Kroger already works Dunnhumby, company behind Tesco Clubcard

Kroger already works Dunnhumby, company behind Tesco Clubcard

Digital and mobile technology is shaping the way retailers interact with consumers as the communication of offers and promotions becomes ever more personalised and interactive. Kroger's recent purchase of You Tech, a leading provider of digital couponing, demonstrates the group's commitment to leveraging digital marketing to reach US shoppers. Katy Askew reports.

Last month, US supermarket group Kroger acquired digital marketing company You Technology Brand Services for an undisclosed sum.

Founded in 2008, You Tech provides technology to help clients connect with consumers, any time, anywhere. It is a leader in the delivery of digital marketing programmes using mobile technology, social media, email and in-store activities.

According to Kroger, the business uses "retailer-centric, cloud-based platform" to bridge the gap between online engagement and in-store purchases, allowing retailer's to drive consumer purchase decisions "online, in-store, and on-the-go".

Services include uPromote for interactive promotions, uCoupon for paperless digital coupon management and uEngage, a retailer branded loyalty solution.

"You Technology revolutionises the way brands and retailers connect with consumers by personalising every communication. We've fused personalisation technology, consumer insights and turnkey marketing programmes to help our customers gain new insights into consumer behaviour, connect anywhere with consumers on a personal level and transform consumer loyalty into a continuous marketing process," You Tech states on its website.

Announcing the deal, Kroger's vice president of customer loyalty, Jeff Talbot, said it will provide Kroger with a "significant" opportunity to expand its digital platform as well as "enhancing" Kroger's exposure to new technologies.

You Tech already counted Kroger as one of its customers. The group's digital couponing network includes 10,000 retail stores representing over US$100bn in retail sales and 100m US households. It serves around two dozen US retailer clients and 63 store banners. Following the transaction, You Tech will continue to operate on a stand-alone basis serving existing and future retail clients, Kroger said.

Kroger is looking to capitalise on the growing popularity of digital couponing to drive customer loyalty and expand its customer base.

As can be noted elsewhere in the world, mobile devices have become ubiquitous among US consumers. The trend represents a growing mass audience for mobile electronic communication and marketing. As a consequence, mobile marketing is becoming increasingly important to US retailers.

According to Kroger, customer use of digital coupons has "accelerated exponentially over the past several years".

Kroger said it began offering digital coupons in late 2009. By 2012, the group reached 500m digital coupon downloads and Kroger customers have downloaded more than 400m more digital coupons in the last 12 months, the company revealed.

"Kroger, like most US food retailers, is seeing a fairly rapid shift to digital and mobile technologies, with digital load to card (or load to mobile phone) promotions taking hold," Neil Stern, senior partner for US retail consultants McMillanDoolittle, tells just-food.

Stern suggests the acquisition of You Tech is an extension of Kroger's drive to develop a fully personalised loyalty scheme.

The group has been working in conjunction with UK customer science company Dunnhumby in an effort to develop its loyalty strategy. "[The You Tech acquisition] allows for more personalised promotions and pricing to a particular consumer. With Kroger's alliance with Dunnhumby, this provides another vehicle for the delivery of one-to-one offers. A smart acquisition to stay on the leading edge," Stern says.

Dunnhumby, which came to the fore with the development of the Tesco Clubcard in the UK, has helped Kroger overhaul its coupinging initiatives by taking loyalty information to analyse the shopping habits of Kroger's consumers.

Kroger then uses this data to send out 11m pieces of direct mail to US shoppers each quarter - and each one is personalised.

Significantly, Kroger's mail drop reportedly has a redemption rate of around 70%. This is far above the industry average. According to Inmar, a research firm, in 2012 only 3bn coupons were redeemed of the 310bn distributed in the US during 2012.

Mobile technology has the potential to change the paradigm of traditional bricks-and-mortar retailing, providing retailers with the opportunity to enter the consumer's environment and develop a more interactive communication platform. The extension of Kroger's personalised insights into this more-comprehensive mobile platform offers Kroger the opportunity to deepen its one-on-one interaction with consumers further still.

Mobile couponing also provides Kroger with the ability to improve the overall shopping experience for consumers, Bob Bishop, chief architect of Brick Meets Click, says. According to Bishop, digital coupons are a means to enhance the in-store experience. "US grocers are interested in retail technology that compliments and, where possible, improves the retail shopping experience... Digital coupons are probably the hottest thing in digital marketing in the states today. Customers can't get enough of them and they work well for retailers," he tells just-food.

As Kroger reaches out to consumers through digital couponing using its personalised shopper insights the group is taking its loyalty programme to the next level. The move is therefore likely to help the US group win over new consumers and retain loyal ones.

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