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DON’T CALL ME A #MILLENNIALMillennials have grown up.
July 2016
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THE ONLY THING EVERY MILLENNIAL HAS IN COMMON IS WHEN THEY WERE BORN
Generations are defined by Age
born 1982-1995 21-34 years old
25% of Total U.S. Population
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40%
33%
27%
Millennial GenX
No Affiliation
WHAT GENERATION
DO I FEEL LIKE I BELONG TO?
% of 21-34
year-olds
BUT I DON’T ACT LIKE A MILLENNIAL!
Millennial stereotypes draw Millennials away from their generational label
Source: Pew Research, Most Millennials Resist the ‘Millennial’ Label
…are not loyal.
…want immediate gratification.
PEOPLE SAY MILLENNIALS…
…only buy piecemeal & on-the-go.
…are self-involved & lazy.
…spend too much time online.
…don’t want to grow up.
MILLENNIALS SAY…
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So why do we all
care so much about
Millennials anyway?
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THEY ARE A HUGE SEGMENT WITH BIG INFLUENCE
Too big to ignore
LARGE & DIVERSE
79.7 million
Largest living
cohort &
most diverse
LIFE STAGE
From landing first job
and increasing
income, to marriage,
parenthood and
homeownership
$1.4 trillion
annual spending
by 2020
Will account for
50% of retail
spending in
5 years
PURCHASING POWER
Impacting
everything
from the
grocery aisle
to the
workplace
ECOMMERCEINFLUENCE
Fluidity of
shopping
behaviors
online and
instore
Source: CEB Iconoculture, US Census, Mintel
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“KIDS THESE DAYS” NO MORE
Millennials have grown up and are choosing their path into adulthood
Leaves College
Moves out of
parent’s home
Lands first job
Gets married
Starts planning a family
Buys a home Has a
Baby
Has 2nd
baby
21y/o
34y/o
Gets divorced
Has 3rd
baby
Gets remarried
Varying life-stages for Millennials now that they’ve entered adulthood.
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WHEN MILLENNIALS WERE THEIR AGE…
Life stages of GenX & Boomers when they were the age of Millennials
Source: Pew Research, How Millennials Compare to Their Grandparents & Comparing
Millennials to Other Generations; CEB Iconoculture, Millennial Ties that Bind; US Census
53%
44%
66%
47%
34%
56%52%
77%
19%
46%
64%70%
73%
15%
44%
Married Parents Employed College Educated Home Ownership
Millennials in 2015 (20-37 y/o) GenX in 1998 (21-33 y/o) Boomers in 1984 (20-38 y/o)
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BEING A MILLENNIAL MEANS SPENDING LESS & SHOPPING LESS OFTEN, BUT SPENDING ABOUT THE SAME PER TRIP
Less disposable income & more options for spending
$1,298
$1,765
$1,575
Millennials GenX Boomers
Dollars per HH
38
45
42
Millennials GenX Boomers
Trips Per HH
$34$37 $37
Millennials GenX Boomers
Dollars Per Trip Per HH
Brick & Mortar FMCG Channels | Last 52 weeks
Source: InfoScout Panel Data
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FOOD & MASS CHANNELS WIN WITH ALL GENERATIONS
Mass has slight advantage with Millennials but GenX spends more
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Food Mass Club Drug Convenience Dollar
Millennial GenX Boomers
Source: InfoScout Panel Data
Dollars per Household by Generation
Brick & Mortar FMCG Channels | Last 52 weeks
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Some of these Millennials are not like the others
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MILLENNIALS ARE “SETTLING DOWN” INTO ADULTHOOD
The presence of children and adapting shopping behaviors
Marriage
53%Married/
Partnered
47%Single
25%Not Financially
Stable Yet
22%Not Ready to
Settle Down
WHY?
Parenthood
44%Of Millennials are
parents
Source: U.S. CDC; Mintel, Marketing to Millennials; UN DESA, World
Population Prospects; CEB Millennials in 2016, Millenial Marketing
67%Of Millennials without
children say they would
like to be parents
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MILLENNIALS HAVE MORE WITH LOW INCOME, BUT THIS WILL CHANGE AS THEY PROGRESS IN THEIR CAREERS
Currently their incomes are lower than total U.S. income
Source: InfoScout Panel Data, US Census Bureau; 15
Economic Facts about Millennials – whitehouse.gov
33%High-Income
(Over $60K)
67%Low-Income
(Below $60K)
18%
27%
22%
15%
8%6%
4%
11%
20% 21%
16%
12%10% 9%
0%
5%
10%
15%
20%
25%
30%
Under $20K $20-40K $40-60K $60-80K $80-100K $100-125K $125K+
Millennials Total U.S.
