Kroger's Customer-centric Business Model: The Competitive Strategies
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Code :BSM0038
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Region : USA
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Kroger: The US Retail Chain Founded in 1883 in Cincinnati, Ohio, the Kroger Company is the third largest supermarket group of US. The company has 2500 stores in 32 states of the US under 28 names and five retail formats. The retail formats include supermarkets, warehouse stores, convenience stores and jewelry stores. In 2004, supermarkets accounted for 94% of Kroger's revenues. These supermarkets are further divided into three different formats - combination food and drug stores, multi-department stores and price impact warehouse stores. Leveraging on its wide variety of store formats, Kroger caters to a large customer base and has established a strong presence in the US retail industry. However, it has confronted certain challenges that are characteristic of the retail industry. Kroger faced stiff competition fromworld's No.1 retailer, Wal-Mart. Keeping its operating costs low, Wal-Mart gains competitive advantage by offering lower prices than its competitors. Studies reveal that products at Wal-Mart cost 8% to 27% lesser than at Kroger, Albertsons or Safeway... Kroger: Competing through its Customer Centric Business Model Unable to compete with Wal-Mart's price-led business model, since 2001, Kroger started moving towards a customer-led business model. It changed its business model to deliver high level of service, selection and value to its customers. Kroger started customer loyalty programs through which it collected a large amount of customer data. However, despite its recognition of the fact that 40% of all US households possessed at least one Kroger shopping card, it failed to leverage the data to its advantage. Realizing that in order to serve customers better it is important to understand them, towards 2002 end, Kroger engaged Dunnhumby to use the customer data to help it understand consumer behaviour. Earlier, in 1995, Dunnhumby had partnered with Tesco and introduced the Clubcard, which made Tesco the No.1 grocer in the UK. The partnership helped Tesco beat its long-time competitor, Sainsbury's and boost its market share from16% in 1995 to 27% in 2003... |
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