Membership Program, Automation Recharge Kroger’s Digital Growth

After seeing its digital business take a dip following consumers’ post-quarantine return to life away from home, Kroger, the largest U.S. pure-play grocery retailer, has reinvigorated its eCommerce sales.

Through a combination of the recent nationwide rollout of the company’s Boost membership program and the expansion of its network of automated fulfillment centers for eCommerce orders, created in partnership with United Kingdom-based grocery technology company Ocado, the grocer reached digital sales growth of 8% in the second quarter of 2022, per a company announcement Friday (Sept. 9), following a digital sales decrease of 6% the quarter before.

“Digital sales … returned to positive growth driven by our one-of-a-kind boost membership program and expansion of our Kroger delivery network,” Kroger Chairman and CEO Rodney McMullen said on a with analysts call Friday discussing the Q2 financial results. “It’s clear our go-to-market strategy is connecting with customers, and we continue to build long-term customer loyalty.”

The company announced the nationwide launch of its Boost membership program, which had already gone live in select areas, in July. The offering provides free grocery delivery, double rewards points for fuel and other perks for a set annual fee ($59 for the basic package or $99 to include free two-hour delivery).

Research from PYMNTS’ study “Relationship Commerce: Building Long-Term Brand Engagement,” created in collaboration with Ordergroove, which draws from a survey of more than 2,800 consumers participating in a blend of subscription, membership and loyalty programs, finds that 77% of consumers with retail subscriptions buy more products from the brands they have these relationships with than those they do not.

See also: Report: Consumers Spend, Shop More Online With Brands That Deliver the Personal Touch

Additionally, brands can further boost the loyalty benefit of these kinds of programs by leveraging data-informed personalization to establish a connection with consumers. The study found that 90% of consumers with these relationships with companies who believe said companies understand their buying preferences are likely to purchase more products from them.

“We are very focused on using our data to make sure offers are personalized for each household individually and discounts that just apply to them,” McMullen said. “That’s probably part of what’s driving the fact that we had 750 million coupons downloaded as well.”

Additionally, the company has been rapidly expanding its delivery presence, opening new automated eCommerce fulfillment centers every month. The company launched its in-house delivery business in the Nashville, Chicago and Louisville areas in August, in Dallas in July and in South Florida and Pleasant Prairie, Wisconsin in June. The goal is for this delivery business to work in concert with the grocer’s other fulfillment options to build omnichannel loyalty.

“Ocado is one part of our overall digital strategy, and the thing that we’re wanting to make sure that we have is a seamless ecosystem where customers can easily go between delivery, pickup and shopping in stores,” McMullen said. “That’s one of the reasons we introduced Boost is, how do we have that total loyalty across all the engagements with the customer?”