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The Kroger Co. has renegotiated its longtime joint venture with U.K.-based Dunnhumby Ltd. to create a new entity tasked with leveraging Big Data for the benefit of retailers and CPG companies.
Under the new arrangement, the companies will replace their existing venture, known as Dunnhumby USA, with a new long-term license and service agreement. The deal involved Kroger acquiring certain assets from DunnhumbyUSA and using them to create a new business, called 84.51°.
Named for its headquarters’ longitudinal location, 84.51° will expand its use of innovative analytics and insights to deliver increased customer engagement.
“84.51° is founded on the principle that building the bottom line should be a result, not the primary objective,” said Stuart Aitken, CEO of 84.51° and former chief of DunnhumbyUSA. “We want everything we do – every decision we make – to be about the customer and what that person wants. To do that, our associates navigate the complex data landscape to reveal relevant customer patterns.”
Under the new arrangement, Kroger will retain Dunnhumby Ltd.’s technology and the talent to continue developing the retailer's customer insights and loyalty programs. More than 500 of DunnhumbyUSA’s employees will become associates of 84.51°, a wholly owned subsidiary of Kroger. 84.51° will also have 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 transitioned to 84.51°.
“Kroger and Dunnhumby revolutionized retailing in the U.S. by focusing on the customer, and we intend to do it again with 84.51°,” said Rodney McMullen, Kroger’s chairman and CEO. “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. 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.”
Dunnhumby Ltd will continue to operate in the U.S., expanding its client base and accelerating the growth of its business through the greater flexibility of the new arrangements with Kroger. It will continue to operate from offices in Cincinnati, New York, Boston, Chicago and Sacramento.
In addition, 84.51° will have the flexibility to accelerate future innovation by working with new partners and tools. 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°’s headquarters will be in the building at Fifth and Race streets in downtown Cincinnati. Financial terms of the new arrangements were not disclosed.