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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Introduction:The Kroger Co. (Kroger) is the third largest US supermarket group with a wide variety of store formats. Kroger's competition for market share, for long, has been against Wal-Mart, which gained leadership through its low-price strategy. While Wal-Mart's price competition posed amajor challenge to Kroger, it also realised that customers had no brand loyalty and switched between retailers frequently. To counter that, since 2002, Kroger has been making efforts to compete on the basis of customer knowledge and customer relationship. It partnered with Dunnhumby, the customer analysis firm that was largely responsible for Tesco's success in the UK. From Dunnhumby's analysis of the transactional data of customers, Kroger gained valuable insights about consumer behaviour that helped it in segmenting its customers and stocking stores with the right products. All this resulted in enhanced store experience for its customers and increased sales growth. However, analysts opine that while both the businessmodels of low-cost and customer-centricity are good in their respective ways, Kroger should refrain fromwavering between price-led and customer-led businessmodels, as itmight ultimately lead the company to a 'no-man's-land'. |
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