It’s Not Loyal to Stop Shopping

Jan 24, 2005

By John Hennessy

You may already have seen information from ACNielsen’s “Channel Blurring” study. Reports have tended to emphasize the continual declines in annual trips to supermarkets; down from 92 trips in 1995 to 69 in 2004.

There’s another story here. For the first time, the penetration of supermarkets is below 100 percent. One percent of shoppers, over a period of a year, have found that they can live without visiting a supermarket.

While the continual decline in trips is bad news, shoppers abandoning supermarkets entirely is worse. There are now enough other retailer channels selling groceries that some shoppers no longer see conventional grocers as a necessity.

According to Todd Hale, senior vice president, consumer insights, ACNielsen U.S. (and RetailWire BrainTrust panelist), “One hopeful sign for the grocery channel is that several chains have rolled out or are experimenting with new store formats. Others are increasing their use of micro-merchandising and marketing to better meet the unique needs of shoppers within their trade areas. Only time will tell, but those efforts toward differentiation may help stem the loss of shoppers to other formats.”

Moderator’s Comment: With all the supermarket loyalty cards in the hands of shoppers, how are supermarkets losing shoppers? What would you do to get
shoppers to return to supermarkets?

According to research conducted by Boston University’s College of Communication, more people carry loyalty cards than have a home computer or Internet access.
Yet supermarkets, with widespread issuance of cards and consequently huge loyalty card acceptance, are experiencing declining trips, dollars and household penetration.

Part of the problem is one-way loyalty. Supermarket loyalty programs expect loyalty from shoppers but do little to demonstrate loyalty TO shoppers. The
good news is that supermarkets have the best resource available to determine shopper preferences; purchase history by cardholder. Unfortunately, they seldom use this valuable
resource that can help them differentiate themselves in a way that cannot be matched by the competitive channels stealing their shoppers.

Furthermore, if cardholding shoppers feel that they are doing all the work and gaining no benefit from the program, it can be perceived as a real negative.

One way to use this data on behalf of shoppers is to tailor offers and other messaging to each shopper’s preferences. By selecting offers that match their
historic preferences, retailers save shoppers time and money and show them that they’re paying attention and working on their behalf.

Another example is satisfying unmet needs. Supermarkets could know more about the products their shoppers are not buying than the competitive retailer who
is making the sale. A supermarket could offer paper products to shoppers who clearly have the capacity to expand consumption based on their purchasing level of other products.
In the process of improving sales, supermarkets help their shoppers save time by limiting the need to visit multiple channels.

John Hennessy – Moderator

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