THE CLARUS Blog

Improving Customer Loyalty In The Competitive Grocery Space

83 percent of consumers say that they visit between four and nine different chain stores each year to purchase their groceries.

And with just 1 percent of consumers indicating that they were loyal to a single retail grocery location, it’s no surprise that there’s not a lot of grocery loyalty. A consumer’s choice of store is heavily driven by convenience and proximity, followed by price and product selection.

While this is a challenging backdrop, grocers actually have a big opportunity to leverage loyalty and personalization to stand out in a highly competitive category.

 

Loyalty Challenges in Grocery

While a great opportunity to create and implement effective customer loyalty programs exists for grocers, they also face certain challenges.

Grocers operate on very thin margins, limiting the value of the rewards and benefits they can give back to their customers within a loyalty program.

Digital coupons that are a primary feature of most grocery schemes are offered equally by all programs.

Savvy shoppers consolidate their shopping at a single brand to maximize the monthly fuel discounts earned with the points rewarded on every purchase. Most grocery loyalty programs are beholden to the CPG subsidies, but that shouldn’t limit the program’s ability to create more loyal customers.

Grocery loyalty program owners are challenged by both the economics of the industry and the limited opportunities to differentiate the customer experience for their best customers.

 

Leveraging Grocery Loyalty and Personalized Benefits

Given all the available shopping options, today’s new generation of consumers is looking for immediate rewards and personalized benefits. With new challenges from leading brands like Walmart and Amazon, grocers need to double down on creating customer loyalty.

Grocers should think about effectively leveraging customer data to deliver a true level of personalization and relevance. In turn, this can create emotional connections and deeper loyalty that build stronger customer relationships.

See why the right mix of transactional and experiential benefits will drive emotional loyalty.

A successful loyalty program delivers a well-crafted blend of rewards and recognition features that changes shopper’s behaviors.

It’s tough to find unique grocery loyalty programs that make their members feel truly special. The same types of weekly coupons and member pricing won’t compete in the long run against the likes of Amazon and Whole Foods.

The speed, value and special treatment that Prime members receive will be evident now in the grocery industry at Whole Foods.

For Whole Foods, the potential to tap into the sheer volume of new customers via the Amazon Prime premium loyalty program is unprecedented. This could change the grocer’s trajectory.

Prime members are already receiving other perks: Free delivery of Whole Foods products to Prime members in certain locations. Using Amazon’s Visa rewards card at Whole Foods will also entitle members to 5 percent cash back.

If Amazon’s acquisition of and integration with Whole Foods takes off, competitive grocery chains could feel the same pressure that traditional retail has from Amazon in the past decade.

 

Loyalty Can Be A Differentiator

The grocery industry has become even more competitive after companies like Walmart, Walgreens, Target, Amazon, Big Lots, and the “Dollar” stores entered the space.

There is little differentiation in grocery loyalty programs today. As a result, grocers should consider doing something different to make themselves stand out from the rest through a unique, highly rewarding, and personalized loyalty program experience.

Efficiently managed loyalty programs can use analytics and insights to enhance customer experiences and purchase journeys. This includes physical store redesign (expanded areas for pick-up, local merchandising, etc.) as well as online (personalized e-circulars, coupons, relevant content, triggered replenishment, etc.).

 

Loblaw’s is Leading Grocery Loyalty Programs

Loblaw Companies, Canada’s food and pharmacy leader, recently announced plans to launch a premium loyalty program called The PC Insiders program. Loblaw Companies comprises a network of corporate and independently-operated stores in communities across Canada and employs nearly 200,000 people.

Amazon’s highly successful Prime premium loyalty program, which eclipsed 100 million members in April, has not only attracted the attention of global consumers, but also other retailers.

Styled after Prime, Loblaw’s new loyalty program offers an assortment of benefits for $99 per year/or $9.99 per month to attract more consumers to shop exclusively with its massive grocery chain.

The PC Insiders program is available to the 16 million members who currently use PC Optimum, which is Loblaw’s free rewards program. PC Insiders was designed with Prime in mind (minus the streaming service).

The PC Insiders program includes free “click and collect” grocery shopping, where customers order online and pickup at one of 600 designated locations, as well as free shipping on purchases from Loblaw’s Joe Fresh apparel brand and Shoppers Drug Mart.

Along with free shipping and grocery pickup, PC Insiders members receive 20 percent back in reward points when they buy baby products and Loblaw store brands like PC Organics and Black Label, as well as online purchases on Joe Fresh clothes and Shoppers luxury beauty products.

Loblaws sees this program as an opportunity for their customers to maximize savings while taking their loyalty benefits to the next level.

 

Grocery is Ripe for Membership Loyalty

To truly differentiate your grocery loyalty program, think outside the box of a traditional model.

A premium loyalty model checks all the boxes of personalization, enhanced engagement, higher average order value, attractive one-of-a-kind benefits, increased transactions, and advocacy.

With the right loyalty partner, a premium loyalty experience can be seamlessly snapped into an existing program, allowing grocers to deliver unique benefits and rewards that will drive shoppers back to their stores more frequently and make them stand out in an increasingly competitive space.

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