In 2023, Kroger’s identical sales (without fuel) increased 0.9% YoY, the retailer introduced more than 700 new private label items, and it grew its digital business to $12 billion in annual sales.
In addition to Kroger’s topline results, here’s what else caught our attention.
1. Retail media hasn’t peaked
The insight: Kroger expects its retail media network, Kroger Precision Marketing, to grow 20% in 2024.
The 2024 implication: While the retail media landscape is getting more crowded, there’s still room to grow for networks that are in tune with what advertisers want. Kroger Precision Marketing launched a self-service solution last year, giving clients more control over campaigns and Kroger’s customer data.
2. Personalization can be profitable
The insight: Personalizing digital promotions helped Kroger increase digitally engaged households by 18% in Q4.
The 2024 implication: Though it requires lots of customer data and some advanced data science, personalization can help retailers improve the bottom line. CEO Rodney McMullen said that digitally engaged households are “extremely valuable” to Kroger’s long-term growth model, as they spend more and power its retail media business.
3. Deal-seeking behavior is here to stay
The insight: Kroger customers used 4 billion coupons in 2023, 1 billion more than 2022.
The 2024 implication: Despite inflation slowing in 2023, grocery prices remained high and consumers relied on deals and discounts to cover the costs. If the economy remains challenging, it’s unlikely consumers’ hunger for deals will let up.
4. Omnichannel strategies are a must
The insight: Kroger customers who shop in-store and online spend three to four times more than in-store only shoppers.
The 2024 implication: Retailers should embrace omnichannel shoppers, helping them to shop wherever and however they want. A consumer that can shop wherever and whenever is more likely to become a loyal customer.
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