Kroger taps DDB as first agency of record

With e-commerce extending the reach of its brand, The Kroger Co. has enlisted DDB New York to serve as its first-ever creative agency of record.

Cincinnati-based Kroger said Monday that DDB will craft a “refreshed, stronger brand identity” for the company under its Restock Kroger, its multiyear plan to redefine the customer experience.

Chief among DDB’s objectives will be to elevate the Kroger brand as the supermarket operator transforms itself into an omnichannel retailer, serving customers through physical stores, same-day delivery (Instacart), direct-to-consumer delivery (Kroger Ship) and store pickup.

"Kroger is excited to partner with DDB New York to uplift our brand," Mike Donnelly (left), executive vice president and chief operating officer at Kroger, said in a statement. "We believe that no matter who you are, where you're from, how you shop or what you like to eat, everyone deserves to have affordable, easy-to-enjoy, fresh food. This partnership will solidify Kroger's position as a food authority, further proving to all of America that Kroger stands for fresh and quality."

Specifically, Kroger said, DDB will highlight four “modalities” of how the retailer provides food and other products to consumers: Store, Delivery, Pickup and Ship.

Related:Kroger to build fourth Ocado warehouse near Atlanta

"Consumers make 221 food-related decisions a day,” according to Mandy Rassi, head of brand building for Kroger. “A standout brand and narrative will drive more customers to choose Kroger more often via any channel. Kroger and DDB will work together to cut through the ‘sea of sameness’ that has arisen in grocery retail advertising, thereby supporting our transformation as a company."

Plans call for DDB's first project with Kroger to launch later this year. The companies didn’t provide further details. However, DDB New York stood out to Kroger “for its creativity, passion for our business and industry, and collaborative spirit," noted Rassi.

DDB New York said Kroger marks the agency’s first major new business agreement under the leadership of President Audrey Melofchik.

"All of us at DDB are humbled and excited to be named Kroger's Agency of Record," Melofchik stated. "It is evident that the Kroger team is as eager as we are to work in partnership to bring the retail brand to new heights. There is massive creative potential to be explored within the brand, and we look forward to a long and fruitful relationship with Kroger."

Already the biggest U.S. supermarket retailer, with 2,764 stores under a range of banners in 35 states and the District of Columbia, The Kroger Co. is poised to bolster its national presence as builds its own e-commerce infrastructure and expands its Our Brands roster of private-label products, which industry observers say could enable the company to serve consumers beyond its current market areas.

Related:Kroger turns in mixed results, but online delivery growing

Earlier this month, Kroger named Forest Park, Ga., as the fourth location of 20 automated warehouses slated to open over the next three years under its year-old partnership with U.K.-based online grocer Ocado. The so-called customer fulfillment centers (CFCs) use digital and robotic technology to fulfill online grocery orders. Kroger said the CFC model will be replicated “to serve customers across America.” The first CFCs — Monroe, Ohio; Groveland, Fla.; and Forest Park — are due to go operational in 2021. The company also has announced plans for a Mid-Atlantic CFC but hasn’t specified a site.

As of the close of its 2018 fiscal year in early February, Kroger offered online grocery pickup at 1,581 of its supermarkets and provided home delivery and/or pickup service to 91% of the households in its market area. The company expects to reach 100% of the country by the end of 2019 with the full integration of Kroger Ship. Digital sales rose 58% and had a roughly $5 billion annual run rate at the end of fiscal 2018, and Kroger said it’s trending toward a $9 billion annual run rate going forward.

Fiscal 2018 also saw Kroger introduce more than 1,000 new Our Brands products, including 200 in the final quarter. Key to that growth has been the better-for-you brand Simple Truth, which now accounts for over $2.3 billion in sales annually. Along with its eponymous store brand, other Our Brands labels include Private Selection, HemisFares, Murray’s Cheese, Bakery Fresh Goodness, Home Chef, Comforts, Abound, Luvsome, Bloom Haus, Dip, OfficeWorks, Pet Pride, HD Designs and Everyday Living.

Kroger, too, has been looking to alternative profit streams to help reach its goal of $400 million in operating profit by 2020 under Restock Kroger. To that end, the company has worked to grow its business through partnerships, media, consumer products data and analytics, and its Kroger Personal Finance arm.