Technology

Next-Generation Loyalty Strategies Poised to Help Retailers Better Compete

FMI and Precima joint research study reveals new insights for differentiated growth

While shoppers rate loyalty toward their primary grocery store quite high (4 out of 5), the reality of their behavior is different, according to results of a collaborative survey of more than 3,000 shoppers and dozens of retailers by the Food Marketing Institute and analytics firm Precima.

While presenting top-line findings of the joint study at the Next-Generation Loyalty: Get it Right in Food Retailing session at FMI’s Midwinter Executive Conference in Miami, Graeme McVie, chief business development officer at Precima, revealed that three out of five shoppers would shop at one store if they could have all their needs satisfied. Further, 19% typically shop at only one store each week, while just 7% allocate more than 90% of their weekly grocery budget to their primary store.

mcvie lecture

“Food retailers need to take a more holistic approach to loyalty than simply viewing it as the domain of the loyalty team,” said McVie, noting that next-generation loyalty strategies are far more than just a card. “Loyalty has to be earned,” he said, by the best retailers satisfying the need with two primary objectives: understanding consumer needs on a granular, timely and frequent basis; and consistent execution with actions that best satisfy needs.

McVie said retailers will see the highest levels of success by “looking at loyalty in 3-D, by strategically allocating resources to earn customer loyalty, by enabling daily decisions to be made that consistently satisfy shopper needs and by delivering a meaningfully differentiated value proposition to shoppers through their loyalty programs.”

Overall, “the most successful retailers do the best job of measuring” their loyalty data, McVie said.

Other recommendations highlighted by survey data include:

  • Viewing loyalty as a comprehensive strategy based on insights gained directly from the shopper.
  • Considering loyalty as the outcome of daily decisions across pricing, promotions, assortment, space, marketing and store operations.
  • Going beyond a two-tier price discount loyalty programs and providing differentiated value to shoppers.

“The research confirms that shopper loyalty is not a traded commodity and needs to be earned through personalized experiences,” said Pat Walsh, FMI’s SVP of industry relations. “The good news is that food retailers are identifying ways to effectively compete in this new omnichannel environment, focusing as much on the fresh categories as the company dedicates to its online presence and e-commerce offerings.”

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