84.51° to spur Kroger – and Downtown growth

Kroger's acquisition of most of dunnhumbyUSA last week will change the face of retailing – and Downtown itself.

Stuart Aitken, CEO of the new consumer insights subsidiary 84.51°, gave The Enquirer an exclusive tour of his firm's new digs where more than 500 of his local employees will be all moved in by Monday.

84.51° is one of Downtown's fastest-growing employers. Its rise coincides with Kroger's own rapid growth at its nearby headquarters. It also underscores Kroger's increasing reliance on technology to propel its growth.

Beyond Kroger, 84.51°'s growing presence will be felt throughout the city and the region.

84.51°'s well-paid, technology-driven jobs will enhance Kroger's standing as a destination employer. The average 84.51° worker makes nearly $100,000 a year and gets five weeks paid vacation from the start. Another 20 college and graduate school grads are scheduled to begin the first week of May.

Downtown officials say the urban core will benefit as the swelling workforce generates tax dollars for Cincinnati, spurs demand for new retail and residences and injects the region with young talent. Further business development will also be nurtured. 84.51° officials revealed to The Enquirer they will play landlord to a handful of local startup companies in their building, asking the firms only to cover their share of utilities.

To thrive, always remember 'Love the One You're With'

Big data consumer insights has been a major ingredient of Kroger's "Customer 1st" strategy that has powered more than 11 years of growing market share. Continuing dunnhumbyUSA's work, 84.51° mines mountains of customer transactions via Kroger's loyalty card program to figure out what shoppers want.

84.51° helps Kroger to thoughtfully evaluate what products to stock, expand or discontinue. The firm's insights are also used to send coupons relevant to shoppers' habits, such as issuing pet food offers to customers who actually buy pet food.

The firm's study of shopping patterns has also informed the placement of products in stores: In Kroger, juice boxes are not in the juice aisle, but the snacks aisle – because 84.51° insights told them parents wanted a section for lunch box staples only.

Aitken says noted 95 percent of Kroger's growth in the last decade has come from winning more business from existing customers – which is a smarter, most cost-effective way to do business. He notes too many industries – from mobile carriers to cable TV providers – chase after new customers with one-time incentives that ultimately encourage switching, not customer loyalty.

"It takes 12 new customers to replace an existing one – our mantra is like that (Stephen Stills) song 'Love the one you're with,' " Aitken said. "But a lot of companies don't do that because it's hard and it's expensive."

Founded as dunnhumbyUSA as joint venture in 2003, the firm started with three workers and now employs more than 500.

Gaining insights to drive loyalty has kept Kroger competitive in a time of unprecedented competition. In the last 20 years, most other supermarket giants have struggled as discount stores like Walmart, drug stores like Walgreens and dollar stores like Dollar General turned to cheap groceries to drive traffic.

Kroger has not only survived, but grown with its Customer 1st Strategy that emphasized customer service as well as a wider array of products and competitive pricing.

"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," Kroger CEO Rodney McMullen said after the deal was announced.

Behind the growth and three other acquisitions in the last 15 months is Kroger's rising use of technology.

In February 2014, Kroger bought out another vendor: San Francisco-based You Technology Brand Services, which is a digital coupon and promotions leader. Six months later, Kroger spent $280 million to buy a Florida ecommerce player, Vitacost.com, which sells nutrition and healthy living products.

Kroger's $2.5 billion decision to buy North Carolina-based Harris Teeter last year was geared toward growing its footprint in the Southeast, but also learning from the chain's "click and collect" buy online, in-store pickup program. Kroger is testing a similar service in Liberty Township.

New headquarters will have ripple effect Downtown

Downtown officials say 84.51°'s and Kroger's continued growth will only feed the city core's renaissance, bringing new talent to the region and spurring other growth.

"These are the kind of positions you dream of for economic development," said Johnna Reeder, president of REDI Cincinnati, a regional economic development organization. "This is not your grandfather's grocery chain – Kroger has realized the customer comes first but technology is key to figuring out what the customer wants."

The two-year, $140-million construction project has added a 280,000-square-foot office building, about 1,000 parking spaces and 30,000 square feet of commercial space.

Cincinnati chef Jose Salazar announced plans to open a restaurant in one of the building's street-level retail spaces. There are active lease negotiations for three retail spaces, a letter of intent is pending for a fourth space and there is an identified prospect for a fifth spot, said Anastasia Mileham, spokeswoman for the Cincinnati Center City Development Corp. 3CDC helped identify Fifth and Race as a spot for dunnhumbyUSA.

"New street-level retail activity on that block, coupled with the young, urban, professional workforce coming and going from the offices, will have more than just a daytime impact," Mileham said. "Saks Fifth Avenue, Macy's, and other retailers are looking forward to creating new events around dinner patrons waiting for a table, or after-hours crowds drawn to the neighborhood.

But 84.51° will do more than spur new eateries and other retail, it will also help new entrepreneurs. To keep the spirit of innovation alive in their headquarters, 84.51° will also make room for a small crop of local startups. Two young firms, Strap and Hello Parent, have already signed up and Aitken said 84.51° will add up to three more.

"That vibe is just going to reverberate through the rest of this building," Aitken said.

Aitken says he's happy to contribute to Downtown revival because it helps him attract talent that otherwise might wind up in Silicon Valley. He notes 70 of his employees live Downtown.

"The transformation Downtown since I've been here has been amazing," Aitken said.

Designed to impress 'creative class' professionals

The new headquarters building is called 84.51° – not the 84.51° Plaza or the 84.51° Center – just 84.51°. Aitken said the firm's home and name are meant to evoke discussion. The moniker derives from the longitude of the new headquarters – longitude was one of most difficult calculations to determine for navigators and it speaks to the complexity of the operation's drive for customer loyalty.

The headquarters are designed to impress: from the imposing matte black exterior to the "digital dust" light display inside the lobby. As visitors walk through the lobby, each guest leaves a unique trail of projected symbols on the floor – illustrated icons of paper clips, presents, globes and other images.

84.51° occupies the building's fifth through ninth floors. The interior decor of exposed ventilation equipment, alternating stark concrete and brightly-painted walls are all designed to attract young, creative class workers.

To power 84.51°'s growth, Aitken says the firm needs to keep adding talent. He plans to meet or exceed the firm's historic rate of adding 80 new jobs a year.

Another 20 new college and post-grad graduates – from the University of Cincinnati, Miami University, Northwestern University, Indiana University and others – will arrive this week. The average age at the firm will likely drop from 31.

Local officials say these jobs will continue to feed Downtown's rebirth by adding to the city's tax base, creating demand for more place to live, shop and providing more people who could be tapped for civic engagement efforts.

"It's a tremendous shot in the arm for the Downtown economy and we're truly fortunate to have it," said David Ginsburg, president of Downtown Cincinnati Inc.

Three facts on 84.51°'s workforce

•Average pay: nearly $100,000

•Average age: 31

•Number of workers living Downtown: 70