Kroger purchases Silicon Valley digital coupons, promotions firm YOU Technology for undisclosed terms; Kroger customers have downloaded more than 400 million digital coupons in last 12 months

Cindy Allen

CINCINNATI and SAN FRANCISCO , February 11, 2014 (press release) – The Kroger Co. (KR) today announced it has purchased the assets of YOU Technology Brand Services, Inc., the Silicon Valley-based leader in digital coupons and promotions.

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 many of the world's largest retailers and brands to drive consumer purchase decisions online, in-store, and on-the-go. Its network, which includes www.kroger.com/digitalcoupons, has grown dramatically and now includes over 10,000 retail stores representing over $100 billion in retail sales and 100 million US households. YOU Tech will continue to serve existing and future retail customers. Financial terms of the transaction, which closed today, were not disclosed.

"YOU Tech's nimble and innovative digital coupon platform has enabled Kroger to deliver hundreds of millions of digital coupons to Kroger customers," said Jeff Talbot, Kroger's vice president of customer loyalty. "This is a good strategic fit for both Kroger and YOU Tech. 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's chief executive officer. "We look forward to partnering with Kroger and other retailers and CPG companies to continue driving growth."

Digital Growth Opportunity

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.

Customer 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 about 3 years later. Customers have downloaded more than 400 million more digital coupons in just the last 12 months, demonstrating their growing popularity and frequency of use.

Based in South San Francisco, CA, YOU Technology, LLC will operate as an independent company within the Kroger family. The company currently serves approximately two dozen retailer clients operating 65 store banners.

"We are very excited to welcome YOU Tech's leadership team and current associates to the Kroger family," said Mr. Talbot. "Cheryl and her team have built an innovative company that is positioned to grow."

Kroger, one of the world's largest retailers, employs more than 368,000 associates who serve customers in 2,641 supermarkets and multi-department stores in 34 states and the District of Columbia under two dozen local banner names including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's. The company also operates 786 convenience stores, 327 fine jewelry stores, 1,218 supermarket fuel centers and 38 food processing plants in the U.S. Recognized by Forbes as the most generous company in America, Kroger supports hunger relief, breast cancer awareness, the military and their families, and more than 30,000 schools and grassroots organizations. Kroger contributes food and funds equal to 200 million meals a year through more than 80 Feeding America food bank partners. A leader in supplier diversity, Kroger is a proud member of the Billion Dollar Roundtable and the U.S. Hispanic Chamber's Million Dollar Club.

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