A Consumer Reports investigation reveals how the grocery chain tracks purchases and sells customer information to third parties.
CLEVELAND — Grocery store loyalty programs offer customers digital coupons, fuel discounts and product recall notifications in exchange for membership.
However, a Consumer Reports investigation has found that Kroger, one of the nation’s largest grocery chains, collects and monetizes shopper data on a scale that exceeds typical retail practices.
According to the investigation, retail loyalty programs typically require customers to provide their name, home address, email address and phone number during signup. Store chains then track purchasing patterns to build customer profiles. While this practice is common across the industry, Consumer Reports found that Kroger has developed what it characterizes as a sophisticated data collection and analysis operation.
“Store chains often collect your name, home address, email address, and phone number. Then study what’s in your grocery cart. Many retailers do this, but Kroger, one of the largest grocery chains in the U.S., is doing it in a much bigger, profitable way,” said Derek Kravitz, an investigative reporter with Consumer Reports.
The investigation found that Kroger uses collected data both internally and sells it to third parties for targeted marketing purposes. The company’s precision marketing division generated an estimated $527 million last year. These alternative profit ventures now account for more than 35% of Kroger’s net income, according to Consumer Reports.
Consumer Reports obtained shopper profiles from Oregon, one of the few states where consumers have legal access to such data. The analysis revealed inaccuracies in demographic information including gender, age, household size, income and education level.
In a statement to Consumer Reports, a Kroger spokesperson said demographic data helps filter audiences so customers receive relevant coupons, promotions and discounts. The company stated it does not affirmatively correct demographic data sourced from data enrichment providers because it does not rely on that data.
Kroger customers can request corrections to their profiles. Consumers can review a company’s data usage and privacy policies online to understand what information is collected and how to opt out of certain tracking and marketing practices.
Currently, 15 states have enacted laws giving consumers the right to access, correct, delete or opt out of the sale of data companies collect about them. Additional states are expected to adopt similar privacy protections in the coming year.
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