Customer Relationship Building at a Grocery Retailer

Retailer Relationships, Consumers and Innovation

Strategic Planning and Building Relationships

Kroger is one of the most successful large retailers when it comes to strategic planning and building relationships. For example, Kroger has always been willing to adapt to meet the needs of customers in a changing environment. Kroger Pickup—its online ordering service allows customers to shop virtually and then pick up items without ever having to leave their car to enter the store. Its Kroger Plus Card is one example of building relationships with customers: it allows loyal customers to earn fuel points on purchases and save on certain items. The strategic planning for online ordering was something that Kroger had to start developing years in advance because it requires so much work on the front end and back end of computer applications. Fortunately all that work and preparation paid off because in 2020 the coronavirus arrived and many frightened shoppers turned to Kroger’s online ordering platform to obtain shopping items without having to risk going into the store and potentially contracting COVID 19. Had Kroger been less strategic in its foresight it would not have had the platform designed, developed and ready to launch. But Kroger was forward thinking and able to plan ahead, seeing that online ordering was the way of the future and taking steps to make sure the company could give customers what they wanted. Its loyalty program has helped make customers happy about shopping there because they get to earn fuel points that they can redeem at Kroger gas stations. In these ways Kroger has built lasting relationships with customers and shown that it knows how to plan for the future.

Three Actions That Would Enhance Relationships with Customers

Kroger has taken steps to fight the spread of coronavirus, and while some people are happy to wear a mask in public, others chafe at mandatory mask policies. Kroger has now required all customers to wear masks when entering the store. This is a bad policy that will damage relationships with customers. Many people have written letters to Kroger’s corporate office denouncing this policy because they feel it violates their right to manage their own bodies and own health as they see fit. The argument for women’s reproductive rights is “my body, my choice,” and the same is being said of people who argue against being forced to wear a mask in public. Not everyone believes the hype over COVID 19, and yet many companies are implementing policies that feel very totalitarian to some consumers. Thus, one action to enhance relationships with customers in the coronavirus era would be to let customers decide for themselves whether they want to wear a mask. If they do not feel comfortable wearing a mask then they should not be harassed or hassled. The customer, after all, is always right, and that is a policy that Kroger has benefited from standing by for a long time. It should not abandon that policy now.

Another step Kroger could take to enhance relationships with customers would be to provide delivery. Uber Eats and Shopify have entered this market and Kroger should have a similar service. This would allow people to shop without having to leave their homes. It is another convenience that people in the digital age are now expecting more and more and Kroger should begin rolling out this service to stay ahead of the curve in the coming years.

A third way to enhance relationships with customers would be to keep building on its brand of organic food items that consumers like. Organic, locally grown foods are something that have become popular in recent years and Kroger could be a shopping market that has its own farmer’s market offerings for consumers who want locally sourced food items. That would be a way to bond with local producers, growers and consumers all at once.

Characteristics of Ownership

The characteristics of ownership of Kroger are that it is a publicly held company. Institutional ownership of shares is 78%, while mutual fund ownership is 41%. Vanguard and BlackRock are the majority shareholders of Kroger (Kroger IR). The retailer is thus owned primarily by investment firms and those firms carry a great deal of influence within Kroger’s corporate management since they are primary shareholders. Kroger’s owners want to see returns for shareholders but stakeholders are also important for a major retailer like Kroger and stakeholder theory should be considered more deeply by Kroger ownership. Stakeholders are important to companies because they are the ones who ultimately drive a company’s success: they decide where and when to shop, what businesses to support, and which companies will survive.

Nontraditional Forms of Retailing

Nontraditional forms of retailing for Kroger are online shopping and driverless delivery, which is a concept Kroger has been experimenting with. Online shopping is a relatively new way to shop that Kroger has only recently rolled out for customers. Driverless delivery is still a work in progress as fully-automated vehicles have not yet been produced.

Two actions Kroger could take to take advantage of the consumer trends in retailing would be to open its own farmer’s market locations where locally sourced foods can be purchased by consumers. Farmer’s markets are ways for local growers and producers to bring their items to consumers directly and without middlemen. However, the venues are often small and inconsistent. Consumers shop when they have time and farmer’s markets are not always open on days they have to shop. Having a stable and convenient location for obtaining locally produced foods with the kind of quality and oversight that Kroger brings to the business could be a marriage that consumers would love to see. Kroger could develop its own farmer’s market division, just like it has done with its organic items division under the Simple Truth label.

Another action Kroger could take would be to offer pre-packaged online grocery carts for customers who do not want to take time to shop online for themselves. With the click of a button they could have a car filled by local Kroger employees and then delivered to their home. This could be called No Hassle Shopping. It would take the inconvenience out of shopping for customers and it could even become a subscription service, so that the same items are delivered week after week for customers who like consistency. Subscription services are a major trend in retail right now, from Harry’s to Dollar Shave Club to Netflix, Amazon, Hulu, and more. For online retail shopping, subscription services are the new trend in the grocery industry (Wagner, Pinto & Amorim).

Target Consumer

There are many target customers for Kroger: there are the spontaneous smart shoppers, which range across demographics; apathetic smart shoppers; and involved smart shoppers (Atkins, Kumar & Kim). There are also high-involvement and low-involvement consumers (Conlin, Labban). The target consumer is best understood from behavioral aspects rather than from demographic aspects. Kroger targets each type of consumer in different ways. For instance, spontaneous shoppers are targeted by way of displays which appeal to shoppers who have no pre-set list in mind; they are susceptible to displays, ads, discounts, or other attractions that call to them and entice them to buy a product. Apathetic smart shoppers are targeted by way of the online shopping app and potential delivery services. Involved smart shoppers are targeted by way of coupons in the mail and weekly discount offerings.

Buying Process

The five steps of the consumer buying process are: 1) identifying the problem or need that the consumer has; 2) conducting a search for information; 3) comparing alternative options; 4) making the purchase, and 5) post-purchase behavior. For Kroger consumers, the need is the most obvious first step. Everyone needs groceries sooner or later. The question is, where should one shop?

If a consumer is finicky about mask-wearing he will rule out Kroger immediately so long as Kroger has a mask policy in place. He will look for other local alternatives where he feels his rights are not being trampled on. This is where the third step comes into play: comparing options. However, before this step, one will search for information. A Kroger consumer will inquire about mask policies, or look up sales online, or check to see what hours the store is open. These will all be factors in determining the buying process.

Making the purchase is another important step. Will the customer purchase online and pickup at the store? Will the customer purchase in store and go through a self-checkout lane? Will the customer check out with someone working a cash register and have bags packed by an employee? These are questions that will likely be answered by the number of goods the customers has purchased and whether the customer wants to scan the items himself. It is an important step for Kroger to determine because it will impact how many self-checkout lanes are needed in-store, how much data its online servers will need to be able to process and at what times online traffic will be greatest so that servers are not overwhelmed. It will need to know how many workers are needed to staff registers and how many baggers it should have on hand.