BUILDING A SEAMLESS USER EXPERIENCE FOR SHOPPERS

October 20, 2013

PRESENTED BYMATT THOMPSON – KROGER | MICHELLE BERRYMAN – THINK INTERACTIVE

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ABOUT KROGER

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ABOUT THINK INTERACTIVE

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Since 1994, we’ve focused on helping brands create business value through digital channels.

We create digital experiences for a connected world.

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Today, will discuss how we are using insights and trends in mobile adoption and emerging consumer behaviors, as well as, contextual consumer research to build a seamless user experience for shoppers, whether in-store or online.  

We will describe techniques for understanding consumer habits, needs and challenges across a full customer journey and the ways in which we are delivering meaningful content to consumers on the right device, in the right moment, with the right services.

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OUR TALK

INSIGHTS & TRENDS

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CUSTOMER & INDUSTRY INSIGHTS

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The most photographed foods are desserts,

vegetables and poultry dishes

25% of socially shared food

photography is simply to show off “what I ate

today”

22% of socially shared food photography documents something the user has

cooked and/or the cooking process they went through

Food is the #1 content category

on Pinterest

47% of women and 33% of men say they use social media as their primary source

for coupons 57% of Pinterest users interact with

food-related content

20% of kids in Australia think pasta comes from animals

49% of surveyed consumers learn about

food from social networks

Influence of social

channels and social sharing

12% of Wal-Mart’s online sales are made through their

smart phone app while customers are in the store

In 1900, 2% of meals were eaten outside the home. In

2010, it was 50%

305B coupons were distributed in the US in 2012 giving consumers access to

$405B in savings

Digital coupon savings rose 41% from 2009 to 2010

67M digital coupons are likely to be redeemed in the US in 2013

28% of coupons are used for food products

85% of families skip healthy purchases at the grocery store

because of price

28% of Americans don’t know how to cook

53% of Americans say they know less about cooking than

their parents

7% of Americans don’t cook

1 in 2 low income families are interested in learning

about cooking healthy meals

2 in 3 low income families are interested in

learning how to better budget their money for

meals

81% of Americans “cook what they

know”

30% of Americans say they love to cook

81% of low income respondents rate fresh produce as “extremely healthy.” That number

drops to 32% for frozen produce and 12% for

canned produce.

85% of low income parents say eating healthy meals is

important to their families

Digital coupon users spend 49% more per year than the average

shopper

25% of the US population is now using

digital coupons

Food and cooking

Budgets, coupons and

deals

67% of people start shopping on one device and continue to

another device (61% laptop, 4% tablet)

71% of shoppers want access to digital content in the store 53% of shoppers

expect greater price visibility via digital

channels

65% of shoppers research online and purchase in-store

Geo-targeted offers and push-notifications will

expand in 2013

Location based services will expand

to 1.4B users by 2014

Context-aware services are on the

rise

Tablets are now driving all growth in

the PC market

Going forward, most smart phone buyers will be older

and poorer

Trends in mobile and

apps

41% of Americans attempt to diet in a

given year

More than half of women say the high cost of healthy

food is a major driver of obesity, compared with just

37 percent of men.

Trends in retail and e-commerce

37% of smart phone owners used a mobile price search app while in a store (a quarter have left to buy the cheaper option).

The most popular recipe on Pinterest (Easy Garlic Chicken) has been pinned more than 1.6M times. The top 25 recipes on Pinterest have been pinned

more than 6.6M times

Health and diet

concerns

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The most photographed foods are desserts,

vegetables and poultry dishes

25% of socially shared food

photography is simply to show off “what I ate

today”

22% of socially shared food photography documents something the user has

cooked and/or the cooking process they went through

Food is the #1 content category

on Pinterest

47% of women and 33% of men say they use social media as their primary source

for coupons 57% of Pinterest users interact with

food-related content

20% of kids in Australia think pasta comes from animals

49% of surveyed consumers learn about

food from social networks

Influence of social

channels and social sharing

12% of Wal-Mart’s online sales are made through their

smart phone app while customers are in the store

In 1900, 2% of meals were eaten outside the home. In

2010, it was 50%

305B coupons were distributed in the US in 2012 giving consumers access to

$405B in savings

Digital coupon savings rose 41% from 2009 to 2010

67M digital coupons are likely to be redeemed in the US in 2013

28% of coupons are used for food products

85% of families skip healthy purchases at the grocery store

because of price

28% of Americans don’t know how to cook

53% of Americans say they know less about cooking than

their parents

7% of Americans don’t cook

1 in 2 low income families are interested in learning

about cooking healthy meals

2 in 3 low income families are interested in

learning how to better budget their money for

meals

81% of Americans “cook what they

know”

30% of Americans say they love to cook

81% of low income respondents rate fresh produce as “extremely healthy.” That number

drops to 32% for frozen produce and 12% for

canned produce.

