Next-Level Personalization Strategies & Tactics for Omnichannel Retailers

Personalization is one of our key competitive moats at Kroger and I was honored to share our journey at Groceryshop with the fellow panelists Katherine Black and Jacques-Edouard Sabatier . Several industry influencers and investors have called out our Personalization session (workshop and panel discussion format) as one of the key highlights of #groceryshop2022 and I am truly humbled by the overall experience.

The panel discussion was organized as a workshop with Katherine sharing the key insights on benefits and challenges of executing Personalization at scale, both online and offline (in store). The attached chart from her sumps up 22 tactics that make up Personalization playbook.

Our panel discussion primarily focused around 3 strategic questions. Here is a quick summary of my viewpoints on each.

Can you share one example of a personalization success story that you are particularly proud of and why?

I am most proud of our Site Search journey not just because it rolls up under my organization, but it drives more than 60% of our Ecommerce add-to-carts and more than 60% of our monetization (i.e., retail media). Let me provide some context. When I search for a product, it returns my personalized search results. As I add one of the products from search results to cart, it dynamically generates “You May Also Like” product carousel comprised of personalized product recommendations. Right on the home page we also offer “Start Your Cart” which leverages customers’ past purchases (e.g., purchase frequency, recency, seasonality, occasions, brand affinity) to provide personalized recommendations. Start your cart drives our 2nd highest add-to-carts but it requires customer to go back to home page. To reduce this friction point, we introduced personalized recommendation of “Buy It Again” as soon as customers searches for something. The combination of Search and Start Your Cart drives over 80% of our add-to-carts and we are actively working to make overall experience even more seamless (e.g., Start Your Cart within Search, Search within Start Your Cart). Last year alone, we provided over 2 trillion personalized recommendations to our customers and our data shows that customers who are exposed to personalization exhibit 98% retention and spend two to four times what an average customer spends.?

One of the things that our research shows is that personalization use cases really lean to online executions but we know that more shopping his happening in stores. Kroger is famous for personalization.?What types of personalization are you executing in stores and what advice do you have for others about personalizing offline?

Kroger I believe is the only retailer that offers Store Mode. It is live in many of our stores and will soon be rolled out to the Enterprise. The way it works is as soon as you enter your local Kroger store, the Kroger App will prompt you to opt-in into Store mode. Now all the personalization magic happens. One of the first thing you can do is Shop List by Isle, which will show your local store’s isle-by-isle map with your shopping list overlaid (5 items in Isle 7, 3 items in Isle 3, and so on). We are seeing ~$12.55 increase in AOV when customers use Store Mode maps. We are working to extend this capability even further by providing Personalized Routing (i.e., the most optimal isle by isle navigation based on customers’ shopping list, think of Google Maps or Waze on steroids but now optimized for your local store), Personalized Savings (i.e., as you walk each isle, you get personalized saving alerts or best customer discounts relevant to your shopping list for that isle, enabling you to clip coupons as that moment of truth and never miss out on your savings opportunity), and Personalized Offers (i.e., think of a real-time advertising & monetization opportunities in partnership with CPGs). My advise to others is think about your customer journey holistically as personalization directly influences 76% of Purchase, 78% of Repurchase, and 78% of Recommendations (to friends & families), independent of the channel - according to 麦肯锡 research. So the fundamental quest for omnichannel retailers like Kroger is, can you make your customer feel special in each of her touchpoints with you. The list of 22 personalization tactics that Katherine shared previously can be simplified into 4 customer-centric use cases.

1. Meet me where I am and make it easy for me to navigate both in-store and online experiences
2. Know my preferences and provide me with the most relevant product or service recommendations
3. Offer something just for me to celebrate my important milestones
4. Check in with me after purchase and surprise me

There are scores of companies like JOW who have built their entire business on knowing customers’ tastes or preferences. "Offering something just for me", I believe is the lowest hanging fruit of personalization. As you know a majority of Grocery stores have Starbucks right within the store. It drives me absolutely crazy when Retailers are willing to spend millions on spray and pray marketing promotions but don’t think about the simple acts such as sending a free Starbucks beverage coupon to their best customers to celebrate an important milestone such as birthday or anniversary. You can start out by doing this for your top 10% or 20% of customers as measured by their lifetime value.

How Kroger leverages outside developers to accelerate personalization??What are you doing, how is it working and what advice do you have for others?

Kroger has a robust ecosystem of external developers from 2-guys in garage to F500 companies that consume our Public, Partner, and Commercial APIs. We may be the only BIG grocery retailer to offer public APIs and currently have over 200 active external consumers of our APIs. JOW happens to be one of our recent Public API consumer and they are raving fans of our API Program. At Kroger, we truly believe in the notion of ecosystems innovation and we don't take pride in ownership and trying to build out all capabilities on our own. We work with our ecosystem partners by interconnecting multitude of products & services to fulfil our customers’ wide-variety of needs in one Seamless experience. Let me provide two examples which highlight the power of ecosystems and open innovation. In the thick of pandemic, a couple of students from Touring School of Software built an App "Neighbor-helping-Neighbor" by leveraging our Public APIs. The app enabled a potential customer (e.g., senior citizens, people with health risks, or any one else not comfortable going into the physical store) to push their grocery list to another neighbor, who didn't mind shopping for neighbor's grocery while doing hers. Without our APIs, we would not have uncovered this important use case. Another example is Kroger's Chefbot, which was developed as co-innovation project with our Agency partner 360i, tech partners Coffee Labs and Clarifai. It addressed the age old question of "what's for dinner" based on what customers already have in their fridge or pantry. The customer would simply take a picture of items or ingredients and tweet it to Kroger Chefbot, who in turn would return personalized recipe recommendations based on visual AI. My advice to others is build out a robust set of platform capabilities focused around APIs, advanced data analytics (AI/ML), and experimentation (test & learn). However, remember that Personalization is not about technology but how do you humanize technology to make your customers feel special in small but meaningful ways.