The grocery loyalty renaissance

Alastair Lockhart

Fri Nov 11 2022

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In recent years grocery loyalty schemes have enjoyed somewhat of a renaissance, as leading retailers have embraced digital technology, encouraging many millions of shoppers to retire their plastic cards in favour of new feature-rich apps. According to Savvy’s latest research 95% of grocery shoppers have used a grocery loyalty scheme in the past year and just over half of us say we use loyalty schemes more often because they are available on our smartphones.

But the benefits of digital loyalty schemes go substantially further than the thinning out the nation’s purses and wallets of unnecessary plastic – they are fundamentally reshaping the promotional landscape and are driving a shopper marketing revolution.

Digital loyalty schemes have supercharged personalisation, allowing retailers and brands to target shoppers with highly relevant promotions. Consistently in Savvy’s research over the past five years, shoppers have praised improving personalisation of promotions and offers, and they’re keen to see further progress still, with 81% of loyalty card users saying they would like schemes to be more targeted to them personally. The rise in loyalty-based promotions in part explains why we see fewer offers in-store compared to a few years ago.

Potentially more powerful and interesting is the increasing ability of loyalty schemes to add excitement to what, in all honesty, has traditionally been a fairly boring grocery shopping experience.

Nectar has led the way over recent years. Simple mechanics such as its digital scratch card, also a feature of Lidl Plus, provide a low cost but high effective incentive to encourage shoppers to visit stores. Campaigns like its ‘Count up to Christmas’ scheme, gamifies shopping by setting shoppers a series of small, incentivised goals to work through during the lucrative run up to Christmas. On the face of it very simple, but designed to appeal to shopper psychology.

Nectar uses behavioural science techniques to help keep shoppers engaged and motivated
Lidl’s coupon Plus incentivises shoppers to reach monthly spending targets drive basket size

Asda’s Rewards scheme is disrupting the market, not only for offering ‘Pounds not Points’, but because it is based around shopper missions. It speaks the language of shopper problem solving, encouraging people to explore categories and try new things. Especially during the current economic climate, the scheme resonates with shoppers. It also offers the retailer’s new owners the option to shift away from Asda’s traditional focus on EDLP, in a subtle way.

‘Pounds not points’ resonates with cost-conscious shoppers and is rightly the focus on Asda Rewards’ TV ad

Savvy’s research suggests gamification and other task-orientated initiatives resonate well with shoppers. 70% say they would like loyalty schemes to be more fun to use, while 80% like the idea of earning extra points for carrying out little tasks.

It’s impossible to talk about loyalty schemes with out mentioning Tesco Clubcard. While it lacks some of its rivals’ interactivity, the introduction of Clubcard Prices has totally reinvigorated the scheme, pretty much making use of the scheme essential and helping maintain Clubcard’s position as the highest rated scheme among shoppers, according to Savvy’s research.

Over the next few years we expect substantial further innovation.

The targeting of loyalty schemes is set to become yet more powerful, as traditional loyalty schemes become more intertwined with other retailer technologies such as self-scanning apps. It doesn’t take much imagination to envisage shoppers being served targeted promotions, during their supermarket shop, based not only on traditional loyalty data, but on what they are adding to their baskets in real time, the day of week and time of day. Such advances would mark a revolution in shopper marketing and the in-store shopping experience, opening opportunities for day-part messaging, advanced occasion-based promotions and new cross-category promotions.

Loyalty apps also provide a powerful platform to educate and inspire shoppers, giving shoppers access to product information, brand stories and inspiration like recipe ideas and product partnerships.

In the next couple of years we anticipate loyalty apps will further gamify the shopping experience. Augmented realty has enormous potential to deliver dynamic brand and category inspiration in-store that can be rolled out across store estates without the need for expensive POS toolkits and displays.

The benefits of digital loyalty apps for brands is also substantial, not least because 84% of loyalty scheme users would like to see more of their favourite brands feature in retailer loyalty schemes.

Digital loyalty schemes provide brands and retailers with more opportunities to tap into events, moments and cross-category partnerships, and can facilitate highly targeted inspirational content at the point of purchase.

Another massive benefit for brands and retailers is the ability to run test and learn campaigns, quickly and cost effectively. This alone will greatly accelerate the pace of marketing innovation and creativity.

Finally, and most importantly for brands and retailers, better personalisation and targeting of promotions means higher ROI.

In conclusion, we find ourselves at a tipping point for loyalty schemes – where increasingly they will be able to drive genuine loyalty through better experiences and relevance, rather than the simple promise of loyalty points. As we navigate a difficult economic period for retailers, brands and shoppers, advances in digital loyalty programmes provide an important means to reframe the way we communicate value, deliver real differentiation, and really put the shopper at the centre of the experience.

If you’re interested in detailed analysis of the full research or to understand how we help our clients drive loyalty, please get in touch.

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