85% of low income parents say eating healthy meals is

important to their families

Digital coupon users spend 49% more per year than the average

shopper

25% of the US population is now using

digital coupons

Food and cooking

Budgets, coupons and

deals

67% of people start shopping on one device and continue to

another device (61% laptop, 4% tablet)

71% of shoppers want access to digital content in the store 53% of shoppers

expect greater price visibility via digital

channels

65% of shoppers research online and purchase in-store

Geo-targeted offers and push-notifications will

expand in 2013

Location based services will expand

to 1.4B users by 2014

Context-aware services are on the

rise

Tablets are now driving all growth in

the PC market

Going forward, most smart phone buyers will be older

and poorer

Trends in mobile and

apps

41% of Americans attempt to diet in a

given year

More than half of women say the high cost of healthy

food is a major driver of obesity, compared with just

37 percent of men.

Trends in retail and e-commerce

37% of smart phone owners used a mobile price search app while in a store (a quarter have left to buy the cheaper option).

The most popular recipe on Pinterest (Easy Garlic Chicken) has been pinned more than 1.6M times. The top 25 recipes on Pinterest have been pinned

more than 6.6M times

Health and diet

concerns

CUSTOMER & INDUSTRY INSIGHTS

7

28% of Americans say they don’t know how to cook.

8

The most photographed foods are desserts,

vegetables and poultry dishes

25% of socially shared food

photography is simply to show off “what I ate

today”

22% of socially shared food photography documents something the user has

cooked and/or the cooking process they went through

Food is the #1 content category

on Pinterest

47% of women and 33% of men say they use social media as their primary source

for coupons 57% of Pinterest users interact with

food-related content

20% of kids in Australia think pasta comes from animals

49% of surveyed consumers learn about

food from social networks

Influence of social

channels and social sharing

12% of Wal-Mart’s online sales are made through their

smart phone app while customers are in the store

In 1900, 2% of meals were eaten outside the home. In

2010, it was 50%

305B coupons were distributed in the US in 2012 giving consumers access to

$405B in savings

Digital coupon savings rose 41% from 2009 to 2010

67M digital coupons are likely to be redeemed in the US in 2013

28% of coupons are used for food products

85% of families skip healthy purchases at the grocery store

because of price

28% of Americans don’t know how to cook

53% of Americans say they know less about cooking than

their parents

7% of Americans don’t cook

1 in 2 low income families are interested in learning

about cooking healthy meals

2 in 3 low income families are interested in

learning how to better budget their money for

meals

81% of Americans “cook what they

know”

30% of Americans say they love to cook

81% of low income respondents rate fresh produce as “extremely healthy.” That number

drops to 32% for frozen produce and 12% for

canned produce.

85% of low income parents say eating healthy meals is

important to their families

Digital coupon users spend 49% more per year than the average

shopper

25% of the US population is now using

digital coupons

Food and cooking

Budgets, coupons and

deals

67% of people start shopping on one device and continue to

another device (61% laptop, 4% tablet)

71% of shoppers want access to digital content in the store 53% of shoppers

expect greater price visibility via digital

channels

65% of shoppers research online and purchase in-store

Geo-targeted offers and push-notifications will

expand in 2013

Location based services will expand

to 1.4B users by 2014

Context-aware services are on the

rise

Tablets are now driving all growth in

the PC market

Going forward, most smart phone buyers will be older

and poorer

Trends in mobile and

apps

41% of Americans attempt to diet in a

given year

More than half of women say the high cost of healthy

food is a major driver of obesity, compared with just

37 percent of men.

Trends in retail and e-commerce

37% of smart phone owners used a mobile price search app while in a store (a quarter have left to buy the cheaper option).

