Why Grocery and Supermarket Retailers Should Take a Fresh Look at Loyalty

by Rohan Ahire |

Grocery chains have traditionally relied heavily on blanket one-size-fits-all offers and blind circulars to incent customers with aggressive discounts. Forrester reports that 80 percent of customers want to be treated as individuals and receive communications and offers tailored to their unique preferences—and this applies just as much to the grocery industry as any other.

Today’s Grocery and Supermarket shoppers expect convenience, unique value, and emotionally connected experiences. Given the following facts, it’s essential that grocery and supermarket retailers create timely, relevant, personalized interactions for customers:

  • 95% of your customers are shopping somewhere else
  • More than half of consumers visit 6 different grocery stores on average
  • According to Forrester, U.S. online grocery sales grew from 38% prior to the pandemic to 76%, and grocery chains want to hang on to these customers

Suresh Kumar, Walmart’s Executive Vice President summed it up in a February 2021 earnings call when he said, “This year onward, it’s going to be about unlocking the future of shopping for our customers, meeting them in their customer journey in a highly personalized omni-fashion.”

The Opportunity Is Ripe

Pre-pandemic, ecommerce accounted for just four percent of all grocery sales but soared to as much as 20 percent in the midst of the pandemic, according to a Sigmoid analysis. While the COVID boom may blow over, customers are increasingly looking to online options and Sigmoid reports 90 percent of customers are expected to continue shopping online post-pandemic. Online grocery sales are expected to account for 21.5 percent of total grocery sales by 2025—an estimated $250 billion—which is more than a 60 percent increase over pre-pandemic estimates.

So, how do grocery retailers protect thin margins, meet changing customer expectations, and seize their fair share of this growing market? Customer loyalty technology and strategies address all these challenges.

Loyalty Solutions—A Recipe for Success

Leverage today’s customer loyalty technology is one of the most effective ways to truly understand your customers, identify and reward your best customers, and accelerate growth.

Take a look at just a few of the benefits of loyalty that grocery and supermarket and retailers can expect:

  • Truly Understand Your Customer—360-degree customer profiles built with first-party loyalty data help you know who your customer is, what they purchase, why, and how often.
  • More Effective Marketing—Create smarter segments and offers your customers care about based on what they purchase, how often, and how much.
  • Higher Value Baskets & Increased Sales—Deliver timely, individualized experiences based on habits and preferences that lead to higher value orders. Spend increases by 68% when customers join grocery loyalty programs.
  • Deliver a Seamless Omnichannel Experience—Leverage first-party data in real time to deliver a unique individualized experience no matter where they shop.
  • Protect Margins—Offer rewards beyond coupons and discounts, such as early access to new products or personal shopping services.
  • Add Value between Purchases—Help with meal planning, shopping lists, wellness, and other tips individualized for each customer.

Let’s Get Personal

According to a recent survey, 90 percent of respondents said they are much more likely to do business with a grocery store that is offering personalized experiences. So, what might that look like, leveraging loyalty’s robust first-party data? Here are just a few examples:

  • Providing offers or coupons based on the customer’s physical location
  • Suggesting complimentary items, or offering cashback or discounts on their favorite items based on past purchases or preferences
  • Sending customized communications that add relevant value, such as healthy recipes based on dietary preferences

Loyalty in Action

According to Gallup, companies that create an emotional connection with their customers outperform the sales growth of their competitors by 85 percent. Supermarket retailer Kroger creates deeper customer bonds in part through an app that provides real-time information to potentially stressed-out shoppers in search of quick dinnertime options. The app provides recommendations based on collected customer data as well as real-time store inventory data. According to NTT Data, one grocery chain offered 1,666 customers at risk of churning a hyper-personalized coupon, motivating 32 percent of them to shop with them. Loyalty is one of the fastest and most effective ways to collect first-party data and push it across your tech stack to individualize every interaction across every touchpoint.

Annex Cloud Can Help

Annex Cloud’s Loyalty Experience Platform™ combines best-in-class loyalty management with powerful engagement and communication modules, enabling grocery and supermarket retailers to build lasting customer bonds while accelerating growth. It’s modular, so you buy just what you need. Learn more about our grocery loyalty programs.

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