How grocers can win loyalty in 2024
It’s no secret that Canadians are losing some love for their favourite grocery stores. With the high cost of food and tight squeeze on their wallets, shoppers are on the lookout for the best price and value – and they’ll cross the street to get it. In this Q&A, Jason Beales, chief strategy and commercial officer at Air Miles talks about how shoppers’ focus on price is impacting loyalty, how grocers can earn it back, and what’s to come in this space.
What are the major loyalty shifts in grocery today and what’s driving them?
Realistically, [price] is the hot button… It’s a pain point which seems to be more pervasive than anyone would like it to be. What’s more disconcerting is the ‘stickiness’ of the pain, which seems to be more pervasive than anyone thought as well… So, we’re starting to learn that there’s some sustainability to this angst, unfortunately. To that end, [Canadians] need some semblance of relief… The price point is unequivocally the hindrance for pretty much every household. Look at any metric across the economic spectrum – percentage of income, year-on-year inflation, what’s left in your wallet after paying your mortgage – all of these things are material constraints which are hurting folks. And loyalty programs have now joined the ranks of good old-fashioned discounting as arrows in the quiver for Canadians to try to implement to make the pain points dissipate a bit.
How is the focus on price impacting brand loyalty in grocery?
What we’re seeing is that loyalty seems to be dissipating a hair in grocery, more than other segments. Again, those pain points financially seem to be instigating a pursuit for greatest value and as a result, allegiances are starting to dissipate. [Consumers are] willing to leave their existing or prior grocer in lieu of one that might be across the street that’s offering superior value, superior discounts and better loyalty [earnings]. A myriad of customers that we’ve looked at through research are shopping at numerous locations, bucking the trend of the notion of comradery to one brand... What we’re seeing is not only a migration and a curving of people’s dedication to one specific brand, but also a segue to more frequent shopping, smaller baskets, and more value-oriented baskets.
You’ll also see this migration away from conventional grocery to more unorthodox paths. That includes the likes of the big boxes, which obviously continue to eat the lunch of every retail segment across the planet… Convenience stores and pharmacies are becoming pretty remarkable forces to be reckoned with as well. So, it’s a multi-faceted landscape now in contrast to the tall, walled gardens that grocery used to be.
READ: Why grocers need to get creative with their rewards programs
How can grocers work to restore brand loyalty?
The communication of value seems to be the prevailing mantra of 2024. The marriage of discounting with earn [earning loyalty points] is a pretty special combination which we’re seeing more and more often, and the reallocation of value back into collectors’ jeans seems to be at the forefront of the communication base now. You’re unfortunately only as good as your last promotion as of late, so [it’s about] not only offering value, but also assuring that the dissemination of the information and the communication reaches a broad enough swath of your customer base.
In the not-too-distant past, a lot of discussion around loyalty programs was about offering members personalized experiences or access to events [versus discounts]. Has that conversation gone away because of the focus on price?
[At Air Miles], we’re sitting in an opportunistic situation where we’re not just a loyalty program, but we now have a travel agency, we have a very rich merchandise catalogue. So, we’re no strangers to pulling diversified levers to try to incite behaviour in the grocery realm. It works, unequivocally. A rich travel opportunity is going to harbour a lot of attention. But that said, you’re in a world [of food inflation] and as I said previously, you’re paying out double digits of what you take home. A flight to Bali is lovely, but so too is mitigating your weekly bills.
What role can a loyalty program play in rebuilding loyalty to the brand?
We’re a believer that loyalty is only as strong as how quickly the flywheel goes around. And by flywheel, I mean the earn-and-burn mechanism of how quickly someone can accumulate value in [a loyalty program] and then convert that into something they value in the form of a redemption. To do that… the opportunity has to be rich but conversely, it’s got to be plentiful as well. We’re of the belief that – and this is our new mantra – we want to be more open and flexible to Canadians, and to do so, you have to be in as many places as possible to eliminate the friction. So, two things that we’re pursuing which I believe will heighten grocery loyalty for our partners, but also for our program organically, is to be in as many places as possible and make it as frictionless as possible from an earn perspective… [For example], everything from food-kit entities to online ordering through our affiliate programs… that’s a conduit where [members] can earn miles now through us.
READ: Why grocers need to adjust their loyalty strategies to deliver the goods
Can you share a prediction on what’s to come in loyalty?
I believe loyalty programs are going to evolve into becoming business tools versus the conventional, blanket ‘always on.’ We continue to encourage partners to consider [Air Miles] as another weapon in their arsenal when it comes to inventory, or seasonality, or optimizing on a certain cohort or region where a business is underperforming – heightening productivity towards the end of a financial quarter, for example. [We think] turning promotions on and off around focal points which are amenable to improving their business is exactly what Canadian corporations need right now.
