Kroger
Founded in 1883 by Barney Kroger in Cincinnati, Ohio, The Kroger Co. operates approximately 2,800 stores in 35 states. Kroger is the fifth-largest general merchandise retailer in the United States and ranks 25th on the Fortune 500 list of the largest U.S. companies by total revenue.
Nearly a century and a half after its founding, Kroger has embraced innovation. Kroger’s early efforts were based on the revolutionary premise of providing fresh food to every consumer. More recent innovations include private label manufacturing, grocery delivery, and product quality monitoring and testing. In 1972, Kroger was the first grocery retailer in the United States to test electronic scanners. More recently, Kroger was the first to develop QueVision, a checkout program that reduced customer line time from minutes to seconds.
In recent years, Kroger has turned to the application of data and advanced analytics to drive the next phase of innovation in its business. Since its launch decades ago, Kroger’s loyalty program has provided a trusted value exchange enabled by permission-based information. Today, Kroger uses machine learning algorithms to deliver valuable personalized offers and communications across 150 million customer touchpoints and 1.9 billion unique coupons tailored to millions of loyal customers.
I recently had the opportunity to speak with Todd James, Chief Data & Technology Officer (CDO/CTO) at 84.51°, a wholly owned subsidiary of Kroger that operates as a retail data science, insights, and media company. I hosted James on a Chief Data Officers panel that I moderated at the MIT CDOIQ Annual Symposium in Cambridge, Massachusetts last month. James explained that 84.51° is helping Kroger create more personalized and valuable experiences for shoppers through the application of data, analytics, and AI.
Powered by cutting-edge data science, 84.51° leverages first-party retail data from more than 62 million U.S. households collected through the Kroger Plus loyalty card program to drive more customer-centric experiences. As the core of Kroger’s in-house data science capabilities, 84.51° works seamlessly with other groups across the company to deploy and operate advanced analytics solutions across the enterprise.
James brings a rich and diverse background and experience to his roles at 84.51° and Kroger. Previously, he served as Senior Vice President of Data, Analytics and Intelligent Automation at financial services giant Fidelity Investments, where he held a variety of leadership roles during his nearly 15-year tenure, and prior to that he led the Technology Services practice at Deloitte Consulting. James began his career in the U.S. Coast Guard, where he served as an officer for nearly eight years, and is a graduate of the U.S. Coast Guard Academy.
I asked James about his role and remit at 84.51° and Kroger. He explains, “I’m the Chief Data and Technology Officer at 84.51° and responsible for driving the Artificial Intelligence agenda and enterprise data at Kroger.” James continues, “My role has shifted from a very traditional IT-centric role to a management From a collection of data, application He stressed the importance of “using data to create value”, adding: “We expect this role to strengthen over the next few years, with an increased focus on creating value for the business.”
Many Fortune 1000 companies have struggled with the Chief Data Officer role, a new role created primarily over the past 15 years to help companies derive business value from their data assets. Today, good data provides the foundation for good AI. James sees the Chief Data Officer role primarily as a “transitional role to help navigate a ‘once in a lifetime’ restructuring with a focus on data management. After the transition, the CDO will likely be split off, with the core data management and governance components moving back to IT and the more strategic and analytical parts of the role moving to a data-savvy business leader.”
James added, “Kroger’s CDO role has nuances in how the solution is leveraged at different scale levels and across different organizational structures, but the common thread is the ability to drive value to Kroger’s customers, clients and employees through a robust portfolio of data and analytics assets.”
Achieving customer satisfaction through personalization using data and AI
So how does Kroger use data and analytics to power decision making in every aspect of Kroger’s business? Essentially, Kroger uses data and analytics to create personalized experiences for Kroger customers across every aspect of the customer journey, with the goal of making the shopping experience easier for the customers and bringing more value to the shopping experience for Kroger customers.
James is focused on three key business priorities:
- By providing a transparent, prioritized AI portfolio, we drive value by enabling new capabilities, improving customer experiences, and simplifying employee tasks.
- By democratizing and building new algorithmic foundations, we will expand access to AI in an efficient and responsible manner.
- We work together across the organisation to drive education and awareness of how data and analytics can be used to drive value, create new business models and transform the way work gets done.
Kroger currently serves approximately 23 million digitally engaged households and makes approximately 500 billion “start cart” recommendations each year. James said, “Data serves as the foundation, managed through automation and the science of relevance, to deliver relevant, personalized customer experiences throughout the buying journey.” James added, “The organization’s focus is to continually improve and extend the science of personalization, the data and the experience itself to increase value and simplicity for the customer, from the moment they interact with a touchpoint like a promotional email to the moment they start their cart.” Using the science of relevance, Kroger has made filling online shopping carts more convenient, making the process “approximately 4.5 times faster over the past few years.”
Measure the business value of your data, analytics and AI investments
More recently, Kroger has been exploring ways to employ AI to improve the customer experience. “We’re using AI-enabled dynamic batching to reduce pickup lead times while simultaneously improving the experience for our store associates,” James explains. “We’re harnessing the power of machine learning and AI to develop new ways to improve the pickup experience for our customers.”
James explains how the solution reduces order lead times for customers by “sorting 200,000 totes per second to create the most efficient pickup carts and identifying the most efficient pickup route within the store, reducing steps by 10%.” He concludes, “These tools dynamically batch orders to provide associates with the most efficient pickup route, significantly reducing pickup lead times in our highest volume stores.”
Improving customer experience and delivering business value are at the heart of Kroger’s investments in data, analytics and AI. AI is now embedded in the business strategy, with transparency and accountability at multiple levels of the organization, including executive leadership. “Work is prioritized to ensure investments follow initiatives that will have the greatest impact on delivering on Kroger’s strategy,” James said. He added, “We are in the midst of a once-in-a-lifetime global replatforming that will accelerate transformation across business and society. It is imperative that we invest to lead the organization through this change.”
Reflecting on the current state of data and AI at Kroger, James commented, “The technologies we’re using are exciting, but our investments begin and end with enabling the business for the benefit of our customers and employees.” James stated, “We invest in data to support AI, and we use AI to serve the business.” He concluded, “At its core, Kroger uses data to make people’s lives easier. Whether it’s empowering our associates with data-driven insights or creating more relevant and simple customer experiences through trusted value exchanges, we’re focused on using data fueled by advanced analytics to deliver the best experience possible to our customers.”
