Two of the biggest traditional players in U.S. retail, Lowe’s and Kroger, have each made major pushes in the past year to ensure they are keeping up with major industry innovators. But this week these retailers made even bigger splashes, with Kroger launching an accelerator fund for consumer brands and Lowe’s acquiring retail analytics technology from Boomerang Commerce.
Kroger has partnered with Lindsay Goldberg, a private equity firm, to form PearlRock Partners, a platform designed to identify, invest in and help grow emerging consumer product brands.
PearlRock Partners will leverage Kroger’s merchandising and predictive analytics capabilities and combine them with Lindsay Goldberg’s track record of investing in family-owned and founder-led companies to better position young brands for growth.
These brands could later be positioned on Kroger store shelves and even give the supermarket inspiration toward expanding its own set of private label offerings. Private label already makes up more than 25% of Kroger sales, led by the grocer’s Simple Truth organic and natural brands.
“The idea of investing in external firms with a view to potentially taking them in-house at a later date makes a lot of sense,” said Oliver Guy, Global Industry Director of Retail at Software AG in a RetailWire discussion. “These startups may well be much more innovative than a private label team that operates within the walls of a large established retailer.”
Instead of launching a new entity, Lowe’s decided its best move was to bring already-developed technology under its corporate umbrella. The acquisition includes tools and technology for Boomerang’s proprietary Retail Analytics platform, but doesn’t include the company’s customer contracts or related confidential information. Lowe’s will integrate the technology into its core retail business as a way to bolster strategic and data-driven pricing and merchandise assortment decisions.
Pricing and assortment planning are the company’s two biggest strategic areas in need of modernization, said Seemantini Godbole, Lowe's CIO in a statement. These modernization efforts are part of a larger initiative at Lowe’s for which the company is planning to invest between $500 million and $550 million in capital per year through 2021 to overhaul its technology. Godbole, who stepped into the role in November 2018, is overseeing the renovation.
Some associates from the Boomerang Retail Analytics teams based in the U.S. and Bangalore will join Lowe’s following the acquisition.
Boomerang Commerce’s CommerceIQ will serve as an independent business with the CommerceIQ.ai name, with founder Guru Hariharan serving as CEO.