It’s also what United Natural Foods, Inc., a publicly traded wholesale distributor for food and grocery items, has invested in, launching its own retail media network this spring called the UNFI Media Network. It developed the platform with Swiftly, a technology company that powers retail media networks.

Who owns your data?

Third-party data is information about consumers that a retailer or advertiser acquires through an entirely separate source. On the internet, that’s often done through third-party cookies. Third-party cookies are code used on websites that can live on in web browsers across multiple site visits. They essentially track user activity and inform targeted advertisements delivered to those users. Google had planned to phase out third-party cookies, but it recently announced it will not do so.

The intuitive alternative to third-party data is first-party data. First-party data is what retailers and advertisers acquire directly and voluntarily from consumers. It can include an email address or phone number that a consumer uses to sign up for a loyalty program, or the information that a consumer uses to complete a checkout on an ecommerce order. That’s the kind of data that powers retail media networks and advertising.

Both kinds of data allow retailers and advertisers to personalize digital ads based on consumers’ shopping behaviors.

“One of the things that we thought was so important about Swiftly versus other retail media platforms out there is that the retailer retains 100% control of the information and data of that shopper, of that loyalty subscriber,” Louis Martin, UNFI president of wholesale, told Digital Commerce 360. “They don’t have to give that away.”

What is an example of retail media advertising?

Sean Turner, cofounder and chief technology officer at Swiftly, showed Digital Commerce 360 examples of what retail media advertising can look like. Sharing his screen on a web-based call, Turner showed three kinds of personalized ads the UNFI Media Network can display using Swiftly technology.

1. Personalized pricing promotions

In the example above, the consumer has shopped at a Hen House location. The prices in the promotion are specific to the Hen House location where that consumer typically shops. Swiftly operates in the first-party cookie list identity space, Turner said.

“So we’re not cookie-ing users to try to track and target users,” Turner told Digital Commerce 360. “I’m actually getting explicit opt-in identities with a first-party login with the user’s email address, phone number into these retailer apps. And when we go and we target users, we’re actually able to target them using a data clean room, target these same shoppers off-platform in a privacy-compliant and cookie-less way.”

A data clean room “leverages the hash of your email address, so you’re not sharing any of the raw data, and it couldn’t be used to reverse-engineer-your email address,” he explained. It matches two people “without ever having to exchange any personally identifiable information,” he added.

He compared the process to a digital version of circular print ads. A local grocery store can send printed coupons and pricing — often on newsprint paper — to consumers and potential consumers near it. But because many shoppers are more inclined to check prices on their phones and computers than go through traditionally mailed circulars, companies like UNFI and Swiftly use retail media advertising capabilities to reach potential customers.

“If I just show you an ad and you’re out on the internet and it just says, well, hey, apples are $0.98 a pound, I don’t know where to go,” Turner said. “I don’t know where to buy it. I’m gonna probably just ignore that ad ’cause it’s not gonna register with me. But if it’s the retailer that you go to every week that’s branded that ad and it’s like, hey, these are the deals at that retailer, well, guess what? We’re seeing very, very high average return on ad spend for these ads.”

2. Product-based promotions

Another Swiftly-powered retail media ad highlights a specific product, as opposed to a pricing promotion.

Turner also showed Digital Commerce 360 a different use case for personalized retail media advertising. In the image above, the retail media ad shows Alexia-brand onion rings. Clicking on the ad takes users to a recipe page featuring the product.

Clicking through the Alexia onion ring ad takes online shoppers to a page that promotes a recipe featuring the product, as well as what other ingredients a shopper should purchase to make the recipe as shown.

“I’ve got all the products featured right below that, so it makes it super easy for me to add these to my shopping list or to add it to an ecommerce cart and actually go and buy the product,” Turned said. “You’ve got a pretty good, complete story there.”

3. In-app mobile advertising

Swiftly powers the retail media technology for St. Louis-based grocery retailer Dierbergs’ mobile app. Upon opening the app, a user might see an ad to make s’mores.

An ad on the Swiftly-powered Dierbergs mobile app calls users to make s’mores.

When a user clicks the ad, she is taken to a list of products that an advertiser or advertisers promote to complete the recipe in their call to action. In this case, those would be Hershey’s, Kraft and Mondelez.

The Dierbergs app shows which products to buy to make s’mores, based on the companies advertising.

The app then displays the products with pricing based on the location where the user shops. Additionally, it shows which aisles a user can go to in the store to find the products. Both of those details update automatically, as the retailer’s app is linked to its point-of-sale system.

The product detail page shows an image, pricing and the duration of the promotion. It also shows where to find the product in the user’s preferred store location.

The user can add the product to an ecommerce cart or to a list for physical shopping by clicking the plus symbol in green on the product detail page.

Dierbergs app users can add products to their shopping lists or digital carts.

The app sorts the products that consumers add to their lists to display by aisle, making in-store shopping more efficient.

Impact on regional and independents retailers

Retail media advertising is a critical capability for smaller retailers, Martin and Turner both told Digital Commerce 360. Any retailer working with UNFI or brand that sells to those retailers can participate in the UNFI Media Network, Martin said.

