Kroger (NYSE: KR) announced it has purchased the assets of You Technology Brand Services, a Silicon Valley-based provider of digital coupons and promotions, and plans to close two stores in West Virginia.
Founded in 2008, You Tech's retailer-centric, cloud-based platform bridges the gap between online engagement and in-store purchases, creating a measurable way for retailers and brands to drive consumer purchase decisions online, in-store and on mobile devices. Its network, which includes Kroger's own digital coupons, includes more than 10,000 retail stores representing over $100 billion in retail sales and 100 million U.S. households.
Based in South San Francisco, You Tech will operate as an independent company within Kroger. The company currently serves approximately two dozen retailer clients operating 65 store banners. Existing clients include Supervalu, Foodtown, Giant Eagle and D'Agostino markets. You Tech intends to continue providing services to these retailers.
"This is a good strategic fit for both Kroger and You Tech," said Jeff Talbot, Kroger's vice president of customer loyalty. "This transaction is consistent with our digital customer growth plan and provides Kroger a significant opportunity to expand our presence in Silicon Valley, enhancing our exposure to new technologies. You Tech will benefit from Kroger's strong balance sheet as it continues to expand its digital platform to many other retailers and CPG partners."
"We intend to build and grow the premier retailer and customer-centric digital coupon platform in the industry, while continuing to deliver for our broad base of retail customers," said Cheryl Black, You Tech CEO. "We look forward to partnering with Kroger and other retailers and CPG companies to continue driving growth."
Kroger's accelerated growth strategy includes targeted capital investments to increase its store base and square footage in both new and existing markets, and to strengthen its connection with customers through the growing digital and mobile channels.
Shopper use of digital coupons has accelerated exponentially over the past several years. Kroger began offering digital coupons in late 2009 and reached 500 million digital coupon downloads nearly three years later. Shoppers have downloaded more than 400 million more digital coupons in just the last 12 months, demonstrating their growing popularity and frequency of use.
Financial terms of the transaction were not disclosed.
Separately, Kroger said it would close two stores in West Virginia. The locations, in Diamond and Weston, have been unprofitable for three years, Kroger spokesman Carl York told the West Virginia Gazette.
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