Karen Short, Managing Director at Deutsche Bank Securities, says that technology and customer interaction has played a significant role in the success of some of the stronger conventional supermarket stocks. That is one of the reasons she has a “buy” rating on Kroger Co (KR). Meanwhile, she says some grocers have been hurt by not collecting consumer data through loyalty programs.
“For example, in the natural and organic space, specifically Whole Foods was consistently very reluctant to offer customers any type of like affinity or loyalty program, whereas Kroger is just a leader in that with their loyalty card program,” Short says.
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Many natural and organic grocers have shied away from loyalty card programs because they believe they alienate customers who aren’t enrolled. But, Short says it’s more about connecting with the customers who do have loyalty cards.
“It’s about the data, and it’s about understanding your customer, and then with the data you can tailor your offering to your more loyal customers and/or strive to make your less loyal customers more loyal,” Short says. “And Kroger has got 12 years of experience with loyalty analytics, and nobody can catch up to them at this point.”
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