A Tale of Two Retailers: Shopping at Kroger and Safeway

• Published on July 28, 2016

Gary Hawkins

Leading shopper-focused retail innovation

As many readers know, I’ve helped lead customer-focused innovation across the retail industry for the past 20 years with a heavy focus on the use of loyalty and marketing personalization to drive retail success. Having moved to Southern California about a year ago I’m able to participate in the programs offered by two of the largest retailers in the US: Kroger and Safeway (now a division of Albertsons). It is fascinating to observe what each company provides me as a shopper.

As a member of each retailer's loyalty program, we receive a weekly email with offers on ‘products we buy’. Week in and week out Kroger (Ralph’s in our market) nails this by providing us offers on the specific items (flavor, package size, etc.) that we buy. For example, of the six offers presented in a recent email, each item was one we frequently purchase.

Safeway's offers on the other hand are not as relevant. Of the eight items presented in a recent email, only one item was something we buy regularly and consistently. The other items may have been things we had purchased at one time or another in the past but certainly not products that we buy frequently.

With regard to pricing Kroger nails it again. Not only are the products chosen for me highly relevant, but Kroger is extending special pricing on these targeted items to make them very attractive. Safeway appears to be either targeting products that are already on sale or is seeking to gain incremental offers from CPG manufacturers to target as part of their program. Safeway’s pricing is not nearly as compelling.

Here’s the key takeaway: Kroger wins the shopping trip by providing more relevant items and significant savings.

From my perspective, Kroger’s use of marketing personalization to drive customer loyalty (shopping trips, increased basket size, and retention over time) feels much more strategic and core to how the company goes to market. The company seems to truly start with a ‘customer first’ approach, choosing the items that are most relevant to me as the shopper, and then working to provide meaningful savings to me to win the shopping trip. 

Safeway’s efforts on the other hand feel much more like a ‘me-too’ effort. My sense is that they start with a more limited pool of offers available for targeting; perhaps items that are already on some type of deal or a smaller number of incremental promotions they are able to obtain from manufacturers. This product starting point - rather than Kroger’s customer starting point - results in a lower level of product relevancy. When combined with less meaningful savings, Safeway’s efforts are just not as compelling.

I think this comparison provides powerful learning for other retailers - of any size - that are seeking to use marketing personalization to drive their business. Many retailers make the mistake that Safeway seems to have made, starting from a product first orientation, often seeking to obtain incremental offers to create an offer pool for targeting. By default, this approach is going to provide less relevancy and less meaningful savings to shoppers. 

Kroger on the other hand understands the battle is being waged over the customer and the customer’s share of wallet. It appears Kroger is investing marketing funds - perhaps both their own and CPG funds - at a customer level. If my experience is any example it is easy to see why Kroger is enjoying 50 consecutive quarters of same store sales growth as they concentrate on winning the shopping trip and growing share of wallet.

It is time for retailers to wholly transform decades of mass marketing and take advantage of new capabilities to provide relevancy and meaningful savings to each of their customers. Retailers that are locked into yesterday’s mass promotion paradigm are destined to fall behind as others leverage new capability to market to their individual customers and grow lifetime value.