The most popular recipe on Pinterest (Easy Garlic Chicken) has been pinned more than 1.6M times. The top 25 recipes on Pinterest have been pinned

more than 6.6M times

Health and diet

concerns

CUSTOMER & INDUSTRY INSIGHTS

8

50% of meals are now eaten out of the home (2010). In 1900 it was 2%.

9

The most photographed foods are desserts,

vegetables and poultry dishes

25% of socially shared food

photography is simply to show off “what I ate

today”

22% of socially shared food photography documents something the user has

cooked and/or the cooking process they went through

Food is the #1 content category

on Pinterest

47% of women and 33% of men say they use social media as their primary source

for coupons 57% of Pinterest users interact with

food-related content

20% of kids in Australia think pasta comes from animals

49% of surveyed consumers learn about

food from social networks

Influence of social

channels and social sharing

12% of Wal-Mart’s online sales are made through their

smart phone app while customers are in the store

In 1900, 2% of meals were eaten outside the home. In

2010, it was 50%

305B coupons were distributed in the US in 2012 giving consumers access to

$405B in savings

Digital coupon savings rose 41% from 2009 to 2010

67M digital coupons are likely to be redeemed in the US in 2013

28% of coupons are used for food products

85% of families skip healthy purchases at the grocery store

because of price

28% of Americans don’t know how to cook

53% of Americans say they know less about cooking than

their parents

7% of Americans don’t cook

1 in 2 low income families are interested in learning

about cooking healthy meals

2 in 3 low income families are interested in

learning how to better budget their money for

meals

81% of Americans “cook what they

know”

30% of Americans say they love to cook

81% of low income respondents rate fresh produce as “extremely healthy.” That number

drops to 32% for frozen produce and 12% for

canned produce.

85% of low income parents say eating healthy meals is

important to their families

Digital coupon users spend 49% more per year than the average

shopper

25% of the US population is now using

digital coupons

Food and cooking

Budgets, coupons and

deals

67% of people start shopping on one device and continue to

another device (61% laptop, 4% tablet)

71% of shoppers want access to digital content in the store 53% of shoppers

expect greater price visibility via digital

channels

65% of shoppers research online and purchase in-store

Geo-targeted offers and push-notifications will

expand in 2013

Location based services will expand

to 1.4B users by 2014

Context-aware services are on the

rise

Tablets are now driving all growth in

the PC market

Going forward, most smart phone buyers will be older

and poorer

Trends in mobile and

apps

41% of Americans attempt to diet in a

given year

More than half of women say the high cost of healthy

food is a major driver of obesity, compared with just

37 percent of men.

Trends in retail and e-commerce

37% of smart phone owners used a mobile price search app while in a store (a quarter have left to buy the cheaper option).

The most popular recipe on Pinterest (Easy Garlic Chicken) has been pinned more than 1.6M times. The top 25 recipes on Pinterest have been pinned

more than 6.6M times

Health and diet

concerns

CUSTOMER & INDUSTRY INSIGHTS

9

20% of kids in Australia think pasta comes from animals.

INFLUENCING TRENDSThe web is disappearing. “As the web is increasingly integrated into our devices, we’re less aware of “going onto the internet” to access sites like Facebook. We’re just using Facebook.”

The physical and digital worlds are fusing.Increasingly with the proliferation of NFC and RFID technologies, embedded sensors, smart devices, geofencing and location-based services, the physical world is becoming a digital information system ripe for interaction with people, devices and other systems.

Every moment is a shopping moment. “In 2013 we’ll see significant growth in moments to shop fueled by technology — from the rise of ‘television commerce’ to ‘social media commerce’ and the maturation of ‘mobile commerce.’”

Enhanced transparency is critical.“[Brands need] to pick the right ways to interact with online consumers, manage these conversations appropriately, and make the best use of digital consumer data. Moreover, successful companies will need to enhance transparency and become more collaborative in their interactions with shoppers.”

Mobile payment technology is evolving.In 2013, 15% of all e-commerce purchases are projected to be made via mobile platforms.Social commerce is just emerging as the newest e-commerce vector.According to Gartner, the mobile payments market has the potential to reach $617 billion by 2016.

