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The Key To Competing With Digital Retail Is Consumer Loyalty


Last updated on July 24th, 2018 at 07:30 am

The best way for food retailers to gain an advantage over digital retailers and other competitors is to have a large, loyal customer base.

“To achieve this, it is critical for retailers to take a next-generation approach to customer loyalty and view it in 3D: loyalty as a strategy, loyalty as an outcome of daily decisions and loyalty as a program,” say the Food Marketing Institute and global retail strategy and analytics company Precima, which recently released a new report, “Next Generation Loyalty: Get It Right In Food Retail Part 2: Loyalty In 3D.”

According to the report, food retailers have the ability compete successfully and sustainably in today’s highly competitive market by understanding and consistently satisfying shopper needs better than the competition. But retailers need to realize that they can’t assume that their current customers will remain loyal; they need to consistently earn the loyalty of their shoppers by aligning their resources and decisions with customer needs.

“Food retailers need to reboot the way they think about loyalty, taking advantage of the latest tools to truly engage shoppers and earn their loyalty across all customer touchpoints and not merely through a loyalty program,” explains Graeme McVie, chief business development officer at Precima. “They need to align their strategic, tactical and operational decisions across merchandising, marketing, store operations and supplier collaboration so a clear and consistent message is sent to the market that the retailer is working hard to earn the shopper’s loyalty.”

The report, the second of two on the topic, provides a framework and roadmap for how food retailers can successfully approach loyalty in 3D and take their efforts to earn customer loyalty to the next level.

“The intangible benefits from a comprehensive approach that includes all of these elements include the advantages of having a very loyal customer base and a purpose-driven workforce that is energized and committed to delivering a higher level of value to customers,” says FMI and Precima. “This one-two combination is difficult for any competitor to replicate or steal and provides an almost unassailable competitive advantage.”

From a tangible perspective, next-generation loyalty enables retailers to grow their number of valuable shoppers, sales per shopper and lifetime value per shopper. It allows the retailer to do this in the most cost-effective and lowest-risk way by understanding and satisfying customer needs better than the competition. By way of a bottom-line example, the report shows that for a $2 billion retailer with a gross margin of 25 percent this equates to $70 million per year of incremental sales and $30 million per year of incremental gross profit.

“With the intangible and tangible benefits that are possible from taking a shopper-centric approach, it is surely time for retailers to embrace next generation loyalty. As one of our member CEOs told us, ‘if you don’t like change, you’re going to like irrelevance a lot less,’” says Pat Walsh, SVP for industry relations at FMI.

The report, which is based on survey of more than 3,000 shoppers and 200 retailers, provides guidelines for how retailers should implement a next-generation approach to loyalty. Central to the suggested approach is a “Crawl, Walk, Jog, Run” strategy to capture and then retain the attention of the customer and build momentum at the company and with its trading partners.

Keep reading:

Research: Retailers Must Take ‘Holistic Approach’ To Shopper Loyalty

Southeastern Grocers Launches New Food And Fuel Loyalty Program

Leevers Supermarkets’ New Loyalty Program Rewards Healthy Eating

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