The digital transformation of Kroger: Remaking the grocery business
As more people began shopping online, hard discounters such as Aldi threatened the already-modest margins of national grocery chains, and customers demanded convenience, ubiquity and variety, Kroger CEO Rodney McMullen launched the Restock Kroger campaign to transform Kroger from traditional bricks-and-mortar player to formidable digital retailer. Slated to cost $9 billion, the strategic initiative was launched in 2017 with four fundamental aims: “redefine the grocery customer experience, expand partnerships to create customer value, develop talent, and live our purpose.”
The case study highlights crucial decisions made in Kroger’s digital transformation journey, including the partnerships it has built to gain momentum in the digital realm, and how it has tried to leverage modern digital technologies (e.g., AI, big data, predictive analytics) to not only improve the efficiency of its store operations but also provide superior customer service. As the case closes, the company’s business was being challenged by the COVID-19 pandemic and the rapid transformation strategies deployed by Walmart and Amazon. Thus, the case offers a good platform to explore the process of digital transformation, aligning the strategy of transformation with the customer journey, and balancing the pressures to maintain some of the elements of the legacy retail model while ushering in radically new solutions online.
Students will learn:
1. To provide insights into an industry that is being significantly impacted by modern digital technologies and how organizations within the industry choose to respond to the changes.
2. To draw lessons in the creation and execution of digital transformation strategies that cut across the entire organization and its stakeholders (i.e., business models, functions, target audiences).
3. To identify the types of challenges that companies typically face when they undertake transformations in general and digital transformations in particular.
