Supermarkets have more competition than ever from convenience stores, dollar stores, big box discounters and a growing number of online retailers, but they’ve also got some advantages in the form of customer loyalty programs full of data that can be mined in ways that keep shoppers coming back.
Grocery stores have been collecting data through loyalty programs for more than two decades, and those that use the information they gather to improve the shopping experience stand to boost same-store sales by 5% to 10%, according to a study done a few years ago by business analytics and intelligence provider SAS.
Supermarket CIOs are moving quickly to adopt big data tools — 64% were using big data last year, up from 20% the year before, according to a study by SwiftIQ. Strengthening shopper engagement and creating personalized promotions were seen as the top avenues for using big data to create value, the report said.
Customer loyalty programs and, increasingly, social media channels provide supermarkets with the ability to improve service on several levels, from personalizing the shopping experience with digital coupons and in-store offers to big-picture planning on what to stock and where to open new stores, said Alan Lipson, retail industry marketing manager for SAS.
“Supermarkets are no different than any other retailers, in the respect that everybody is trying to understand their customers better when it comes to their.wants, needs and buying behaviors,” he said.
“Now we can analyze it to the household. We can understand what the household is purchasing, and so we can also now analyze the total shopping value,” of the household as a whole, he said. Doing it that way instead of focusing on the individual market basket gives supermarkets more tools for catering to its most valuable shoppers.
Take a jar of capers, for example. It’s likely not a high-volume, high-margin item at most mainstream supermarkets. Before, merchandising managers might have decided to stop stocking the specialty item. Now, analyzing household data may show that big-spending top customers buy a jar every once in a while. They might not make a trip to the store just for capers, but they want them when they want them and if they’re not on the shelf, the shopper might just take all her business to the rival down the road.
Today, mobile technology gives supermarkets a range of new options for using point-of-sale data to personalize the shopping experience, with in-store promotions and instant coupons based on both previous purchases and what’s in the basket today. A growing number of chains are investing in instant coupon programs, including Cincinnati-based Kroger which earlier this year acquired digital coupon provider YOU Technology. Even Lakeland, Fla.-based Publix, which has resisted adding a customer loyalty card program, has launched a pilot program to provide personalized discounts to shoppers who opt in, as Progressive Grocer reported last month.
That opt-in part is key, said Lipson, as retailers work to navigate the big data seas without turning off the very people they want to attract.
Grocers used to track traffic patterns through the store to improve the layout, but the process was basically anonymous. Now, supermarkets can, in theory at least, send a mobile suggestion about additional items that would go with the product a shopper just put in her cart. To inspire shoppers to buy more, the offers must be relevant to that shopper that day and they must offer a compelling value. And, above all, they must be anticipated, Lipson said.
Most shopping applications give users the option of whether they want to be tracked in the store, and retailers need to make sure the apps clearly explain what that means. “You have to be expecting this kind of offer. If not, it comes across as stalking, and it’s creepy,” he said.
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