Consumer loyalty has given way to convenience and product loyalty in the wake of COVID-19. With shoppers adjusting to strange circumstances and embracing this new normal, buyer behaviors are shifting.
According to FMI’s U.S. Grocery Shopper Trends 2020 study, grocery shoppers as a whole have increased the number of retailers visited each month from 4.4 to 5.1; meanwhile, millennials and Gen Z are visiting close to six grocery stores monthly. These new realities have forced retailers to reevaluate how they cultivate loyalty among consumers, and those strategies have been affected by several sizable trends.
The expansion of online purchasing options (e.g., delivery, curbside pickup, BOPIS, etc.) has significantly impacted consumer loyalty in retail. Although shoppers were already moving a number of their purchases to online options, COVID-19 pushed entire shopping trips online — with household penetration of online grocery orders alone increasing by 35%, according to a June 2020 Brick Meets Click/Mercatus Grocery Shopping survey. Additionally, the 2020 Consumer Intel Report found the percentage of consumers who identified as online grocery shoppers increased to 52% (up from 38% in 2019).
Part of the online surge was the result of pantry loading. Shoppers saw items quickly disappearing from store shelves, so the response was to buy those essentials online from anyone who had them available. Furthermore, some shoppers were already moving certain category purchases online before the pandemic, including baby and pet items — COVID-19 just accelerated that process. Research found in the Kantar Commerce Snapshot Wave 1 suggests these behaviors will remain as consumers indicate they’ll continue to shop online after the pandemic: 64% via curbside pickup, 59% using in-store pickup, and 37% through home delivery.
With an increasing number of consumers switching shopping tactics as they try to find their desired items, retailers gaining any traction are left wondering how to encourage these new shoppers to become loyal consumers. Those experiencing a decline in sales are left with an even bigger question: How do I bring shoppers back to my store? Once you see a decline in frequency (i.e., how often you’re spending at a retailer), recency (i.e., when consumers last spent their money there), and dollars spent (i.e., how much is spent at the retailer), loyalty is likely faltering.
The impact of COVID-19 has been longer-lasting and deeper than anticipated. As a result, retailers are left asking a new question: How can we ensure that current and new customers keep coming back while also recapturing lost shoppers?
Strengthening Customer Loyalty in the Retail Industry
Building customer loyalty in retail will vary by organization, naturally. A one-size-fits-all approach rarely brings about success. But there are a number of tactics to consider going forward, and the following are often the best places to start:
1. Don’t rest on your marketing laurels.
It’s tempting to rein in marketing during economic downturns — tightened budgets shift consumer engagement to the bare minimum. That’s a bad idea. Instead, now’s the time to beef up your marketing efforts. The competition is always looking for ways to lure your loyal customers away. And once you’ve lost them, it might not be so easy to get them back.
According to a recent Nielsen article, short-term cuts to ad spend could have long-term consequences, as on average 50% of the impact of marketing is realized after one year. That means a reduction in advertising over the next few months could have a big impact in the fall and well beyond. In addition, messaging from brands that stop advertising now may be less effective when the brands ramp up their marketing efforts again, potentially reducing long-term sales. Reducing ad units actually gives competitors a larger or louder voice.
Regardless of the loyalty scenario you face in the wake of COVID-19, this advice can be applied:
- Loyalty Gainers: If you’ve gained new shoppers during the pandemic, you need to use urgency to keep those buyers aboard. Whether these consumers came to you because they are seeking a good deal, because they had a pleasant shopping experience on your website, or because they found their preferred product/brand/category on your shelves, don’t take their business for granted.
Keeping up your marketing efforts will go a long way toward better fostering that loyalty. Keep consumers in the know about any new services you offer, and update your retail apps with coupons, special events, and other value-adds. These practices demonstrate a level of transparency that should help shoppers confirm their buying decisions. In fact, the FMI Grocery Shopper Trends Study found that 50% of shoppers care when companies use open and honest business practices. The same study indicates that 28% of respondents like when their preferred retailers and brands are active in the community, so be sure to highlight any efforts in that area.
