The Kroger Subsidiary That Reads Your Receipts

Introduction

Kroger's own first-quarter earnings release, out June 18, 2026, says the division that keeps a profile on you grew profit more than 20% year over year. That division is Kroger Precision Marketing, and the profiles come from 84.51° LLC, which Kroger's most recent 10-K lists on Exhibit 21.1 as a subsidiary it owns outright rather than a vendor it hired. Twenty-one months before that earnings release, Kroger's then-Chief Information Officer, Yael Cosset, testified under oath that the company holds 10 petabytes of data on 60 million households. 84.51° builds those profiles out of your purchase history and turns them into the discount waiting on your loyalty card, the number that decides whether cereal rings up the same for you as for the person behind you in line.

What Kroger Told a Federal Judge

That testimony came in Oregon federal court, where Cosset was defending the Kroger-Albertsons merger against an FTC challenge. Kroger's data and advertising business, he said, runs at fatter margins than groceries, according to The Oregonian's courtroom reporting.

Cosset drew one line carefully: Kroger doesn't sell raw customer data to consumer brands, he testified, it sells "overall insights of a group of customers" and targeted advertising. The merger fell apart the following winter, and the business he described kept compounding. Kroger's alternative-profit segment, the broader bucket holding precision marketing, produced $1.3 billion in fiscal 2023, more than a third of operating profit.

He was CIO from May 2019 to March 2025 and has been Kroger's executive vice president and chief digital officer since. His bio on Kroger's investor-relations site says he "is also responsible for Kroger's alternative profit businesses, including Kroger's data analytics subsidiary, 84.51° LLC, and Kroger Personal Finance."

None of that came from a leak or a subpoena. Every load-bearing fact about Kroger's pricing machine is a document Kroger produced about itself, most of them filed in the section where the good news goes.

Exhibit 21.1 Lists 84.51° as a Subsidiary

When an algorithm gets blamed for a price, the standard corporate answer is that some outside vendor built it, and Kroger doesn't have that option. Exhibit 21.1 of its 10-K for the fiscal year ended January 31, 2026 lists "84.51 LLC [Ohio]" among the company's direct subsidiaries, where it has appeared in every annual report since 2016. Kroger formed it in April 2015 by buying out the remaining half of its dunnhumbyUSA joint venture.

Consumer Reports reported in May 2025 that Kroger acknowledges selling shopper data or insights to more than 50 companies, tobacco firms and data brokers among the buyers, with 63 million customers inside the file. Kroger's privacy policy, posted in the same form on its Mariano's and FoodsCo sites, discloses that it collects "Biometric information (in select locations only) such as facial recognition data" for "security purposes," with notice posted at the door. EPIC's February 2025 analysis treats that as a gap in the law rather than an accusation: almost nothing in most states' statutes would hold the collection to security uses only.

Kroger's One-Word Defense

Ask the company directly and the answer hasn't moved in two years. "Kroger does not personalize prices on its products," it told Consumer Reports. "Kroger presents customers with available offers that Kroger believes will be the most relevant and thus the most valuable to them."

Consumer Reports got one of its named subjects a look at his own profile. He's a college-educated man earning six figures, and Kroger's system had him down as female, high-school-educated, and making roughly $66,000. CR's hedged conclusion is that he's "likely to get" fewer of the chain's best discounts because those errors "might play a role in why he's not considered worthy of more discounts." What sticks with me is that he'd never have known. You just get the coupons the model thinks you'll take.

Senators Elizabeth Warren and Bob Casey put 11 questions to then-CEO Rodney McMullen in an August 2024 letter about Kroger's electronic shelf labels, including whether the company would "use customers' data to institute personalized pricing on its ESL platforms." Kroger's public reply, given to Progressive Grocer that month, went around it: "Any test of electronic shelf tags is to lower prices more for customers where it matters most." The letter also cited a 2019 pilot camera partnership with Microsoft, which both companies now deny is in current use. Kroger says it "does not use facial recognition technology in connection with electronic shelf labels or pricing."

EPIC titled its Kroger analysis "with or without facial recognition" for that reason. The distinction Kroger is defending is between a price and an offer, and at the register there isn't one. Nobody hands you a menu of prices to choose from. You get the single discount the system picked for you, and that's the number that comes off your total.

