- Virginia Retail/Flickr
- Yael Cosset is helping Kroger execute a massive transformation amid growing competition from Walmart, Aldi, Lidl, and the Amazon-owned Whole Foods.
- Cosset called Kroger’s new Ocado warehouses a “total game changer.”
- “We’re going to be able to fulfill these orders in a way nobody else can,” he said. “There is no equivalent in the industry today in the US market.”
- In the future, grocery stores could use video analytics and robots to determine customers’ health and state of mind and recommend food to them based on those analyses, he said.
The stakes have never been higher for Kroger.
The 135-year-old grocery chain is facing stronger competition than ever before, whether from Amazon’s foray into groceries with its acquisition of Whole Foods, Walmart’s multibillion-dollar investments in store remodels and digital grocery services, or the rapid growth of the German discount grocers Aldi and Lidl, which have upended the UK grocery market over the past decade.
Yael Cosset, 45, is tasked with helping Kroger fend off those threats. He’s the head of digital for the grocer and in May will be promoted to chief information officer.
In an interview with Business Insider, Cosset said Kroger was positioned to win the battle for shoppers’ grocery spending because of a key advantage over its competitors: nearly two decades’ worth of data on its customers’ shopping behavior.
“We have had the longest-standing loyalty program with detailed data science on the customer for over 15 years now,” he said.
That data, along with Kroger’s network of 2,800 stores and a new partnership with the UK technology firm Ocado, is powering a transformation that Cosset said would set Kroger on a path to success.
“We are building a seamless experience to offer our customers anything they want, any time they want it, anywhere they want it,” he said.
Kroger is the largest conventional grocery store in the US. It has a 9% share of the grocery market, second only to Walmart, which has a 23% share, according to Morgan Stanley.
Kroger now offers grocery delivery or pickup to 91% of its customers from 1,600 stores, and it plans to expand those services to 2,000 stores by the end of 2019.
Kroger has also added in-store digital shelving that can communicate with shoppers’ smartphones, and it’s working with Ocado to open automated warehouses capable of fulfilling a 50-item order within minutes.
Cosset called these warehouses a “total game changer” and said Kroger was working with Ocado on other fulfillment models as well. The first of the warehouses is scheduled to open within two years.
“We’re going to be able to fulfill these orders in a way nobody else can,” Cosset said. “There is no equivalent in the industry today in the US market.”
Kroger isn’t the first grocer to offer pickup and delivery or digital price tags. Walmart, for example, now offers pickup at more than 2,100 stores and delivery from more than 700 stores.
Cosset said that once the Ocado warehouses were open, Kroger would use all its physical assets – including stores, distribution centers, and Ocado sheds – to fulfill orders in a way its competitors couldn’t match.
- Business Insider/Hayley Peterson
He called the online-fulfillment equation a “balancing act” that he said was informed by Kroger’s vast amount of data on shopper activity.
“We know what the trends are in terms of specific choices for products or food or flavors,” he said. “We know more about the next yogurt trend or ice-cream trend than many of our competitors just because of the volume of interactions we have with our customers and our commitment to listening to what they tell us.”
This knowledge gives Kroger an “additional lens” that allows for precise forecasting of demand for online orders, he said.
Cosset said that data allowed Kroger not only to balance the fulfillment but also to “plan the next evolution of our network.”
More robots will be coming to stores
Looking to the future, Cosset said robots and automation would play a bigger role in stores and communicate directly with customers.
“I think the role of automation will be very different than what we see today,” he said.
Grocery stores could ultimately use video analytics and robots to determines customers’ health and state of mind, and recommend foods to them based on those analyses, he said.
“How can we drive better understanding through video analytics of what your emotions are, what your frame of mind is, what your health state is?” he said. “How do I detect where you are, in your mind, better than you can do yourself?”
Grocers could use that data to help provide customers with recommendations for certain foods that would help them achieve their objectives, such as reducing stress or getting over the flu, he said.
“The role of technology, in general, will expand well beyond what’s been most visible in the past five or six years in the industry around digital and e-commerce,” he said. “The role of technology will change how we work and interact with our customers. At the core of everything we do is going to be how we take advantage of data and inject it into everything.”