- Loyalty Losers: If you’ve noticed a decrease in customers — specifically former loyalists spending less with you — find ways to bring them back with targeted messaging. Highlight the return of certain products and brands or new e-commerce and digital capabilities to entice these former fans back to their favorite store. Consider promoting basket value coupons or coupons on high-penetration categories such as paper goods or health, beauty, and cosmetic products that have experienced spikes in online sales.
- Online Opportunists: Continue to market to your in-store loyalists to make them aware of the value of your digital and e-commerce offerings. Illustrate how adding digital features (e.g., BOPIS, curbside pickup) to an omnichannel approach can inject convenience into the purchase journey they already have come to love.
An omnichannel grocery shopper survey by Bain & Company and Google found that 85% of first-time online grocery shoppers would do so with their primary store, while 75% continue to shop via the first online grocer they try. A good experience goes a long way with online adopters, so make the most of it.
Even when times are good, you shouldn’t leave well enough alone. Carry on with your retail marketing strategy, remembering that loyal shoppers are often the easiest to keep when you “surprise and delight” them regularly. Our’ Consumer Intel research found that 53% of shoppers will visit stores that reward loyal customers with personalized offers and discounts. Send special coupons, hold an invite-only event, or offer special shopping hours. Continue to support your customers, and they will support you.
2. Leverage dynamic loyalty data.
Retailers with loyalty programs already have a deep well of data on the spend, frequency, and recency of shopping trips among their consumers. Leverage evolving consumer trends and act on these insights to bolster engagement and uncover category opportunities.
Reach out to loyal consumers regularly. Show your appreciation by offering discounts on shopping cart values or by issuing coupons and promotions only to regular consumers. Use the data available to customize your loyalty programs for enhanced consumer engagement. Send out birthday greetings and keep them abreast of special events and shopping hours. Whatever you do, your goal should be reaching existing and potential consumers with enticing offers.
3. Align your approach against the competition.
When used correctly, data can make any retailer stand out in a competitive marketplace. It can help identify shoppers who most closely fit the profile of loyal consumers, tap into their specific needs, and personalize interactions to entice them into your store.
And if you leverage the evolving consumer trends at the same time, such as knowing that 64% of shoppers are buying more store/private brand products than they normally had been before the pandemic, you can arrive at offers and messaging that will keep them coming back. A targeted direct mail insert or expansion of a weekly circular, for example, is a perfect platform for promoting a private brand or seasonal offerings. Weaving a bit of urgency into that messaging can help drive sales in a short period.
4. Take an omnichannel approach.
With fewer people commuting, it makes sense to shift allocated media dollars from radio or outdoor into digital and in-home media. Consumers are spending even more time online and streaming during the pandemic, so you might consider video ads, connected TV, or display ads to engage them digitally. Surround your target audience with relevant messaging across multiple channels to cut through the clutter and grab their attention.
Free-standing inserts, circulars, or mailers delivered directly to shoppers’ mailboxes can make quite a difference. Extend the physical into the digital realm with a corresponding dynamic circular display ad. It’s all about using consistent messaging to target consumers. Nearly half (49%) of consumers said they appreciate brands that provide consistent messaging in print and online ads, says the Consumer Intel Report. Additionally, considering that online grocery shoppers use an average of 3.5 touchpoints between print and digital media, it makes sense to keep everything consistent. Leverage omnichannel to stay top of mind and strengthen loyalty to your store.
Consumer behavior is changing our definition of loyalty, and the fallout of the COVID-19 pandemic could permanently alter where and how much people shop. These changes will have sizable ramifications on how retailers engage consumers and foster loyalty. To build that rapport with shoppers, keep connecting with your target audience, using the data available to you, and going after any customers you may have lost along the way.
Convenience and urgency are fueling the current shopper behaviors. For retailers to catch up, they must put the tools and insights in place to reaffirm consumer loyalty. The grocery landscape paints an accurate picture of how COVID-19 has shifted the concept of loyalty. For a more granular look at those effects, download the 2020 Consumer Intel Report.