LOW INCOME HIGH INCOME
47%High-Income
(Over $60K)
52%Low-Income
(Below $60K)
Total U.S. Millennials
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The Millennial Income Disparity
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MILLENNIALS DO MORE WITH LESS & UTILIZE ECOMMERCE OPTIONS
Less disposable income & more options for spending
$0
$500
$1,000
$1,500
$2,000
$2,500
- $20k $20k-40k $40k-60k $60k-80k $80k-100k $100k-125k $125k +
ANNUAL DOLLARS PER HH BY INCOME
Millennial Dollars / HH Gen-X Dollars / HH Boomer Dollars / HH
+28% +25%+26%
+26%+32%
+35%+46%Brick & Mortar FMCG Channels | Last 52 weeks
Source: InfoScout Panel Data
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30
40
50
$25
$35
$45
$55
Dollars & Frequency per HH
By Income
Dollars / Trip Trips per HH
MILLENNIAL
BEING A MILLENNIAL DOESN’T MEAN YOU SHOP PIECEMEAL
Other generations behave similarly based on income
Source: InfoScout Panel Data, CEB Iconoculture
Brick & Mortar FMCG Channels | Last 52 weeks
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BEING A MILLENNIAL DOESN’T MEAN YOU SHOP PIECEMEAL
Other generations behave similarly based on income
Source: InfoScout Panel Data, CEB Iconoculture
30
40
50
$25
$35
$45
$55
Dollars & Frequency per HH
By Income
Dollars / Trip Trips per HH
MILLENNIAL GENX BOOMER
30
40
50
$25
$35
$45
$55
Dollars & Frequency per HH
By Income
Dollars / Trip Trips per HH
30
40
50
$25
$35
$45
$55
Dollars & Frequency per HH
By Income
Dollars / Trip Trips per HH
Brick & Mortar FMCG Channels | Last 52 weeks
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THE GENERATION SADDLED WITH THE MOST STUDENT LOAN DEBT
Putting stress on Millennial incomes
Source: CEB Millennials in 2016; US Bureau of Labor Statistics, Nielsen Consumer 2015
47%Attended College
42%Paying off student loans
$30,000Median Balance
Student Loan Debt
COLLEGE-EDUCATED MILLENNIALS MEDIAN NET WORTH
$8,700
$64,700
Has Student Loan Debt
No Student Loan Debt
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Millennials say “Hello Baby. Goodbye Money.”How the presence of a child in the home affects HOW this demographic shops
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ADULTHOOD CAN MEAN BABIES. BABIES MEAN MAJOR EXPENSES.
Parents alter their basket to include items for baby
Source: USDA 2013 Annual Report- Expenditures on Children By Families
Housing$2,700 Misc.