That includes some of the largest consumer packaged goods companies (CPGs), he said. Those CPGs typically come in with a checklist of expectations. That’s because they have the resources to understand what goes into advertising at that scale, he added.

“The flip side is we also have a universe of suppliers who don’t have that infrastructure,” Martin said. “They are small, natural organic suppliers. In many cases, they may be all the way down to still doing stuff in the garage of their home to maybe having one or two production facilities and able to supply to just a few.

“Well, they’re not the ones that can go to Walmart and get on the media platform because one, if Walmart turns it on, they’re not going to have the scale to keep up with it. But two, they don’t have the administrative infrastructure to engage. And so we’ve tried to make that very easy for that type of supplier by you can just simply go on our website and with a few clicks, sign up, put your brand on it.”

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The Boise, Idaho-based company reported an adjusted net income of $392 million for the first quarter, which ended June 15. Stores under the Albertsons Companies Inc. umbrella include:

• Safeway
• Albertsons
• Shaw’s
• ACME
• Jewel-Osco
• Randalls
• Vons

In total, the chain operates 2,269 retail food and drug stores with 1,725 pharmacies.

Albertsons is No. 24 in the Top 1000, Digital Commerce 360’s database ranking of North America’s leading retailers by online sales. It is classified as a Food & Beverage retailer. Digital Commerce 360 projects that Albertsons total web sales in 2024 will reach $5.52 billion.

Albertsons web sales by year

Albertsons Q1 earnings results

In a released statement, Albertsons CEO Vivek Sankara lauded the company’s performance. However, he also cautioned that there are potential impediments to earnings ahead.

“As we look ahead to the balance of fiscal 2024, we expect to see continuing headwinds related to investments in associate wages and benefits, an increasing mix of our pharmacy and digital businesses which carry lower margins, and the cycling of prior year food inflation,” Sankara said, adding that some of the turbulence will be offset by other actions the company is taking.

“We expect these headwinds to be partially offset by ongoing productivity initiatives,” Sankara said.

Albertsons Q1 earnings came just two days before the grocery agreed to pause its proposed merger with Kroger. Regulators are suing to block the $24.6 billion deal, which already led to the companies proposing a list of almost 600 stores that they would sell if the merger closes. Both companies agreed to an injunction, eliminating the need for another hearing before the case — which was filed in Colorado — proceeds to trial on Sept. 30.

Albertsons digital sales soared in Q1

The 23% growth in Albertsons online ordering business reflected ongoing investments it is making to build out capabilities.

“In the first quarter of fiscal 2024, we continued to invest in our Customers for Life strategy and the digital and omnichannel capabilities necessary to support it,” Sankaran said. “Our Customers for Life strategy is placing the customer at the center of everything we do, and we continued to drive strong year-over-year growth in loyalty members as we launched our new simplified ‘for U’ loyalty program.”

The loyalty program, rebranded recently as “for U,” offers a more streamlined experience and digital deals to reward customers.

In Albertsons’ fiscal first quarter, its growth occurred as the company expanded its network of grocery delivery partners to include Grubhub, in addition to Doordash and Instacart. Albertsons began revamping its digital strategy during the pandemic as more customers shifted their shopping online.

“Speed and convenience are becoming just as important as cost savings,” Chris Rupp, Albertsons chief customer and digital officer, told the U.S. Chamber of Commerce in 2022.

Kevin Dunn, vice president of retail and consumer packaged goods sales at Liveramp, a data collaboration platform, attributes earnings results at Albertsons to its robust customer data collection program.

“Albertsons positive quarterly earnings results are a testament to the power of first-party data,” Dunn said.

That data is used not only to identify what Albertsons customers want, but also to power its retail media network capabilities.

“Leveraging its media network, the Albertsons Media Collective, the retailer has built powerful, data-driven partnerships with its brands and suppliers that deliver the real-time insights needed to bridge the online and offline customer experience,” Dunn explained.

Other details

Albertsons explicitly highlighted risks related to the proposed merger with Kroger. Those risks include the “ability to close the transactions contemplated by the Merger Agreement, and the impact of the costs related to the Merger,” according to Albertsons. Other concerns mentioned were:

• “Erosion of consumer confidence”
• “Restrictions on our ability to operate”
• “Challenges in retaining and motivating our associates until the closing of the Merger”
• “Litigation related to the transactions contemplated by the Merger Agreement”

Additional first-quarter highlights include:

• Identical sales increased 1.4%.
• Loyalty members increased 15% to 41.4 million.
• Net income of $241 million, or $0.41 per share.
• Adjusted net income of $392 million, or $0.66 per share.
• Adjusted EBITDA of $1,184 million.
• Total net debt of $7.57 billion as of June 15, 2024.
• Net debt ratio of 1.81.

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The UNFI Media Network launched in May 2024. It extends digital marketing capabilities to more than 30,000 retail customer locations and about 11,000 brand partners, the distributor said.

Louis Martin, president of wholesale, United Natural Foods, Inc. (UNFI)

UNFI already offered what it called “professional services” to its clients. That included helping clients design the layout of a new store, shelving units, getting deals on refrigeration equipment, or getting better rates on credit card machines bought through the company.

