Despite a slight dip in Kroger’s third-quarter results, digital growth still shines.

Kroger’s digital transformation is showing promising results as digital sales grew 11 percent, driven by strong performance at customer fulfillment centers (CFCs) and delivery sales, which grew 18 percent. Kroger’s total company sales fell 1.2%, to $33.6 billion, due to lower fuel sales due to the sale of its specialty pharmacy business and lower retail gas prices.

“Digital offerings are a key way we deliver savings,” CEO Rodney McMullen said during an earnings call on Thursday (Dec. 5). With 5% more digital offer clips so far this year, customer engagement continues to grow, and has led to 14% more savings for Kroger customers. We are always creating additional ways to save for our customers. This quarter, we celebrated and thanked our customers for a Customer Appreciation Week by offering great new deals—and to help our customers enjoy a memorable Thanksgiving, we’re offering a third consecutive Sal reduced the prices of Thanksgiving meals by creating a meal bundle that catered a group of 10 for less than $5 per person.

This focus on savings and customer engagement reflects a larger trend in the retail industry, where consumers combine digital and in-store shopping experiences.

The PYMNTS Intelligence Report, 2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants, was commissioned by Visa Acceptance Solutions and is based on a survey of nearly 14,000 consumers in seven countries. About 40% of consumers are now click-and-mortar shoppers, engaging across digital and physical channels. According to the report, 25% of in-store shoppers are assisted digitally, while 14% are pick-up shoppers who buy online and collect in-store. Despite this increase in digital engagement, 87% of grocery transactions still occur in physical stores, highlighting the need to integrate digital and in-store shopping experiences.

Increasing digital and customer engagement

McMullen noted that Kroger’s efforts to strengthen its digital capabilities were evident in its customer engagement metrics. The company’s commitment to creating a seamless shopping experience has fostered customer loyalty, most notably through the Kroger Plus loyalty program and the company’s paid membership program, Boost, with features such as Disney streaming benefits. has expanded.

McMullen explained that Boost has also helped the company deepen its relationship with customers, offering personalized discounts and rewards based on shopping habits. As a result, the company reported an increase in total and loyal households, with more customers engaging with Kroger’s digital platforms and in-store options.

“As customers become more engaged, we gain deeper insight into customer trends, while generating data that enables us to enhance Kroger’s precision marketing and deliver more effective promotions and relevant product recommendations.” makes,” McMullen explained. “We’re working to expand Boost, our loyalty program, to the next level through new benefits, and this quarter we announced the addition of Disney+, Hulu, and ESPN+ streaming benefits. Within digital, delivery Sales grew 18 percent and continue to outpace other channels.

E-commerce access is key for Kroger.

Expanding e-commerce reach is critical to Kroger’s business model, McMillan explained, “because the households that connect with us digitally shop and are in our stores are our most loyal customers as well as retail media monetization opportunities As our digital business grows, particularly in our delivery network, it has a major impact on our financial results Improving profitability is a key priority and is even more important to our financial model It has made significant investments in digital capabilities, built its own properties, built distribution channels in both pickup and delivery. While each of these capabilities requires significant investment, we now have a unique digital experience that our customers enjoy. They enjoy.

While many consumers are financially strapped, McMullen noted, “Consumer engagement is strong. Consumer spending habits continue to adjust to macroeconomic factors. Many consumers’ spending habits are more confident and They are returning to pre-pandemic habits more quickly. Budget-conscious households remain under pressure.

Outlook and integration progress

Looking ahead, Kroger expects to see a 1.2% to 1.5% like-for-like sales increase in the fourth quarter, with a continued focus on digital engagement and customer loyalty, Interim Chief Financial Officer Todd Foley noted. will go While consumer sentiment remains a challenge, the company is confident in its ability to deliver value, especially as it expands its holiday promotions and digital offerings.

Kroger is awaiting a federal judge’s decision on its proposed $24.6 billion merger with Albertsons, which has been in the works for two years. While the Federal Trade Commission initially blocked the deal, the two companies took their case to court in October, and Kroger remains optimistic about the merger’s potential benefits for customers, associates and communities.

“The food industry has always been competitive and will continue to be after this merger,” McMullen said. “We are committed to closing this merger because bringing Kroger and Albertsons together has meaningful and measurable benefits for customers, associates and communities across the country – lower prices, safer jobs and greater access to fresh, affordable food. will be provided.”