$790
Childcare$2,920
Healthcare$850
Clothing$770
Transportation$1,700
Formula & Food$1,460
Diapers$1,000
Birth to age 18
$230,610
Babies 1st Year
$12,190
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$1,038 $1,126 $1,314 $1,482
$438 $559 $406
$562
MillennialLow Income
MillennialHigh Income
GenXLow Income
GenXHigh Income
Dollars Per HH
No Kids Kids
“BABY BUMP” BIFURCATION
No matter age or income, babies mean more money and more trips
35 3342 39
+7 +8
+6 +7
MillennialLow Income
MillennialHigh Income
GenXLow Income
GenXHigh Income
Trips Per HH
No Kids Kids
+42%+50% +31%
+38%
Source: InfoScout Panel Data
Brick & Mortar FMCG Channels | Last 52 weeks
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The Millennial Income & Parenthood DisparitySegmenting Millennials and their shopping behavior
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High
Income
36%
Low
Income
64%
Millennials w/ Kids
High
Income
31%
Low
Income
69%
Millennials w/o Kids
MILLENNIAL INCOME & PARENTHOOD AS DETERMINING PATHS
The path to adulthood is paved by income & parenthood
Has Kids
44%
No Kids
56%
All Millennials
Source: InfoScout Panel Data
High Income: Over $60,000
Low Income: Under $60,000
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“BABY BUMP” BIFURCATION OF MILLENNIAL HOUSEHOLDS
With less money to spend, Millennials still spend more when they have a child
$1,550
$1,065
$0
$1,000
$2,000
Millennial w/Kids
Millennial w/o Kids
$1,298
$0
$1,000
$2,000
Millennial
Dollars / HH
Presence of Children & High/Low Income
Dollars / HH
Presence of Children
Dollars / HH
Total Millennials
Source: InfoScout Panel Data
$1,685
$1,476
$1,126 $1,038
High Income w/Kids Low Income w/Kids
High Income w/o Kids Low Income w/o Kids
+19%
-18%
+30%
+14%
-13%-20%
Brick & Mortar FMCG Channels | Last 52 weeks
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MASS WINS WITH LOW-INCOME MILLENNIALS, BUT NOT BY MUCH
High Income households spend at mass and food equally
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
All Millennials High IncomeMillennials
Low IncomeMillennials
Food Mass Club Drug Convenience Dollar
Dollars per HH by Millennial income
Source: InfoScout Panel Data
Total Millennials High/Low Income %
Brick & Mortar FMCG Channels | Last 52 weeks
67%
Low Income
33%
High Income
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MASS WINS WITH PARENTS
When you add the demographic for children, mass spikes.
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
All Millennials Millennials w/ Kids Millennials w/o Kids
Food Mass Club Drug Convenience Dollar
Dollars per HH by Millennial Parenthood
Source: InfoScout Panel Data
44%Has Kids
56%No
Kids
Total Millennials With Kids & w/o Kids
Brick & Mortar FMCG Channels | Last 52 weeks
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MASS DEFINITELY WINS HOUSEHOLDS WITH CHILDREN
Households with children seek the value & convenience of Mass channel
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Food Mass Club Drug Convenience Dollar
High Income - Kids Low Income - Kids
High Income - No Kids Low Income - No Kids
Source: InfoScout Panel Data
Dollars Per Household By Millennial Segments (Income & Kids)Brick & Mortar FMCG Channels | Last 52 weeks
16%
29%
17%
38%
Total Millennials
Low Income- No kids
High Income- No Kids
Low Income- Has Kids
High Income- Has Kids
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KEY
All MillennialsHas Kids
Hi IncomeHas Kids
Low IncomeNo Kids
Hi IncomeNo Kids
Low Income
Walmart Walmart Walmart Walmart Walmart
Costco Costco Costco Costco Costco
Kroger Target Kroger Kroger Kroger
Publix Kroger Publix Target Publix
Target Sam's Club Target Sam's Club Sam's Club
Sam's Club Ahold Sam's Club Ahold Target
Ahold Aldi Safeway Safeway BJ's
Safeway CVS Aldi Whole Foods Ahold
Albertsons Walgreens Albertsons Trader Joe's Safeway
Aldi Dollar General Ahold CVS Albertsons
MILLENNIALS PICKING RETAILERS IN MASS CHANNEL OVER KROGER
Millennials are value seekers, especially when they have kids
1
2
3
4
5
6
7
8
9
10
Source: InfoScout Panel Data
Retailers ranked by Millennial dollars per HH
Brick & Mortar FMCG Channels | Last 52 weeksBlue: Mass
Green: Grocery
Pink: Club
Grey: Drug
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WALMART WINS DESPITE A LACK OF SATISFACTION