What became clear was that retail media was a service UNFI’s independent and regional clients “were not getting full access to,” Louis Martin, UNFI president of wholesale, told Digital Commerce 360.

UNFI owns some retail banners, including Cub and Shoppers Value.

Why did UNFI start a retail media network?

There are a variety of reasons these independent and regional grocery stores were not getting full access, he said. One of those reasons is the scale at which the retailer can buy and sell product.

“If you’re a small independent grocer or a bodega or a mom-and-pop store with three to four or five outlets, you probably don’t have the bandwidth or infrastructure in place to be negotiating with Kraft on what they’re going to bring into your store,” Martin told Digital Commerce 360.

Another example is that a grocery company could have different store banners through which it sells, but they use different types of technologies, making it challenging to have a single point of entry to “that universe of retailers because they were all in different places,” he said.

As a result, he added, UNFI identified that developing a retail media network would create value for the grocery distributors and store operators it serves. In a sense, UNFI and those companies it served were “sitting on the sidelines as Walmart and Kroger and Amazon and Target were building their infrastructure for retail media.”

“Well, we wanted to make sure our customers had an ability to play in that space,” Martin said. “And not only did we think that internally, but a whole lot of our customers were coming to us and saying, ‘Help me think about this.’ We need to be able to compete and provide this to our consumers in our stores so that they have more tailored and differentiated shopping experiences — because we’re not going to beat Walmart on price, but we can offer a much better shopping experience, and this is a way to do that.”

How does a company develop a retail media network?

At first, Martin said, UNFI planned to build its retail media network capabilities in-house. And it began to do so.

But the distributor realized “really quickly” that developing such technology wasn’t its core capability. And its customers couldn’t wait for the time it would take UNFI to develop it, Martin explained. That led to UNFI meeting with technology providers figure out which retail media platform best matched its goals. Among those providers was Swiftly, which had the added benefit of having already been working with UNFI customers, Martin said, allowing the distributor to get references it felt were credible.

What is an example of a retail media network?

Retail media networks are a type of advertising platform where retailers can sell ad space on their own digital channels to third parties. Advertisers can target their ads using the retailer’s first-party data on customers, including information from loyalty programs. Then, advertisers can place ads on the retail media network provider’s websites, within mobile apps, or in stores via screens and displays. Those options provide an alternative to other targeting methods, such as those that rely on third-party cookies.

The on-site — or on-platform — component allows retailers advertising through the UNFI Media Network to “create a tailored shopping platform” via desktop and mobile.

In UNFI’s case, it’s not limited to UNFI-owned channels, Martin told Digital Commerce 360. Its retailer and supplier partners will be able to advertise off-platform in, for example, the Wall Street Journal as well as on Facebook and other social media platforms, Martin said. What differentiates it from other digital marketing is that they are targeting not just generic consumers from a marketplace or area. Instead, they can target individuals who they know are members of a loyalty program within UNFI’s system.

Based on that, he said, advertisers can “understand with a closed loop” if consumers convert from looking at a product via retail media advertising and then going to a UNFI-affiliated store or supplier website or app.

How does it work?

Retail media networks can work in different ways. For the UNFI Media Network, one way is through suppliers and brands couponing digitally. Another is being part of a retailer’s loyalty program.

Whereas some companies feel they’re devaluing their brand’s equity through couponing, Martin said, there are workarounds that still benefit both the advertising brand and the consumer. One example is that a brand can opt to donate a certain amount of points to a grocery store’s loyalty program if a consumer purchases the brand’s product. The consumer then accumulates points from that purchase that can eventually convert to dollars they can spend on groceries.

“But you did it through a series of transactions,” Martin said. “You didn’t do it because Heinz ketchup happened to be cheap that week, and so there’s a lot of interesting ways to reinforce that loyalty and that activation.”

Grocers and brands selling in UNFI Media Network-affiliated stores can also use in-store digital advertising. For example, some grocery stores might use digital screens on the doors in their refrigerated and frozen sections, highlighting specific products or displaying video advertisements.

It then becomes “plug and play based on what the retailer wants and prioritizes,” Martin said.

That could mean ads prioritizing categories, a retail banner, a loyalty program or in-store activity.

First-party data and user privacy

All this factors into the personalized advertising UNFI Media Network displays. But it’s also based on consumers’ shopping activity.

“What you’re going to see and what gets promoted to you is going to be very much tailored to meet those buying patterns and to help reinforce what you’ve already demonstrated are your preferences or your priorities as a consumer,” Martin said. “And more importantly, through our network, not only are you tailoring it, but one of the things that we thought was so important about Swiftly versus other retail media platforms out there is that the retailer retains 100% control of the information and data of that shopper, of that loyalty subscriber. They don’t have to give that away.”

Other retail media platforms, Martin said, declining to name them, will give companies access to the technology in exchange for user data. Those platforms, he said, are “interested in then using that data to create last-mile delivery connectivity.”

“Well, we’re not in the last-mile business,” Martin said. “We’re in the [business of] helping our shoppers, our business, our retailers grow their business in store. So we actually are able to deliver on the promise that you retain your shopper loyalty data. It is yours. It is private to you. We don’t need to see it to activate the programming that we have and we are able to provide the right ROAS [return on ad spend] analytic analytics to the suppliers without having to sacrifice that privacy either.”

