Ever thought about what your grocery shopping habits say about you? Well, if you’re a shopper hoping to get extra discounts, signing up for that free loyalty program sounds like a good idea. However, it’s likely that what you’re really paying with is your personal information.
Many retailers do this, but one retailer is doing it to a scale bigger and in a more sophisticated way than any others – making it potentially a model for others, but a worry for customers. Derek Kravitz, an investigative reporter for Consumer Reports, joined Texas Standard to talk about what large companies do with the data shoppers willingly provide, how stores track buying habits, and the potential risks that come with brokering shopper’s info. Listen to the interview above or read the transcript below.
Texas Standard: You were telling me that there’s one retailer that does this in a way that is off the charts compared to how other retailers gather this personal information from loyalty programs and such. What is that company and what are they doing that’s so different?
Derek Kravitz: Yeah, so it’s Kroger. They are the second largest grocery chain in the United States. They have a data unit in their company. It’s actually a subsidiary called 84.51°, the coordinates of their Cincinnati headquarters, that is way more sophisticated technologically than any other company out there. They collect data and they analyze it in a way that’s just very advanced and they make a lot of estimates and guesses about who you based off that data.
I thought everyone did this sort of thing. You know, you have Walmart’s loyalty program. Many grocery stores do this kind of thing as well. Why did you want to focus on what Kroger is doing specifically?
Yeah, so not every grocery chain does this. Costco, Trader Joe’s, they sort of build into their brand that they don’t do this. But yeah, a lot of other grocery chains do – and merchants generally. This is at a different level. When we found out or saw a lot of the information that they collect and how they package it to others to sell, it caught our attention, plus the profits that they’re making. Increasingly, Kroger is becoming a data company, not just a grocery chain. Almost a third of their net profits at this point comes from alternative sources, not grocery or gas. Meaning that, yeah, it’s gonna be a billion-dollar business soon, a year net.
And that means that with all this data that they’re collecting about their customers, they’re selling it for advertising and marketing purposes to places like Disney or Pepsi or Hulu. But Kroger is just doing it at a scale and doing it in a way that’s just much more advanced and, in many ways, better than other places.
In many ways better, I guess. I’m curious about what might be worse about it, from the consumer’s perspective.
Yeah, so just because it’s better maybe for that company’s bottom line, or more sophisticated in its output, doesn’t mean that it’s good for consumers. So what it means is many people will get personalized discounts. A lot of people love discounts and it’s a free loyalty program so you’re not paying to be in it. So there’s no wrong extraction there. Now some people won’t like if the information that’s collected about them results in inaccurate inferences or guesses about who they are.