And Kroger ranks higher with Millennials than general population
RetailerNet
Recommended
Rank in All
Age Groups in
National
1 Amazon 55.7% 1
2 Wegmans 52.5% 4
3 Costco 52.1% 3
4 Dollar General 52.0% 2
5 HEB 49.3% 6
6 Sam’s Club 46.6% 7
7 BJ’s 45.1% 8
8 Family Dollar 44.6% 5
9 Publix 44.3% 9
10 Meijer 41.5% 11
RetailerNet
Recommended
Rank in All
Age Groups in
National
11 CVS 41.2% 10
12 Kroger 39.5% 15
13 Delhaize 36.7% 17
14 Rite Aid 35.9% 12
15 Target 35.7% 16
16 Walmart 31.7% 18
17 ShopRite 31.2% 13
18 Walgreens 31.0% 14
19 Albertsons 25.1% 19
20 Stop & Shop 21.9% 20
Overall, thinking about your purchase of XXX, how likely would you be to recommend shopping at RETAILER for XXX to a friend? (SR)
Source: Lucros Partners Shopper Intelligence
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What are Millennials buying?Kroger Category Deep-Dive
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MILLENNIAL CATEGORY MIX CHANGES WITH PARENTHOOD
A Millennial parent’s top categories are different from those without kids
Millennials Without KidsMillennials With Kids
Categories Rank
Index
to all
HHs
Dollars /
HH
$ Increase (vs. all HHs
with kids)
Formula 1 144 $126.85 $38.93
Aerosol & Spray Deodorant 2 124 $12.10 $2.31
Breakfast & Cereal Bars 3 121 $8.18 $1.42
Wipes & Wipe Holders 4 120 $18.93 $3.18
Baby Food 5 118 $38.94 $5.93
Disposable Diapers 6 117 $70.83 $10.16
Air Freshener Sprays 7 116 $11.59 $1.58
Baby Cereal 8 115 $9.71 $1.25
Pantiliners 9 113 $7.99 $0.92
Hot Cocoa 10 113 $5.21 $0.59
Categories Rank
Index
to all
HHs
Dollars /
HH
$ Increase(vs. all HHs
w/o kids)
Performance Bars 1 108 $6.53 $0.51
Nutritious Snacks 2 106 $17.55 $1.06
Safer Sex (Contraceptives) 3 106 $11.23 $0.62
Rice 4 106 $10.06 $0.55
Face Make-up 5 105 $9.52 $0.47
Utensils & Gadgets 6 103 $4.97 $0.17
Fresh Seafood 7 103 $27.90 $0.88
Grains & Rice 8 103 $5.09 $0.16
Couscous 9 103 $5.48 $0.16
Oil & Blemish Control 10 103 $8.49 $0.24
Source: InfoScout Panel Data
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Formula
Aerosol & Spray Deodorant
Breakfast & Cereal Bars
Wipes & Wipe Holders
Baby Food
Disposable Diapers
Air Freshener Sprays
Baby Cereal
Pantiliners
Hot Cocoa
Kroger Other Food Mass Drug Club Dollar Convenience
OPPORTUNITY TO GAIN DIAPER DOLLARS FROM MILLENNIAL PARENTS WHO SHOP AT KROGER
• Food items do better
than non-food items
• Kroger has an
opportunity to gain
disposable diaper dollars
from the mass channel
Millennials with children share of wallet at Kroger
Last 52 weeks
81%
45%
80%
51%
66%
28%
47%
66%
57%
41%
Spend by CategoryCategories Purchased at Kroger & Other Channels
Source: InfoScout Panel Data
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OPPORTUNITY TO GAIN PERFORMANCE BAR DOLLARS FROM MILLENNIALS WITHOUT KIDS WHO SHOP AT KROGER
• Food items do better
than non-food items
• Kroger has an
opportunity to gain
performance bar dollars
from the mass channel
Millennials without children share of wallet at Kroger
Couscous
Face Make-up
Fresh Seafood
Grains & Rice
Nutritious Snacks
Oil & Blemish Control
Performance Bars
Rice
Safer Sex (Contraceptives)
Utensils & Gadgets
Kroger Other Food Mass Drug Club Dollar Convenience
87%
52%
88%
59%
54%
46%
50%
62%
68%
52%
Last 52 weeks
Spend by CategoryCategories Purchased at Kroger & Other Channels
Source: InfoScout Panel Data
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65.9%
53.4%45.9%
40.9% 39.4%
16.4%
% Recommend
MILLENNIAL CATEGORY SATISFACTION AT KROGER
Do Millennials recommend their top categories at Kroger?
FORMULA
BREAKFAST BARS
DIAPERS ENERGY DRINKS
BABY FOOD
SPICES
Source: Lucros Partners Shopper Intelligence
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FOR MILLENNIAL PARENTS, ONLY TWO TOP CATEGORIES EXCEED 10% SPEND ONLINE COMPARED TO IN-STORE
Despite fear of ecommerce, the majority of Millennial spend is going to brick & mortar
96.0%
100.0%
98.1%
89.2%
97.8%
88.8%
99.7%
98.0%
97.2%
97.9%
4.0%
1.9%
10.8%
2.2%
11.2%
0.3%
2.0%
2.8%
2.1%
50% 60% 70% 80% 90% 100%
Formula
Aerosol & Spray Deodorant
Breakfast & Cereal Bars
Wipes & Wipe Holders
Baby Food
Disposable Diapers
Air Freshener Sprays
Baby Cereal
Pantiliners
Hot Cocoa
Instore Online
• In-store still has the
leg up.
