Insights on Aisle Six

Kroger has stocked the selves with data but is the product right for you?

The great paradox of the massive retail disruption is that everyone agrees that it is indeed a massive disruption, yet often the responses of firms are a lot less than massive.  And since data is at the heart of this disruption, a data driven response is required.  So I give the team at Kroger a lot of credit for going big and bold in their Kroger Restock strategy , which is a well-considered and well-funded approach to use data and technology to better meet customers, drive growth and find entirely new avenues of business.  The recent announcement  of their Stratum offer through their analytics firm 84.51°, takes this data focused strategy further.  Stratum offers CPGs access to the data and insights Kroger has gained from serving 1 out of every 2 American households.  With this volume of data and the depth of data talent (84.51°, has its roots in dunnhumby, among the first retail analytics firms established), this offer has big appeal.   

Still you can put small-batch, craft brewed kombucha on sale, on the endcap (and here in Portland, OR it always is), but I’m not buying.  It’s just not the right beverage for me. 

And while you can’t taste test a data offer like Stratum, you should think about few things when you think about if it’s right for you.

Firstly, with apologies in advance for being a bit snippy, so what Kroger has served such a large part of the American consumer pool?  Just because they are a large sample size does not mean they are the right representative sample.  These two are not interchangeable.  A larger sample is usually, but not inherently better.  For example, while Stratum rightfully claims to be able to serve up both physical and digital data, it is undoubtedly skewed towards physical.  And while this can be handled with basic statistics, the underlying fact that Kroger digital shoppers are not likely digital natives cannot be as easily managed, for example.  So, if like me, you are a bit of data fiend and the thought of understanding the shopping behavior of so many people appeals to you, don’t forget to ask, does the sample and its size suit your needs? 

Secondly, are you clear what you’re shopping for? There is big potential in the volume and diversity of data from Kroger, and solid capability from the folks at 84.51°, and the two things together can for sure deliver some valuable insights.  Those are, however, 3 distinct things, and the value of each of them is very related to the scarcity of them inside your own organization.   If you already have large volumes of well-structured and relatively clean data, it’s entirely possible there would be little to gain with even more data.  Like most things data does adhere to the law of diminishing returns.  Similarly, if it’s high-quality talent you want to access, that’s possible (if difficult and expensive) to retain in other ways.  And if managing your product portfolio through data and analytics is essential then doing so in-house must be a focus.  So now you can see I have ‘checkmated’ myself because if you want the power of all that data together with the talent, it’s possible the offer is right for you…with a few more considerations, at least.

Given the potential power of this offer or similar ones, it can be tempting to simply add this to your analytics mix and expect/hope for the best.  Still you need to have a clarity on how this will impact your strategy and organization, because it will.  Many questions need to be socialized throughout your enterprise since the goal is actionable customer and product insights, even if it has roots in your data organization.  Among the first questions to ask is: are those who need to act on the data and insights going to do so?  Never underestimate people’s unwillingness to engage in better solutions.  Wheeled suitcases existed for 20 years before they became widely popular, because businessmen (who comprised the largest part of the market) found them “unmanly.”  Another great question that is often avoided because it can make for uncomfortable conversations with colleagues is: are we adding this to underdeveloped competence or replacing competence?  I phrase that question in such a tough manner to highlight that people will view it as one or the other regardless of how it’s framed.  Even if the Kroger based data set is a good match, you will need to develop an approach to integrating data that your firm alone (we hope) has.  For example, should Stratum help you quickly discover that packaging size is driving more purchase behavior than you thought, you will want to just as quickly understand the feasibility and profitability of acting on that insight and this would require firm-specific data from other parts of the organization, like product develop and supply chain to name a couple.  Having external and internal providers out of synch is a recipe for frustrating a lot of people in multiple organizations.

Once you have decided to pursue the right offer of additional data and talent for the right reasons, there are more questions than those above, but those are a good start.  Fortunately, there are lot of analytics professionals who will share their perspective as I have done here.  And, even if the Stratum offer is new, tapping into data and analytics from outside an organization’s four walls is not new and there is a wealth of research and experts to connect to who can help you explore the right way to approach a choice like this.  So just like it’s a bad idea to go grocery shopping when you are ravenously hungry, when considering an offer like Stratum, take a break, make a list of what you want to achieve and shop with measured urgency and patient consideration.

Drew SmithComment