Dive Brief:

• Changes in store layout and operational procedures at some Kroger locations is underway as part of the company’s Restock Kroger Initiative, reports Supermarket News. The retailer is using customer data and analytics from its 84.51º research unit to make the best use of store square footage and make sure each location has its own unique presentation.
• Chief Financial Officer Mike Schlotman said at a Barclays investor conference last week that some of the stores surrounding Kroger's headquarters in Cincinnati "may look entirely different and include a different variation of prepared foods and other items based on what nearby consumers want." Assortment-related changes will be based on expanding location-relevant vendor partnerships to offer items that resonate in different geographic areas — for example, carrying a barbecue sauce with a local following in Cincinnati and Kentucky stores but not farther away.
• The company first unveiled its three-year $3 billion “Restock Kroger” initiative in October, which includes a vast store remodeling effort with decisions tailor-made for individual stores. Changes in space distribution and product selection are initially being made to about 700 stores. About 20% to 30% of the merchandise assortment is expected to be switched up to reflect localized assortments.

Dive Insight:

Big data mining and analytics will continue to gain traction among grocery retailers as industry competition intensifies. The result will be more personalized grocery shopping experiences, which in turn could translate into increased sales and repeat visits by loyal customers. Kroger’s best-in-class loyalty program and application of shopper analytics is often lauded as the industry standard, and keeps the company one step ahead of the competition.

The retailer uses its Plus Card loyalty program data to predict the products consumers might want to buy, and then sends shoppers customized digital coupons for those products. This strategy has helped Kroger grow the number of dedicated households shopping at its stores, and has led to consistently solid performance over the years.

Kroger already announced it was doubling down on data collection, keeping a close eye on purchase behavior and product preferences through its loyalty cards. Now it’s taking some of this data and personalizing each store to better serve local community demographics, tastes and desires — a smart move on the grocer's part because it has another point of differentiation.

Retailers can no longer compete on price — competition has already made the grocery business a race to the bottom. Supermarkets, especially those operating in the middle as Kroger essentially does, must find ways to deepen emotional connections with shoppers in order to remain relevant. Low prices, great taste and convenience aren't enough to capture grocery shopping dollars and retain increasingly fickle and finicky customers.

Some consumers are looking for stores that offer experience over function, embracing retailers with similar values as their own, and looking for a customized assortment that meets their needs and tastes. In-store experiences that engage consumers and encourage them to shop longer, spend more and stay loyal may be the solution.

“Selling food won’t be enough because shoppers want information and an experience,” David Fikes, vice president of communications and consumer/community affairs for Food Marketing Institute, which issues an annual U.S. Grocery Shopper Trends report, previously told Food Dive. “They want the retailer to do more curating. Help them make the best choice. Give them guidance. We expect retailers will invest heavily to up their game in personal engagement.”

This appears to be exactly what Kroger intends to do. Updated stores with tailored products and personalized approaches should help the retailer remain relevant for existing loyal shoppers, and attract new ones with an enhanced experience.