At the turn of the millennium, Kroger was sitting high atop the list of U.S. grocers. The Cincinnati-based grocery store chain had reached the summit of the conventional supermarket industry by expanding its private label business and pursuing strategic acquisitions. But Kroger's momentum heading into the new millennium proved to be no match for Wal-Mart's aggressive one-stop Supercenter concept, and soon the world's leading big box retailer had become the world's No.1 grocer.

Today Kroger is making plans to regain its former crown. At the center of the grocer's rebound strategy is DunnHumby, a data-mining firm founded by British entrepreneur Simon Hay. DunnHumby played a key role in the growth of British grocery giant Tesco, and, in 2001, its data-mining and loyalty-card programs caught the attention of David Ciancio, Kroger's VP of customer relationship marketing. Ciancio contacted Hay to launch a customer-relationship-management (CRM) program for Kroger, and his message for DunnHumby was urgent: "We don't know what we don't know. Use the data [from the loyalty program] to tell us what we don't know." Sensing Kroger's need to make sense of its customer data, Hay set up an office in Cincinnati and immediately put his technology to work.

Hay's data mining plan hasn't yet returned Kroger to the No. 1 spot, but a strong effort is now underway, and all eyes are on the long term. "We are really at mile one of a 26-mile marathon,'' said Mr. Hay. DunnHumby has expanded its US operation to 170 staffers, and the company is both a data-mining resource and creative partner in Kroger's marketing efforts. Hay claims that 43 million households are using Kroger cards that feed into the data-mining program.

If Hay is successful in leveraging databases and CRM technology to help Kroger create the long-term rapport with shoppers that Ciancio envisions, the marketing vice presidents of many other retailers will soon be knocking on DunnHumby's door.