While food costs have risen globally, the UK has been hit particularly hard; in April, food inflation was 19% — the highest in Western Europe. In response, UK consumers have changed their spending behaviours when deciding what’s for dinner. A grocery survey we conducted earlier this year asked consumers in the UK and Ireland, Asia Pacific and North America about their views on loyalty programmes, the current economy, and their shopping habits. 62% of British and Irish consumers said they were eating and drinking out less, 55% were ordering less takeaway, and 38% were finding ways to make meals that eliminate food waste, writes Tim Mason, Chief Executive Officer at Eagle Eye.
Cost-consciousness has also extended to these consumers’ grocery shopping behaviours. The combination of their increased appetite for value and restricted out-of-home food spending has translated to more frequent grocery trips which has undoubtedly created an opportunity for grocery retailers. If British grocers can successfully deliver additional value to their customers now when it matters most, they have the opportunity to grow share of wallet and increase advocacy which will result in them building more resilient, sustainable relationships which will pay dividends long into the future.
The key to delivering this? The venerable loyalty programme.
Why grocery loyalty programmes matter
The UK and Ireland already represent a mature loyalty market, with 86% of consumers belonging to at least one loyalty programme, according to our survey. A majority (63%) also use them to access exclusive savings and use their earned points to pay for grocery items. But are grocery retailers leveraging their loyalty programmes in the most optimal way to engage their customers and retain them in this unique economic environment?
The answers are mixed, according to our report. Shoppers are demanding value, and many have identified loyalty programmes as a pathway to savings. 74% of UK and Irish consumers rank value as the most crucial factor when choosing a programme, followed by discounts at 54%. 45% said that they are now using loyalty programmes more frequently as a way to save money.
But there’s a disconnect between what consumers want and where grocery brands are investing their money. For instance, 65% of consumers think retailers should offer deeper discounts on products they typically purchase, while only 35% of programme owners are developing this capability. And more than half of the consumers we surveyed (55%) want more personalised offers, but only 27% of UK and Irish loyalty programme managers plan to invest in this feature over the next 3-6 months.
Closing these gaps – offering more recognisable value and expanding personalisation capabilities to deliver the right promotions to the right customers – will help grocery retailers build sustained engagement with customers, ensuring they feel known and acting as a helpful partner to the end customer.
Personalisation and the loyalty experience
Rather than being looked at separately, retailers need to see personalisation as a key pillar of their overarching value proposition. In Grocery’s Great Loyalty Opportunity, we found that 87% of UK and Irish consumers believe personalisation would help them save more money. At the same time, a recent study by Boston Consulting Group found that “redirecting 25% of mass promotion spending to personalised offers would increase return on investment (ROI) by 200%”. So, if it’s a win-win for both the retailer and the customer, what’s preventing grocery retailers from executing personalisation at scale within their loyalty frameworks? More often than not, it’s a technological limitation, as legacy systems and processes stand in the way of enabling programme owners to execute the hundreds of millions of offer types to individual customers at the speed and scale required to deliver genuine personalisation. However, with the rapid advancements happening in the data science and AI space, combined with the power of cloud computing, there is no excuse for retailers to hold back. In fact, they should be looking beyond just personalisation for today, but to what this could look like tomorrow. Something which we term: Marketing in the Moment.
Value at the right time and place
Marketing in the Moment – retail’s next great transformation – will allow retailers to add an additional layer of context to their personalisation efforts. This means adapting offers and messages in real-time for individual customers based on various factors which could include location, time, weather and so much more. Marketing in the Moment will enable physical-store retailers to better compete with pure-play ecommerce outlets, pushing ‘you might like’ offers to customers as they navigate the store using scan-as-you-shop, for example, or triggering a reward to be issued to top customers as they enter the store.
With 46% of global consumers demanding brands make it easier to find discounts and specials, Marketing in the Moment ensures that the deals find them at the exact time and circumstance that would be most valuable. And consumers are ready for this; 75% of UK and Irish shoppers would consider buying a product or find it helpful to receive a text or notification with an offer while shopping. But for retailers to deliver this kind of value to consumers, they will need upgraded technology — a fact that many of the programme managers we surveyed acknowledged.
More than half said that integrating with other operational systems was most important to them when considering their loyalty programme’s technology capabilities, while 27% said their biggest challenge was maintaining the technical aspects of their programme. Both numbers indicate the need for third-party providers that can integrate and automate data from multiple sources, including a retailer’s point of sale, with the loyalty platform.
High food prices are an opportunity for grocery retailers to prove their value to consumers by delivering meaningful savings to individuals on the products that matter most to them. This is personalisation’s secret weapon – the ability to provide a personalised value proposition to customers. By expanding their programmes’ capabilities and enabling shoppers to receive personalised, timely and contextualised value, grocery retailers can make themselves indispensable to their customers and build relationships that will drive sustainable revenue growth well into the future.
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