Who Benefits

Kroger, and 84.51° as the part of Kroger that does the work. The payoff is money first and cover second.

Groceries are a thin-margin business, and a shopper profile is the opposite: costly to build once, close to free to rent out again. That's why Cosset could testify that data and advertising beat food on margin. In the first quarter of fiscal 2026 Kroger booked $46.12 billion in sales and $903 million in net earnings attributable to the company, up from $866 million a year earlier, roughly 4% growth. Precision Marketing profit in that same quarter grew more than 20%.

Kroger doesn't publish division-level profit, a point Consumer Reports makes explicitly, so the dollar figures attached to this business come from Wall Street. Guggenheim Securities estimates that unit made about $450 million in 2023 and $527 million in 2024, on a path toward $825 million by 2027, a bank's model of numbers Kroger keeps private.

The cover is the other half. State legislatures are drafting bans around a phrase, and Kroger's answer puts the company outside the phrase without changing anything at the register.

New Jersey's Ban Doesn't Start Until 2027

Gov. Mikie Sherrill signed the Fair Price Protection Act on July 23, making New Jersey the third state to ban surveillance pricing after Maryland and Connecticut. Coverage published that same morning still counted two; the number changed hours later.

The enacted text defines surveillance pricing as a price "determined, adjusted, optimized, or recommended by an algorithm or automated system... based, in whole or in part, on using personal data... and that results in price variation for individual consumers or groups of consumers." That last clause narrows the ban to differential pricing rather than algorithmic pricing generally. Section 9 then staggers everything: the New Jersey Innovation Authority's study of electronic shelf labels began on signing, the moratorium on new shelf-label installations starts February 1, 2027, and the pricing ban itself starts August 1, 2027. Nothing in the law binds any retailer today.

The teeth are borrowed. The Act makes surveillance pricing an unlawful practice under the New Jersey Consumer Fraud Act, a 1960 statute that lets private plaintiffs sue with mandatory treble damages and attorneys' fees under N.J.S.A. 56:8-19, on top of Attorney General penalties of $10,000 for a first violation and $20,000 after that. Loyalty programs stay exempt, though the third reprint attached conditions: opt-in enrollment and disclosure of the pricing benefits and data practices behind them. EPIC, which testified for the bill in May, still wants stronger consent rules so loyalty programs "do not allow surveillance pricing in disguise."

Kroger has no supermarket under its own banners in New Jersey. The company runs 2,697 supermarkets in 35 states and DC as Ralphs, Fred Meyer, King Soopers, Smith's and other banners, serving more than 11 million people a day, and New Jersey's definition is what other legislatures will copy.

Colorado Gov. Jared Polis, a Democrat, vetoed a broader version of this policy on June 2, his second such veto in about a year, warning in his veto letter that it could "punish differentially lower prices, not just higher prices." Linda Doherty of the New Jersey Food Council put it differently, in a statement to NJBIZ: the law "claws away personalized coupons and loyalty rewards that families, students, seniors, and shoppers on fixed incomes use to stretch their grocery budgets." A working paper covered by the AP in June 2025 tracked five years of transactions at a chain that put electronic shelf labels in more than 100 stores and found virtually no surge pricing afterward. That study measures time-and-demand pricing rather than the identity-based kind, the distinction EPIC has been drawing all along.

Federal regulators started down this road and pulled over. The FTC opened a 6(b) study of surveillance pricing in July 2024, and staff published preliminary findings on January 17, 2025 over the objections of incoming Chairman Andrew Ferguson, whose dissent went to the timing of the release rather than the inquiry itself. The public-comment request closed within days, no final report or rule has followed, and neither that study nor any federal action since has named Kroger.

The Bottom Line

Nothing at the register changes for the next year. New Jersey's ban doesn't bind anyone until August 2027, and the FTC's file has been closed since early 2025. What stands between the profile 84.51° keeps on you and the price you pay is Kroger's choice of the word "offer," and that word has held up against two U.S. senators, a federal courtroom, Consumer Reports, and the country's largest privacy nonprofit.

New Jersey's definition doesn't ask what a company calls the output. It asks whether personal data "results in price variation for individual consumers or groups of consumers." Somebody eventually has to hold Kroger's own filings up against that sentence, and the first state to write the sentence into law is one where Kroger doesn't operate a single supermarket.