Business

Dillons’ ClickList raises questions about targeting consumers

(June 2016)
(June 2016) File photo

Like many Wichitans, I was excited to see Dillons unveil ClickList, a new online service that allows customers to order groceries online and pick them up for a $5 fee.

But logging into the website, it was surprising to see my Favorites list populate itself, even though I’d never logged in before.

It knew I like Tropicana no-pulp orange juice. That the produce I buy is (almost) all organic. And that I also buy Nutella – probably more often than I should.

Of course Dillons would have this information. I’ve had a PlusCard for nearly 10 years and have noticed the customized coupons that match my purchases. The Favorites feature tracks your most commonly purchased items and lists items it thinks you may need soon.

But it raises myriad questions about shopping in the digital age: What do retailers do with my information? Are all people comfortable sacrificing a layer of privacy for convenience? Do we spend more money when advertising and services are tailored to us?

“In our mind as consumers, until now, we’re pretty accustomed to brick-and-mortar purchases being separate from what you purchase online. Consumers haven’t done this that much yet. This is the beginning of something that will probably become just as common,” said Eric Siegel, consultant and founder of Predictive Analytics World.

And yes, Siegel says, targeted marketing and predictive analytics lead to consumers spending more money.

When it comes to privacy and ethics, Siegel says it’s practically the same as buying in the store.

It’s the same company, the same organization.

Eric Siegel, consultant and founder of Predictive Analytics World

“It’s the same company, the same organization. You’ve just happened to have purchased stuff off the shelf physically before, but still it got scanned and was connected to you because you use a loyalty card,” he said.

“It’s the same thing as buying it online. If there are privacy concerns – and there certainly are – they aren’t any different.”

Dillons’ website says it will keep customer names, addresses, phone numbers, e-mails, payment information and “any information that can be linked to an individual” private. It says it will not sell, trade or rent personal information to outside companies or marketing firms.

But what about aggregate data on collective behavior?

Retailers will produce coupons based on the predictive chance you’re going to want to buy something, Siegel says.

“They’re not just based on things you’ve purchased in the past but based on what it’s learned about general consumer behavior across the population of which products tend to go together. Basically if you purchase these products, it’s going to put a probability on other products you’ve not yet purchased that are most likely to be of interest to you.”

The classic example, he says, is new parents purchasing diapers are also more likely to buy beer on the same trip to the grocery store. That correlation was discovered by Tesco, a large European grocery chain. So the grocer gives shoppers buying diapers coupons for baby-related items along with coupons for beer.

Tesco’s personalized coupons were redeemed 3.6 times more than other methods.

Tesco issues more than 100 million personalized coupons at grocery cash registers in more than 10 countries each year, and predictive modeling increased redemption rates by 3.6 times, according to Siegel.

Methods to increase our consumption are all around us, Siegel said. It’s in the position of escalators in malls to get you to walk past more stores. It’s the recommended products on Amazon. And it’s the new music Pandora and Spotify play for you based on songs you already like.

Nearly all of our purchases are tracked now, unless you’re paying in cash.

And Dillons’ parent company, Kroger, is “going to become Amazon and Walmart’s biggest threat,” according to a recent article in Business Insider.

The main reason? Features like ClickList.

Starting at the 21st and Maize store and moving to six stores in the market by year's end, Dillons is adding online shopping. Customers shop and order online and pick up the next day at the supermarket. (June 10, 2016)

Amazon offers its Fresh grocery service in limited markets, including Seattle, California and New York.

Kroger now offers online ordering in 25 markets, according to its most recent quarterly report. And like Wal-Mart, with its brick-and-mortar presence across the country, it already has an infrastructure in place for people to get produce and other groceries quickly.

$26 billionAmount U.S. online grocery market could grow in 2016

There’s a lot of room for growth in online grocery shopping. The U.S. online grocery market could grow by $26 billion in 2016 to more than $42 billion, according to a recent survey by Morgan Stanley, and Kroger’s customer science division has “industry-leading data analysis capabilities.”

Kroger did not return requests for an interview about their analytics division and features of ClickList.

For now, I’ll stick with convenience and give the service a shot.

Dillons is probably banking on that for thousands of other customers, too.

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