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Albertsons is No. 24 in Digital Commerce 360’s Top 1000, a ranking of North America’s leading retailers by online sales. The company appears in the rankings’ Food & Beverage category. Digital Commerce 360 projects total ecommerce sales for Albertsons in 2024 will be $5.52 billion.

Albertsons ecommerce sales by year

Why Albertsons is partnering with Grubhub for delivery

Amber Kappa, vice president of business development and digital innovation at Albertsons Co., framed the partnership in the context of the grocer’s prioritization of “convenience, choice and variety.”

“With our latest collaboration with Grubhub, shoppers can receive fresh produce, household essentials, and regional favorites directly from our stores to their homes with a simple tap on Grubhub,” she said in a public statement.

Analysts and insiders see the partnership as offering strategic benefits to both parties and customers.

Damian Rollison, director of market insights at the brand marketing platform SOCi, said that the Grubhub and Albertsons alliance makes sense.

“The partnership between Grubhub and Albertsons marks a strategic move for both companies to capture a larger share of the online grocery delivery market,” Rollison says.

Delivery strategy at Albertsons

Rollison said this collaboration expands Albertsons’ digital footprint and enhances customer convenience. He also noted that it diversifies delivery options alongside existing Albertsons partnerships with Instacart and DoorDash. In addition, it responds to consumer demand for increased digital availability of common local needs, including groceries.

Rollison said Grubhub’s entry into the grocery delivery market uses its established logistics and customer base. Moreover, it will tap into a new revenue stream as online grocery shopping continues to grow.

“Partnering with a major chain like Albertsons also strengthens Grubhub’s competitive position by offering a more comprehensive service portfolio,” Rollison assessed.

He called this partnership the latest example of a food delivery company trying to become an “everything app” connecting consumers to local stores.

“This partnership sets a precedent for future collaborations in the online grocery delivery space, reflecting the current consumer retail behavior,” Rollison says.

Opening up a new channel for discovery

While home grocery delivery has become a fairly standard service since the pandemic, Jennifer Silverberg, CEO of the ecommerce platform provider SmartCommerce, says that Albertsons’ partnership with Grubhub has a crucial difference from in-house delivery services like ones run by Kroger: “Grubhub is not talking about being the fulfillment engine of an order that happens on an Albertsons site,” Silverberg said (though that may happen, too). Rather, she sees it as being more about using Albertsons as a product source, or de facto “warehouse” for products purchased on Grubhub.

“This moves the shopping experience from Albertsons to Grubhub, which reflects what we have been seeing for a while, where product discovery and now even the transaction have become distributed, rather than concentrated only at the retailer,” Silverberg stated.  She added that the trend has expanded the definition of a retailer to pretty much anywhere a product is purchased.

“We have the potential to see a fundamental change in what we as consumers consider a store,” Silverberg said. She called the partnership “a very smart move” for Albertsons.

“It gets them at the front of the line for expanding their reach with Grubhub’s reach,” she explained. “It would be easy and understandable for a retailer to try to insist on controlling the full shopping experience — many are — but based on the shifts we’ve seen in consumer behavior, this was a very smart move for all parties.”

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Parentheses indicate the merchant’s ranking in the Top 1000, unless otherwise stated.

This week’s ecommerce earnings takeaways

• La-Z-Boy reported a 1.4% decrease year over year in net sales for its most recent quarter, as its CEO said the furniture industry broadly faces continuing challenges.
• Apparel retailer Reitmans (Canada) Ltd. saw sales rise 3.4% at its stores during its first fiscal quarter of 2025, even as online sales dropped 9.2% from the same quarter a year earlier.

The Kroger Co. (No. 6)

Q1 2024 earnings: The Kroger Co. reported that net sales were flat year over year reaching $45.3 billion for its first fiscal quarter of 2024, which ended May 25. Meanwhile, digital sales were up 8% year over year during the quarter, said Todd Foley, interim chief financial officer at Kroger, during the grocer’s earnings call.

Read more on Kroger’s earnings here.

La-Z-Boy Inc. (No. 254)

Q4 2024 earnings: La-Z-Boy net sales decreased 1.4% year over year to $553.5 million for its fourth fiscal quarter of 2024, which ended April 27. The company frames its total written sales — down 3% year over year in the quarter for La-Z-Boy Furniture Galleries stores — as outperforming the overall furniture industry, which it said were down 8% for the same period. The company also noted challenges in online sales when discussing its Joybird brand.

“Turning to Joybird, written sales declined 14% in the quarter versus a year ago as the online furniture market continues to be challenged, consistent with the broader furniture industry,” said Melinda Whittington, the president and CEO of La-Z-Boy, during the company’s earnings call for the period.

Reitmans (Canada) Ltd. (No. 454)

Q1 2025 earnings: Reitmans net sales were flat year over year at 165.7 million Canadian dollars ($121.3 million) for its first fiscal quarter of 2025, which ended May 5. Ecommerce sales were down 9.2% year over year in the quarter for the apparel retailer, which saw in-store sales rise 3.4% during the same earnings period.

