Can AI Strengthen Kroger's Customer Personalization Strategy?

The Kroger Co. KR is expanding AI-powered capabilities within its media business to support real-time optimization, predictive budget allocation and faster audience creation, positioning the technology as a key enabler of performance and scalability. Rather than presenting artificial intelligence (AI) as a standalone initiative, management is tying it to Kroger Precision Marketing and the company’s broader effort to use customer data more effectively.

Kroger’s AI opportunity rests on its extensive first-party data ecosystem. Management noted that 95% of all transactions are tied to a loyalty card and supported by more than 20 years of purchase history. This gives Kroger the ability to measure actual purchase behavior, not just intent, creating retail signals that are valuable to brands and advertisers.

The company is also extending those capabilities through external digital platforms. Kroger said that advertisers can now use KPM’s retail signals through Google’s Display & Video 360 to reach audiences across YouTube and YouTube TV, with SKU-level conversion reporting available for the first time. The company also said that Kroger Precision Marketing is set to launch a self-service collaboration with TikTok, giving brands direct access to its audiences.

Overall, Kroger is using AI to make its loyalty data and retail media platform more scalable and effective. Management believes that direct customer relationships and first-party data are becoming more important in advertising, and AI could help Kroger turn those assets into more targeted marketing solutions and a longer-term growth opportunity.

The Zacks Rundown for KR

The company's shares have lost 1.8% in the past six months compared with the industry’s decline of 1%.

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From a valuation standpoint, KR trades at a forward price-to-earnings ratio of 10.87, lower than the industry’s average of 33.40. KR currently carries a Zacks Rank #3 (Hold).

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The Zacks Consensus Estimate for KR’s current and next fiscal year earnings implies year-over-year growth of 7.4% and 6.5%, respectively.

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Stocks to Consider

Some better-ranked stocks have been discussed below:

B&G Foods, Inc. BGS manufactures, sells and distributes a portfolio of shelf-stable and frozen foods and household products. BGS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for B&G Foods’ current fiscal-year earnings implies growth of 11.8% from the year-ago actuals. BGS delivered a trailing four-quarter negative earnings surprise of 1.7%, on average.

Armanino Foods of Distinction, Inc. AMNF produces and markets frozen food products in the United States. AMNF currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Armanino Foods' current fiscal-year sales and earnings indicates growth of 7.1% and 1.7%, respectively, from the year-ago actuals. AMNF delivered a trailing four-quarter earnings surprise of 23.1%, on average.

Mama’s Creations, Inc. MAMA, together with its subsidiaries, manufactures and markets fresh deli-prepared foods in the United States. MAMA currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for MAMA's current fiscal-year sales & earnings implies growth of 30% and 73.3%, respectively, from the year-ago actuals. MAMA delivered a trailing four-quarter negative earnings surprise of 129.2%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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