Kroger is keeping close tabs on its customers and that more than anything may explain how the grocer has managed to achieve significantly higher same-store gains than rivals Safeway and Supervalu.
David Dillon, chief executive of Kroger, told the Los Angeles Times that the company's work with Dunnhumby has given it greater insights into the shopping behavior of its customers.
"We send our very best customers coupon books specifically targeted at what they actually buy. The redemption rate of these coupons is significantly higher than other coupons," Mr. Dillon said.
Kroger uses the data it receives on its customers to divide its stores into three groups. A store serving an affluent consumer base, for example, would have an expanded wine selection and no value-priced private label items. At the opposite end, a so-called value store would "be much more focused on price," Mr. Dillon said.
One advantage of the Dunnhumby system, according to the LA Times report, is it allows Kroger to identify items that will continue to sell at higher prices.
"Ten years ago we paid too much attention -- almost every day -- looking at what our competition was doing," Mr. Dillon said. "We can't ignore our competitors, but we have to pay more attention to what our customers want in our stores."
Discussion Questions: Has Kroger gotten better at understanding its customers in your opinion? Is its work in this area above that of its competitors in markets across the country?