“Comparable sales, which include ecommerce net revenues, were down 4.6%, primarily due to decreased online traffic,” said Richard Wait, executive vice president, chief financial officer at Reitmans, during the quarter’s earnings call. “Sales of product through RCL Marketplace, which launched a little over a year ago, did not contribute significantly to the top line as we continued to develop partnerships and curate offerings. Retail store activity accounted for 75.4% of net revenues in Q1, while ecommerce made up the remaining 24.6%.”

Other recent ecommerce earnings results

Academy Sports + Outdoors (No. 144)

Q1 2024 earnings: Academy Sports + Outdoors net sales fell 1.4% to $1.36 billion in its first fiscal quarter of 2024 ended May 4. Steve Lawrence, the chief executive officer at Academy Sports + Outdoors said “customers remain under pressure in the current economic environment” but said the sporting goods retailers was “pleased that we drove a positive comp in our new stores and omnichannel business.”

Read more on Academy Sports + Outdoors earnings results here.

Alibaba Group Holding Limited

Q4 2024: Alibaba said it grew revenue 7% year over year in its fiscal fourth quarter ended March 31, 2024. Meanwhile, net income decreased 96% compared to the prior Q4.

Alibaba owns the world’s two largest online marketplaces by gross merchandise value (GMV), Taobao and Tmall. Taobao ranks No. 1 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the largest such marketplaces by third-party GMV. Tmall ranks No. 2. Both operate in China.

Read more on Alibaba’s earnings here.

Amazon.com Inc. (No. 1)

Q1 2024 earnings: Amazon net sales increased 13% to $143.3 billion in its fiscal first quarter. Meanwhile, its operating income more than tripled.

It ranks No. 1 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by third-party gross merchandise value (GMV).

Read more on Amazon’s earnings results here.

Costco Wholesale Corp. (No. 7)

Q3 2024 earnings: Costco net sales grew 9.1% to $57.39 billion in its third fiscal quarter of 2024 ended May 12. During the same period, ecommerce sales grew 20.7%.

Read more on Costco ecommerce sales here.

The Home Depot Inc. (No. 4)

Q1 2024: Home Depot reported that sales declined 2.3% in its fiscal first quarter of 2024 ended April 28 due to challenges in the broader economy. B2B and Pro sales were equally impacted, while online sales grew.

The Lovesac Company (No. 389)

Q1 2025 earnings: Lovesac reported that net sales decreased 6.1% year over year to $132.6 million for its first fiscal quarter of 2025, which ended May 5. For the same period, online sales fell 9.0% to $36.6 million.

Lovesac CEO and founder Shawn Nelson called the quarter’s results “in line to slightly above the high end of our expectations” and characterized them as “continued outperformance compared to the industry.”

In the meantime, he expressed optimism about the furniture retailer’s omnichannel efforts and upcoming product launches.

“We believe through our omni-channel infinity flywheel, designed for life platform and advantaged supply chain, we are well positioned to continue to deliver results and capitalize on the tremendous opportunity still ahead,” Nelson said in a release statement. “With the recent launch of our PillowSac Accent Chair, we are continuing to expand our offering and see opportunity to further widen the aperture with exciting innovative launches yet to come.”

Signet Jewelers Ltd. (No. 55)

Q1 2025 earnings: Signet Jewelers net sales fell 9.4% to $157.2 billion in its first fiscal quarter of 2025 ended May 4. Signet CEO Virginia Drosos cited positive customer responses to the jewelry retailer’s “new product offerings and loyalty program,” saying the company expects “continued momentum in the second quarter, leading to a positive same-store sales inflection in the second half of Fiscal 25.”

Target Corp. (No. 5)

Q 1 2024: Target reported that total revenue declined 3.1%. That’s down to $24.5 billion in the first quarter of its fiscal 2024 ended May 4. However, online sales did increase slightly. Declines in discretionary categories were partially offset by continuing growth in the beauty category.

Read more on Target’s earnings results here.

Walmart Inc. (No. 2)

Q1 2025: Walmart grew U.S. online sales 22% for its fiscal 2025 first quarter ended April 30, 2024. Consolidated revenue grew 6.0% to $161.5 billion in Q1.

Read more on Walmart’s earnings here.

Ecommerce earnings calendar

Here’s when other ecommerce earnings are scheduled to report this quarter:

• Levi Strauss & Co.: June 26
• H&M: June 27
• Nike: June 27

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CEO Rodney McMullen said in an earnings call with investors that Kroger expects customer sentiment “to continue improving” as inflation moderates. But for now, many are “managing economic uncertainty.”

“As we’ve seen over recent quarters, customers continue to seek value and are shopping with us differently based on their financial situations,” McMullen said. “Spending from premium and mainstream customers continue to be strong.”

He added that Kroger is starting to see positive signs among its “most budget-conscious households.”

Kroger has moved up to No. 6 in the Top 1000, Digital Commerce 360’s database ranking the largest online retailers in North America. Kroger is first in the Top 1000’s Food/Beverage category. However, it competes with Mass Merchants that rank higher than it in the Top 1000 — Walmart and Target — for online grocery sales.

Kroger digital sales

In Q1, Kroger said, it accelerated its digital presence by increasing delivery sales 17% year over year. It also increased digitally engaged households 9% year over year.

