It has now collected transaction data since the early-2000s, which has allowed it to track monthly spending patterns and get a better understanding of price elasticity. This also helps it direct price investments to the areas that matter most to customers. With ~90% of transactions involving one of the company's loyalty cards and roughly half of US households holding one of the cards, we believe this offers Kroger a considerable competitive advantage that's tough for others to replicate.”

“Kroger operates a diverse array of retail formats, which help it better understand the competition. While Kroger's wide array of businesses adds a considerable degree of complexity to the retailer, it also allows it to better understand non-traditional competitors. Much of this has been accomplished through M&A, including its entry into supercenters (through Fred Meyer) and hard discount stores (through Jay C and its Ruler division). With a diverse array of formats in place and a competitive advantage from 84.51°, Kroger can use analytics to get a better understanding of how it can position itself against new competitive threats. For example, it can learn whether shoppers are more loyal if it also offers general merchandise in certain markets and how far customers are willing to drive to save cash at a hard discounter.”

“Similar to its benefits from running multiple banners, we believe 84.51 ̊ can help Kroger better understand shopper habits. We see 84.51 ̊ helping in multiple ways. First, it can help Kroger better understand what kinds of markets ClickList works best in, and where it's likely tougher to see as much of a benefit. It can also be used to test whether a regular fee (similar to what Harris Teeter uses) would lead to increased loyalty among Kroger's best shoppers, or if that would turn too many potential shoppers away.”

For more information about UBS Group, visit its website at www.ubs.com.