• Non-food items are an
opportunity area for
Kroger to differentiate
themselves from
ecommerce.
Source: InfoScout Panel Data
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FOR MILLENNIAL WITHOUT KIDS, THEIR AFFINITY FOR FRESH FOODS KEEPS THEM IN-STORE
Despite fear of ecommerce, the majority of Millennial spend is going to brick & mortar
97.9%
99.8%
100.0%
100.0%
98.2%
97.4%
100.0%
99.5%
97.3%
97.4%
2.1%
0.2%
1.8%
2.6%
0.5%
2.7%
2.6%
50% 60% 70% 80% 90% 100%
Couscous
Face Make-up
Fresh Seafood
Grains & Rice
Nutritious Snacks
Oil & Blemish Control
Performance Bars
Rice
Safer Sex (Contraceptives)
Utensils & Gadgets
% Instore % Online
• In-store still has the
leg up for food
categories.
• Non-food items are an
opportunity area for
Kroger to differentiate
themselves from
ecommerce.
Source: InfoScout Panel Data
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HOW THE INSTORE EXPERIENCE GIVES BRICK & MORTAR A LEG UP
Compete with ecommerce by creating an authentic in-store experience for Millennials
Source: Eventbrite - Harris survey - Millennials Fueling the Experience Economy: July 2014
“The key to retail success in this era of robot-like online shopping lies in finding creative ways to turn it into a real experience.”
- Daniel Newman, Forbes Contributor “How Social and Digital Create The New Retail Experience”
78%Choose to spend money
on an experience over
ownership of goods
70%believe experiences make
them feel more connected
to their community
69%experience FOMO which
drives Millennials to show
up, share and engage
60%shared their experiences on
social media in the past year
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WHERE CAN KROGER GET THE BIGGEST BANG FOR THEIR BUCK?Demand Index & Sales Data
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STORES WITH HIGH DEMAND, BUT LOW SALES ON DIAPERS CREATE OPPORTUNITY FOR KROGER
• Harris Teeter markets &
Southern California are
opportunity areas
Areas of Maryland, North Carolina, & Southern California are opportunity areas for Kroger
High Sales – High Demand
High Sales – Low Demand
Low Sales – High Demand
Low Sales – Low Demand
Source: Spectra Demand Data; Nielsen Scan Data
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STORES WITH HIGH DEMAND, BUT LOW SALES ON CONTRACEPTIVES CREATE OPPORTUNITY FOR KROGER
Areas of Southern California & Metropolitan areas of Texas are opportunity areas for Kroger
High Sales – High Demand
High Sales – Low Demand
Low Sales – High Demand
Low Sales – Low Demand
• Areas of Southern
California & Metropolitan
areas are places to
maintain your lead with
non-baby Millennials
Source: Spectra Demand Data; Nielsen Scan Data
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RECOMMENDATIONS
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SO WHAT’S THERE TO KNOW ABOUT #MILLENNIALS?
When it comes to how Millennials think about themselves & your brand
They expect authenticity
in their relationships
with brands.
They have an affinity
for fresh foods.
They value sharable
experiences that make
them feel a part of
something bigger
than themselves.
Don’t think of
Millennials as kids or
teenagers who don’t
want to grow up.
They are savvy shoppers
who look for promotions
and value, particularly
those with children.
They consistently shop at
the same retailers,
despite being known for
lacking in loyalty.
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RECOMMENDATIONS FOR KROGER
Give Kroger the Baby
Destination feel.
Support busy parents by
focusing on how to make
their trip convenient.
Assist cash-strapped,
value-seeking Millennials
by catering to their need
to stretch incomes.
Mix items with low
satisfaction into a meal kit,
appealing to desire for
cooking & convenience.
Remind this segment to
purchase self-improvement
items with healthy foods.
Hyper-personalize
your 84.51 loyalty
program
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THANK YOU