With the help of dunnhumby, Kroger Co. believes it has more sophisticated data on its consumers than any of its competitors. But chairman and CEO David Dillon also frequently does "shopalongs" alongside core customers, goes incognito on store visits, visits stores unannounced and even visits consumers in their homes to inspect their cabinets.
He told The Associated Press that other key Kroger executives follow much of the same routine.
"The data only tells you so much," Mr. Dillon told the AP. "Dunnhumby tells me what to look for and I go in and see."
Through its joint-venture with dunnhumby, Kroger gleans shopping behavior data from its loyalty card holders, and also some 50,000 surveys with customers exploring four areas: people, prices, products and services. Associates also partake in similar surveys under its Customer 1st strategy.
"During the first half of 2010, our customers have told us, we continue to make steady progress in each of the four key areas we target," Rodney McMullen, president and COO, said on Kroger's second quarter conference call. "We continue to seek feedback from our customers and incorporate what they tell us in our business plans."
Mr. Dillon told the AP that the combination of the data along with the real-time view of store and home visits guides marketing and merchandising decisions.
"We can use our own intuition, our own eyeballs, our own sense of how the store should work, but that can be hugely enhanced by applying real data," he said.
For example, dunnhumby's analysis indicated that shoppers' use of food stamps had doubled during the recession. Further visits to stores, however, showed that first-time users often couldn't figure out which items were valid under the government's guidelines. After himself witnessing one man struggling with food stamps, Mr. Dillon pushed to add more informational signage to stores and better train store employees to help clear up the issue for customers.
Discussion Questions: What insight do retailers gain from visiting stores or customer's homes that they can't get from customer data? What is the most efficient way to gain such honest input from customers? What are the pros and cons of the methods mentioned in the article?