BREAKING: dunnhumby and Kroger Announce New Relationship
dunnhumbyUSA joint venture partners dunnhumby Ltd and The Kroger Co. today announced a new chapter in their successful alliance that will provide greater flexibility for both parties to use data to create substantial opportunities for innovation and growth. Under the new arrangements dunnhumby Ltd and Kroger will replace their existing exclusive joint venture with a new long-term license and service agreement and the acquisition of certain assets from dunnhumbyUSA by Kroger. A new business called 84.51° will operate with those assets as its foundation.
dunnhumby Ltd will continue to operate in the U.S. as dunnhumby, expanding its client base and accelerating the growth of its business through the greater flexibility of the new arrangements with Kroger. dunnhumby will now have the ability to use its proven insight products and data expertise to capture the substantial, previously unavailable potential of the North American market through working with new retailers, consumer brands and media partners. dunnhumby will continue to pioneer the field of customer science through innovations in retail consulting services, analytics software, data science and digital media and will continue to develop its existing strong platform of client relationships in the US. Current retail clients of the joint venture will be seamlessly transitioned to dunnhumby. dunnhumby will continue to operate from offices in the US in Cincinnati, New York, Boston, Chicago and Sacramento. dunnhumby's work with retailers and brands in its other 70 countries earning the loyalty of almost one billion customers continues as normal.
Under the new arrangements, Kroger will retain dunnhumby Ltd's technology and the talent to continue developing Kroger's leading customer insights and loyalty programs for the benefit of its customers. More than 500 of dunnhumbyUSA's employees will become associates of 84.51°, a wholly-owned subsidiary of The Kroger Co. 84.51° will also have the benefit of a perpetual license to use dunnhumby Ltd's analytical tools to find customer insights in Kroger's data. dunnhumby Ltd will provide service and maintenance on those tools for a period of five years, but will no longer have access to Kroger's data. Current consumer packaged goods companies that serve Kroger customers and work with dunnhumbyUSA will be seamlessly transitioned to 84.51°. Stuart Aitken, who previously led dunnhumbyUSA, will become chief executive officer of 84.51°.
In addition, 84.51° will have the flexibility to accelerate future innovation by working with new partners and new tools, always toward the goal of engaging customers where, when and how it matters most to them. Where previously Kroger was restricted to working with dunnhumby only, the new non-exclusive arrangement now makes available to 84.51° the use of innovative tools from other companies to analyze its data. 84.51° will be an innovation engine, focused on rapidly developing customer science, analytics and insights to bring new solutions to market to support Kroger, consumer packaged goods companies, and other partners. 84.51°'s headquarters will be in the building at Fifth and Race Streets, downtown Cincinnati.
"We are excited to bring our insights and capabilities to more of the American market and to continue our relationship with Kroger over the next five years" said Simon Hay, chief executive officer of dunnhumby Ltd. "The wider US market is a fantastic opportunity for dunnhumby to help more retailers and brands undertake a similar journey using data-informed insights to delight their customers and earn their loyalty."
"Kroger and dunnhumby revolutionized retailing in the U.S. by focusing on the customer, and we intend to do it again with 84.51°. We are launching 84.51° with a powerful foundation, including a decade of experience and a team of incredibly talented associates from both dunnhumbyUSA and Kroger. The ability to combine what we already know with other partners is exciting and will speed up innovation. We expect these innovations to grow our business and deliver a world-class customer experience," said Rodney McMullen, Kroger's chairman and chief executive officer. "We will continue to utilize data science for the benefit of the customer and to deliver a personalized experience, both in store and online. Doing so will continue to differentiate Kroger and create value for our shareholders."
Financial terms of the new arrangements were not disclosed. The new businesses will commence operations on April 27, 2015. There are no anticipated headcount reductions as a result of the new arrangements.