Kroger digital sales increased more than 8% in Q1, said Todd Foley, interim chief financial officer, in the earnings call. For total Kroger sales, which increased to $45.3 billion in Q1, gross margin was 22.4% of sales. Whereas total sales increased slightly from $45.2 billion in the previous year’s Q1, gross margin decreased slightly (down seven basis points), he said.

McMullen said delivery and pickup both grew in the quarter. Kroger’s delivery team has improved fill rates, he said. That refers to the number of orders Kroger can ship from its available stock. It also reduced wait times and improved on how many of its orders were delivered without error, he added.

“Through the power of machine learning and AI, we are developing new ways to elevate the pickup experience for customers and at the same time reduce costs,” McMullen said. “With dynamic batching of orders, these tools are providing associates the most effective pick routes, which is enabling us to dramatically reduce pick lead time in our highest volume stores.”

Additionally, he said customers love Kroger’s delivery experience for refrigerated products. The Kroger delivery network has nearly doubled sales year over year in Q1, he said.

Personalization and retail media at Kroger

Personalization has helped Kroger engage with more digital customers, McMullen said. As a result, Kroger customers clipped 18% more digital coupons than they did in the year-ago quarter.

“Capturing more digital households is a key to our long-term growth model as these households are more loyal, spend nearly three times as much with us and drive our alternative profit businesses,” McMullen said.

Meanwhile, McMullen said Kroger Precision Marketing, the company’s retail media network, is on pace to meet full-year expectations of more than 20% growth. Kroger Precision Marketing added new capabilities with Meta on June 19, he said. It continues to “broaden its reach by offering its custom audiences and ad measurement capabilities to advertisers on the Meta social media platforms.”

McMullen said this will create more opportunities for clients to reach relevant audiences in more places.

Possible Kroger merger with Albertsons

McMullen told investors that Kroger believes its updated divestiture plan meets regulators’ concerns and will put the company in a better position to complete its merger with Albertsons.

Kroger and Albertsons announced in April a plan to sell grocery stores to C&S Wholesale Grocers. This came in response to a statement the Federal Trade Commission had released in late February calling the proposed Kroger-Albertsons merger “anticompetitive” and suing to block the $24.6 billion acquisition.

McMullen said the proposed divestiture “positions C&S to be a strong and successful competitor.”

Albertsons ranks No. 24 in the Top 1000. C&S currently does not rank in the Top 1000.

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Central to US Foods’ ecommerce strategy is digital innovation. That includes the use of artificial intelligence to improve the customer experience, the company told stock analysts at its annual Investor Day presentation earlier this week.

US Foods posted net sales of $8.9 billion during the first quarter of 2024. That’s a 4.8% increase over the same period a year ago.

The three pillars of US Foods’ ecommerce strategy

• To use digital innovation to retain its position as an ecommerce market leader and partner of choice.
• Increase the use of its ecommerce and business management platform.
• Leverage artificial intelligence to improve operating efficiencies and the customer experience, John Tonnison, executive vice president and chief information and digital officer told analysts.

At the heart of US Foods’ digital strategy is MOXē, the company’s ecommerce portal, which launched in late 2022. The company says that 84% of US Foods’ customers use MOXē to place orders and manage their business.

What differentiates MOXē from competing platforms is that it was built to be a business management application, versus a marketplace that simply enables ordering.

Tools in US Foods digital suite

Business management tools embedded in MOXē include cost management, labor and staff planning, and retail performance.

Another tool is Menu Profit Pro, which:

• Calculates the cost and margins for each item on a restaurant’s menu.
• Keeps recipe costs in line with menu prices.
• Determines if food service providers are making money on high-volume items.
• Provides recommendations on how to improve the sales mix to generate more profits.

“We created MOXē to be a tool that allows our customers to run and rely on the supply chain,” Tonnison said. “MOXē is at the core of our digital commerce suite.”

Since the launch of MOXē, US Foods has seen increased order sizes of more than 1.5 cases per order, on average. Tonnison attributes the increase to the digital merchandising and marketing tools embedded within MOXē. They include customer alerts, reminders, and product suggestions.

“We also use the data we gather around customer behavior and ordering preferences to create more personalized merchandising experiences,” Tonnison said. “These are all tools that allow us to interact with customers far more frequently than we could face-to-face. With every interaction, we learn more about our customers, which helps us fine-tune those [interactions].”

The increase in average order size proves that US Foods digital marketing and merchandising strategy is working, Tonnison said.

Digital-first customers change the game for US Foods

In addition, customers using MOXē interact 8x more with US Foods than non-digital customers. MOXē users also generate 120 million annual product searches, each of which creates a merchandising and marketing opportunity.

US Foods has also seen a 5% increase in customer retention since MOXē launched. Tonnison attributed the increase in customer retention to the perceived value US Foods’ customers see in the platform.

In addition to bolstering order sizes and customer loyalty, MOXē has reduced the US Foods sales team’s daily workload by 30% through the automation of such tasks as:

• Fulfillment
• Order tracking
• Sending customer alerts
• Exception management

“This has allowed our sales reps to double down on consultative and gross selling,” Tonninson said.