1010

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Authenticity and imperfection matter.Consumers seek authentic products and services, complete with natural patina. Heirloom tomatoes, purple potatoes, lumpy carrots and other natural looking foods have increasing appeal.

Real food, farm-to-fork and urban gardening are on the rise.

• Consumption of ancient grains like quinoa, amaranth, teff and chia continues to increase.• Hooftymatch, FoodHub, Market Mobile, Farmigo, Farm Fresh to You and other online marketplaces are emerging to connect consumers with

locally grown, locally sourced fresh foods and vegetable box delivery. These marketplaces are connected to the growing “locavore movement.”• Cities like Chicago, Portland and New York are embracing community gardens.

Wellness is increasingly important.

• 57% of people want support in their healthy living goals. • Baby Boomers will control just over half the dollars spent on grocery by 2015. Research shows this group deliberately thinks about how they eat

with 70% of Boomers seeking more fiber in their diet, 60% trying to consume less fat and cholesterol and 40% trying to eat less fried food.

Mindful living transforms the way people navigate eating, shopping and wellness.

• Consumers are becoming more concerned about the humane treatment (care, feeding, end-of-life practices) of the animals they eat.• “MovNat” is an exodus from gyms and a return to natural forms of exercise outdoor such as running, walking, climbing trees, balancing on rocks,

etc. It’s a direct affront to the sedentary lifestyle of many urbanites.• People are seeking coaching in all aspects of life: general wellness, life, finance, meditation, fitness — even breathing, sitting, communicating and

colon health.• Purposeful pleasure is deemed as more meaningful than instant gratification.

INFLUENCING TRENDS

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THE CUSTOMER CONTEXT

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CENTER OF THE CUSTOMER RELATIONSHIP

Today, one touch point lies at the heart of Kroger’s customer trust and loyalty — the store.

Digital offers an increasing number of touch points — each of which is an opportunity to amplify relationships and reach customers where they live, work and play.

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Today TomorrowTomorrow

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THE STORE EXPERIENCE IS COMPLICATED

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For many, grocery shopping is an exercise in logistics and scheduling.

Today, it requires a trip to the store — along with planning ahead, thinking about what’s needed and juggling time and money. And it’s not always pleasant or enjoyable.

When shopping looks like this, who wouldn‘t want a little help?

Sleeping baby taking up most of the shopping cart

Groceries piled high

List & pen in hand

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THE CUSTOMER JOURNEY IS...

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THE CUSTOMER JOURNEY IS...

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of Americans rank grocery shopping as their most time-consuming chore...

66%

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THE CUSTOMER JOURNEY IS PHYSICAL

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BEHAVIORAL INFLUENCES

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Digital Engagement

Digital Shopping Behaviors

Blur between shopping specific behaviors & other

digital behaviors

Brick & Mortar ShoppingBehaviors

Conflict between online & offline spending patterns

Interaction differences between physical and

digital

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THE CUSTOMER JOURNEY IS AN OPPORTUNITY

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Every phase of the journey is a chance for Kroger to amplify customer relationships.

Breadth of journey

Dep

th o

f jo

urne

y

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CUSTOMERS NOW EXPECT OMNI-CHANNEL EXPERIENCES

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Shoppers are no longer loyal to an individual channel but rather to experience across channels . . . they expect the seamless integration of the online, physical and mobile shopping experience by 2014.

Digital Shopper Relevancy Report — Capgemini

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IN-STORE

DELIVER SHIP

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For customers, this results in saving time, saving money and achieving success with personal goals.

THE ROLES OF KROGER’S DIGITAL CHANNELS

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For Kroger, this results in increased spend, share of wallet and loyalty.

An omni-channel approach to digital throughout the customer journey will...

DriveAwareness

CreateEngagement

AmplifyRelationship

DeepenLoyalty

ImproveCustomer

Understanding

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THE DIGITAL RELATIONSHIP LOOP

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Deepening digital relationships with customers is first about the exchange of value, ultimately leading to greater market share and the exchangeof money.

Insights“What”

RELATIONSHIP LOOP

Location Dialogue“Where”“How”

“Why”

Deepening digital relationships with Kroger

is more about the exchange of value,

leading to the savings of time and money.

Momentsof Truth

VALUE

“When”

THANK YOU