EXCLUSIVE: ‘Bananacam,’ ClickList improvements among innovations Kroger’s technology unit is launching

Feb 13, 2017, 2:18pm EST Updated Feb 14, 2017, 12:34pm EST

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Steve WatkinsStaff ReporterCincinnati Business Courier

New ways to get products on Kroger’s ClickList system, online pay, website improvements and even a cool-sounding “bananacam” are some of the tech initiatives Kroger Co. is developing.

Cincinnati-based Kroger (NYSE: KR), the nation’s largest operator of traditional supermarkets, isn’t just a grocery store chain anymore. It’s a tech firm.

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Matthew Groom is Kroger Technology's general manager.

DAVID KALONICK

Kroger offered me a chance to view the home of a big chunk of its digital operation that's part of Kroger Technology. This is one of four Kroger technology sites in Blue Ash. One is so secret that Matthew Groom, Kroger Technology’s general manager, told me he couldn’t disclose the site or he’d have to kill me. He was kidding about the punishment … I think.

The location I visited on Carver Road in the Landings office development opened a year ago. It’s home to about 250 Kroger digital employees. Many are developers and analysts who track every order nationwide on ClickList, Kroger’s online order and customer pickup service, and develop and update features on Kroger’s multitude of websites.

To put it in perspective, the facility houses about half of Kroger’s roughly 500 employees in its digital unit. It has about 1,900 in total who work for Kroger Technology. The biggest chunk of them are in Blue Ash, spread among a few buildings, but others are scattered around the country in Portland, Salt Lake City and elsewhere.

“We are the digital face to the customer for all of Kroger,” Groom told me.

That includes websites for Kroger’s many banners: Ralphs in Southern California, Dillons in Kansas, King Soopers in Colorado and a host of others.

A walk through Kroger’s offices on two floors in the Landings building shows employees arranged by teams with catchy names, many based on comic book themes. Legos, puzzles and a Rock ‘Em Sock ‘Em Robots game are scattered throughout the office, giving employees a fun way to take a break and maybe enhance creativity. It looks the way I’d envision Google’s offices to appear.

In addition to websites, the group also works on mobile apps, which Kroger touts as industry-leading, providing shoppers with tools such as digital shopping lists that can tie in to digital shelf technology, digital offers and providing store aisle locations for the items on their lists. The latter is the No. 1 request from males over 25, Groom said. One team works on ClickList in a constant effort to improve by finding things like the most efficient way for Kroger employees to go through the store to pick out items that shoppers have ordered.

A hot topic now for the Kroger Technology team is how to provide the capability for customers to pay online as they order instead of at the store.

“We’re doing that at a couple locations,” Groom said. “We typically don’t make a big splash. Instead, we test it and try to make sure we get good customer feedback before expanding it.”

The team is also working on improving the way Kroger’s employees can best select substitute items if the store is out of the item the shopper ordered. Groom gave the example of a shopper who typically buys a certain type of bacon but orders a special cut around the holidays to make a certain appetizer. If the store is out of that item, substituting the typical brand and cut of bacon won’t work for the customer.

Kroger Technology works closely with 84.51, Kroger’s data analysis unit that studies customer purchases to determine which items to carry, pricing, coupons, offers and other key steps. Kroger conducts 8.5 million customer transactions a day, so there’s plenty of data to examine.

Kroger Technology takes that information to the customer in several forms, such as a customer’s previous purchases showing up on the screen when they get online to place a ClickList order.

“But we try not to do it in a creepy, stalky way,” Grooms said.

That insight is what gives Kroger its edge when it comes to technology.

“Our competitive edge isn’t that we have a homepage that loads faster or richer graphics,” Groom said. “The real advantage is that we can unlock the science of 84.51 through the depth and breadth of our merchandise.”

Some of Kroger’s developments come from its research and development group, a unit “that has some mad technology skills” and is separate from the digital group, Groom said.

“Bananacam” is one example. Kroger has cameras in stores to prevent and detect shoplifting. It figured out how to split a video feed to alert the store manager when bananas are starting to turn brown and need to be replaced in the produce section. That’s a big deal here because Cincinnatians buy a lot of bananas, Groom said.

It also developed a temperature monitoring system that lets store managers know when something goes wrong long before a freezer or refrigerator fails. That improves food safety and cuts down on spoilage.

Kroger Technology is working at a pace that’s unheard of in most tech organizations. Traditional IT projects might involve spending $100 million over five years to roll something out. That wouldn’t work at Kroger.

“The way customer demand is, we have to be way faster,” Groom said.

How fast? They generate software that they roll out in two weeks. They work on two-week cycles and step back every eight weeks to analyze what they’ve done and what’s next. After all, Kroger is competing with Amazon.com, Wal-Mart, Target and Blue Apron among dozens of others.

“Companies are iterating not in years but in days,” Groom said. “We’re in a digital arms race. We’re a 133-year-old grocery chain that’s competing with companies that didn’t exist a year ago. It’s an energetic, frenzied approach to how to make our lives better and get cool stuff working."

It’s safe to say Barney Kroger never saw this coming back in 1883, when he opened his first Kroger store downtown.

The focus on technology all comes from the top.

“The thing that makes us unique is the support we get from Rodney (McMullen, Kroger’s CEO),” Jack Deardorff, a digital scrum master – yes, that’s a real title meaning he facilitates development teams – at Kroger Technology, told me.

Where does Kroger go from here when it comes to tech? Believe it or not, it’s just getting started.

“We believe we’re very early in Kroger’s digital journey,” Groom said. “We believe there‘s a huge market and we’re just at the very beginning of where we need to go. This is not a side business. We want to be recognized as having the same capability in digital as we do in retail.”