Features that US Foods customers like about MOXē include real-time inventory, detailed product descriptions and product titles, simple navigation, and ease of use. Ordering on MOXē takes about half the time of other apps, Patrice Myer, culinary director of Blackberry Market, a fast-casual cafe and bakery in Glen Ellyn, said in a taped testimonial.

US Foods powers up its AI technology

Looking ahead, US Foods plans to enhance MOXē using artificial intelligence. The company has created its own AI lab. It’s using AI to translate foreign language content, improve delivery tracking and exception management, and streamline customer onboarding and account creation.

Using AI to help with language translation will pave the way for deeper penetration of the platform among customers that operate multi-language kitchens, according to Tonnison.

US Foods also uses AI to make more intelligent menu recommendations for customers and provide deeper insights into customer behavior and interaction. “AI will enable us to do these things because we know this mousetrap works,” Tonnison said.

The company is also in what Tonnison describes as two-week product enhancement sprints, in which 1.5 new product features are developed in a week and then taken live a week later.

Independent research has shown MOXē to be the preferred digital commerce platform among 53% of independent restaurants. The next closest competing platform is preferred by 36% of independent restaurants, the company says.

Given the enhancements planned for MOXē, US Foods forecasts that 95% of its customers will be using the platform in 2027, which will generate an estimated $1.5. billion in incremental sales, the company says.

“MOXē makes customers stickier and [more profitable],” Tonnison says. “Our goal is to make MOXē a compelling tool our customers can’t live without and use digital [innovation] to drive new value for customers and new heights for the company.”

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Underpinning a 20.7% rise in ecommerce sales year over year, Gary Millerchip, executive vice president and chief financial officer at Costo, listed gold bars and silver sales as significant drivers. Meanwhile, appliances and electronics played key roles as CEO Ron Vachris, who stepped into the role in January, said Costco warehouses have seen returning interest to discretionary purchases in categories such as toys and health and beauty products.

Those warehouses saw two new openings during Q3, both in the U.S., with two more than have since followed in Loomis, California, and Nanjing, China. Millerchip said Costco expects to open 12 new locations in 2024, with nine of those in the U.S., plus “two in Japan and one in Korea.”

Costco is No. 6 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Digital Commerce 360 categorizes it as a mass merchant, a group that also includes Amazon.com Inc., Walmart Inc. and Target Corp.

Costco ecommerce sales in Q3

“Total ecommerce sales growth in the quarter was led by gold and silver bullion, gift cards and appliances,” said Millerchip during Costco’s Q3 earnings call, according to a transcript published by Seeking Alpha.

In other metrics, Millerchip pointed to increased activity across Costco’s website and apps.

“Our app downloads were up 32% versus a year ago with about 2.5 million new downloads in the quarter, bringing total downloads to more than 35 million,” he noted. “Site traffic was up 16% and average order value was up 8%.”

In addition, Millerchip said the retailer’s curated marketplace, Costco Next, added eight new vendors during Q3, as the total number of vendors in the marketplace reached 75.

Asked about buy online, pick up in store (BOPIS), which Costco refers to as “buy online, pick up in warehouse,” Vachris described a focused effort for expanded offerings with electronics as a priority.

“Right now, we’re rolling out an expanded buy online pickup in warehouse that is always going to be limited in scope based on the volume in our warehouses that we have,” Vachris explained. “We can’t expand to all categories, but we’re expanding as we currently speak in televisions and other electronic items that are there as — and so yeah, we see that as a real opportunity for us.”

Deliveries and Uber Eats

Meanwhile, delivery picked up during the quarter, with Millership citing a 28% rise in volume year over year, with appliances driving order fulfillment through Costco Logistics.

Costco has also expanded its work with Uber, which Millerchip briefly addressed.

“Previously, Uber Eats delivered Costco orders in Texas and this new agreement allows consumers the ability to order from Costco through Uber Eats across all of Canada as well as 17 states in the U.S.,” he stated. “We are also working to expand this partnership to several of our international countries in the coming months.”

Millerchip said Costco will also begin selling Uber gift cards globally, while providing Uber One membership discounts to Costco members.

Signs of growth in discretionary spending

In a quarter that saw announcements of price cuts from retailers such as Target and Walgreens, Millerchip acknowledged an optimistic outlook on inflation with some price cuts happening in Costco’s warehouses as spending returned to discretionary categories.

“As inflation has leveled off, our members are returning to purchasing more discretionary items,” said Millerchip. “And growth in the category was led by toys, tires, lawn and garden and health and beauty aids.”

Vachris elaborated on customers’ spending habits, crediting Costco’s buyers and saying that although “categories such as the home division and toys are categories that have lagged quite a bit post-COVID,” Costco’s buyers have “rejuvenated those categories.” He cited “sporting goods,” “furnishings” and “domestics” as other discretionary areas seeing renewed sales.

As for price reductions Millerchip mentioned specific cuts for Costco’s Kirkland Signature pine nuts and Kirkland Signature frozen shrimp. However, he framed Costco’s larger strategies for cuts as targeted and not broad.

“We believe our strategy of delivering value to drive unit volume and member satisfaction is the winning combination for us,” he said. “In that vein, our buying teams are constantly aware of changing costs across all of their SKUs and are ensuring that we are capturing all cost decreases quickly so that we can pass on incremental value through price reductions.”

