Kroger taking data-driven approach to develop next generation consumer brands

Date : 15 May 2019

Stewart Samuel

Program Director - Canada

Kroger is partnering with Lindsay Goldberg, a private investment firm, to develop a new platform to identify, invest and help grow the next generation of leading consumer brands.

Supporting Kroger’s alternative profit streams model

The two companies will create a new entity, PearlRock Partners, which will sit within Kroger’s alternative profit streams portfolio. PearlRock will be one of the largest data-driven investment vehicles focused on consumer brands. It will optimise Kroger’s merchandising and predictive analytics expertise and Lindsay Goldberg’s track record of investing in and supporting family-owned and founder-led companies. Commenting on the launch, Brian Kelley, a Partner at Lindsay Goldberg who previously served as CEO of Keurig Green Mountain and President of Coca-Cola’s North American operations, stated,

“We are thrilled to partner with Kroger to help grow tomorrow’s most successful consumer brands alongside the entrepreneurs who built them. Backed by a state-of-the-art predictive data platform, real-world consumer product expertise and unparalleled merchandising resources, these next-gen brands will be poised for growth and offer Kroger’s broad customer base greater choice, convenience and innovation.”

Source: Kroger

Optimising private brand capabilities

Kroger will also be able to draw on its expertise in developing private brands. Last year, sales exceeded $22bn as it focused on driving growth through ranges including Simple Truth and Private Selection. Its insights into the latest product trends and understanding what resonates best with consumers will help the smaller brands it will be working with to refine their products, packaging and marketing approach. Working in this way will also provide Kroger with early sight of potential winners which could go on to become much larger brands.

Aiming to grow operating profit by $400m

Last year, Kroger outlined its plan to change its profit model through developing alternative profit streams. It plans on optimising its stores, logistics and data assets to create incremental new profit streams as part of its goal to grow operating profit by $400m by 2020. It plans to use this to invest further in redefining the customer experience, which in turn will enable it to further optimise its assets. This latest initiative aligns with this.

Data capabilities becoming an essential component of retail

The partnership with Lindsay Goldberg also highlights the growing importance of having deep data capabilities within retail organisations. This has been a strength for Kroger for several years, but especially since 2015 when it acquired the technology assets of Dunnhumby USA to form its data-science unit, 84.51°. More recently Kroger has been utilising its data to drive its category resets programme, a key component of its ‘Restock Kroger’ strategic plan. The retailer is also optimising its data to build a significant media business, which it also views as being an important driver of future profitability.

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