Kroger pilots paid, two-tier loyalty program
The Kroger Co. is piloting a paid subscription program in select markets.
The supermarket giant's new Boost by Kroger Plus is being offered as a paid add-on to members of the free Kroger Plus loyalty program in the Atlanta, Indianapolis, Cincinnati, and Columbus, Ohio markets. The company plans to roll out the program to additional markets in 2022.
The new Boost by Kroger Plus provides two tiers of membership with different costs and service levels. At the $59.99 annual cost tier, members are eligible to receive delivery of online orders within 24 hours. At the $99.99 annual cost tier, members can receive delivery of online orders in two hours.
Kroger is also offering all members perks such as double fuel points, as well a welcome kit it says is worth more than $100 at sign-up.
Kroger has spent the last few years developing next-generation infrastructure to support rapid online delivery. Its rapidly-growing customer fulfillment center (CFC) concept, introduced in partnership with U.K.-based online grocer Ocado in May 2018, combines vertical integration, machine learning, and robotics with affordable and fast delivery service for fresh food.
The CDC facilities leverage proprietary technology solutions focused on artificial intelligence (AI) and advanced robotics and automation to create more seamless and efficient fulfillment, picking and delivery capabilities for enhanced digital commerce capabilities across the U.S
Kroger also recently announced it will use CDCs as a bulwark to enter the Northeast, a major U.S. market where it does not currently have a presence.
According to Tom Caporaso, CEO of loyalty provider Clarus Commerce, Boost by Kroger Plus is timed well, with an intriguing pricing model.
“The Kroger Boost program pilot has great timing, especially as gas prices continue to soar to high levels." Caporaso said in an emailed statement to Chain Store Age. "According to Clarus research, 41% of consumers said that they would be willing to pay for a premium loyalty program that provided gas perks, and Kroger’s extra points can help reduce some of those growing gas bills.
"Not to mention, droves of shoppers have already turned to e-commerce programs like Walmart+ to get their groceries delivered, so Kroger’s new program will help the brand stay on par with competing options," said Caporaso. "However, Kroger is implementing a cart minimum fee of $35 for grocery delivery, a similar rule that Walmart+ ended up dropping to attract more daily users. This might be something that Kroger changes, depending on the results of the pilot.
"The other interesting component of the Boost program is that Kroger is offering two different price tiers that provide different award amounts," he concluded. "This seems to be an unprecedented choice, as most brands either offer a traditionally free loyalty program or one price tagged premium option, like Walmart+, Amazon Prime or Best Buy Total Tech. However, Kroger’s multi-level membership program could set a new trend, offering ranging price points that can better meet family needs or monthly budgets.”
[Read more: Walmart takes wraps off membership program]
“Customers are increasingly looking for more convenient ways to feed their families and shop for groceries while consolidating trips and saving money,” said said Colleen Juergensen, president of Kroger Central Division. “From fresh food to household essentials, Boost elevates everything Kroger has to offer while providing our customers access to a new level of savings and benefits,”
“Kroger Boost is an accelerant to the Kroger family of companies’ rapidly expanding seamless ecosystem, which includes our new Kroger Delivery fulfillment centers,” said Bill Bennett, Kroger VP and head of e-commercial affairs.
Kroger operates nearly 2,800 stores under a variety of banners that include Kroger, Ralphs, Dillons, Smith’s, King Soopers, Floors 4 Less, Fry’s, Harris Teeter, Fred Meyer and others.