Growing Costco’s retail media network team

Asked about innovation and other changes coming out of his first full quarter as Costco’s CEO, Vachris cited Costco’s retail media network operations as an area where he sees potential.

“We have a significant program now with retail media and we see some great upside potential,” he stated. “We’ve expanded that team and we see some good potential and some good runway for us in that as well, things like personalization and so forth.”

Specifically, he cited “a great opportunity for data,” as an area where other retail media networks are seeking to differentiate themselves, leveraging first-party data to target ads.

Costco earnings

For the fiscal third quarter ended May 12, 2024, Costco reported:

• Net sales increased to $57.39. That was up 9.1% from $52.60 billion in the third fiscal quarter a year prior.
• Costco’s net income in the quarter was $1.68 billion. That was up from $1.30 billion the previous year.
• Costco ecommerce sales increased 20.7% year over year.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update.

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To help its customers cut their downtime from broken kitchen and HVAC equipment, the food-service and HVAC parts distributor has more than doubled its same-day parts delivery service to a 50-mile radius — often within two hours — from over 130 locations across the United States.

Parts Town is providing the expanded service through a strategic partnership with Roadie, a UPS company specializing in logistics management. Roadie operates as a crowdsourced delivery platform providing last-mile deliveries.

Parts Town is using Roadie to let customers order original equipment manufacturer (OEM) parts from over 130 Parts In Town stocking and service locations throughout the U.S. Parts In Town is an online marketplace on PartsTown.com where customers can purchase parts and services from the Parts Town service center nearest their facility.

The expanded same-day delivery service includes products ordered from Parts Town’s largest distribution center in its home base of Addison, Illinois, providing deliveries as fast as two hours to the entire city of Chicago, according to Roadie and Parts Town.

Increasing first-time fix rates

Parts Town says it developed the expedited deliveries with Roadie to support to help service technicians increase their number of “first-time fix rates” and decrease the amount of equipment downtime for customers.

Emanuela Delgado, group vice president of the revolution, growth and innovation, Parts Town

“The expansion of our same-day delivery radius is a step change in the ultra-fast accessibility of OEM parts locally,” says Emanuela Delgado, who has the dual title of Group Vice President of The Revolution and GVP of Growth and Innovation, Parts Town Unlimited. “This partnership is the latest example of our commitment to not only ensuring genuine OEM parts reach our customers quickly and seamlessly but also to providing tools for service technicians and our end-user customers to increase first-time fix rates and reduce equipment downtime.”

Over the past several years, Parts Town has worked to build a reputation for innovation through such technology and services as its AI-powered PartPredictor tool for helping customers proactively manage equipment repairs with replacement parts; a mobile app for placing and tracking orders and accessing manuals; and a robotics-driven automated distribution system.

Parts Town reported $2.3 billion in revenue last year, up from $1.8 billion in 2022.

“We’re a distribution company, but we’re really more of a digital technology company that has distribution,” Delgado has said.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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The companies detailed their new deal in a May 21 announcement.

Ibotta also works with retail brands Family Dollar and Dollar General on digital offers and rewards. It touts its ability to deliver coordinated promotions across retailer platforms, large third-party publisher sites and Ibotta’s direct-to-consumer properties.

Family Dollar is owned by Dollar Tree, which is No. 176 in the Top 1000, Digital Commerce 360’s ranking of the largest North American online retailers. Dollar General is No. 697. Digital Commerce 360 categorizes both retailers in the Mass Merchant category.

Schnucks omnichannel offers and rewards through Ibotta

“Schnucks is thrilled to partner with Ibotta, a leader in digital rewards, to expand savings for our customers through our Schnucks Rewards program,” said Tom Henry, chief data officer at Schnucks, in a released statement. “Through this partnership, Schnucks customers will have access to a wider range of digital coupons in our Schnucks Rewards program, creating more value for customers with every in-store or online shop.”

Moreover, Schnucks and Ibotta plan to work together on strategic research and development, pursuing new shopping experiences for Schnucks customers.

“Together with Ibotta, Schnucks is committed to creating innovative retail solutions that will shape the future of grocery shopping,” Henry stated.

What Ibotta’s network provides

“Driven by Ibotta’s mission to make every purchase rewarding, we’re pleased to add Schnucks, one of the country’s most storied regional grocery brands, to the Ibotta Performance Network, to drive more value for their customers through personalized offers and rewards,” said Ibotta CEO and founder Bryan Leach. “Schnucks’ and Ibotta’s mutual track record of industry-leading innovation is a befitting foundation for our partnership to reimagine the grocery shopping experience of the future.”

Leach offered some details on the focus of the research and development goals underpinning the two companies’ future work.

“Together, we’ll collaborate to develop a more personalized, premium shopping experience for Schnucks customers,” he explained.

Looking ahead, they intend to explore new types of digital offers in retail media. In addition, they will look to create “innovative touchpoints in-store,” according to the announcement.

New promotions for Schnucks customers will begin to roll out before the end of 2024, according to Ibotta. The company claims its network already reaches more than 200 million consumers and has been responsible for $1.8 billion in earned rewards since 2012.

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