Retailers Looking to New Ways of Driving Customer Retention

The latest American grocery market share figures from IGD Retail Analysis may have done little to buoy the retail sector’s low spirits, but there may be light at the end of the tunnel. Research from TCC Global reveals how global retailers are adopting fresh ways of increasing shopper frequency in order to drive loyalty with remarkable results.

According to IGD, the American grocery market as a whole grew by 4.1% between 2010 and 2011 but this growth is predicted to continue in 2012 with an estimated marginal increase of 4.3%. Of the main players, Walmart Stores grew 2.2% on the previous year with a 25.6% share of the market. Kroger saw the largest increase at 7% with a 9% market share. Safeway Inc. and Supervalu (USA) each saw a decline, currently holding 3.9% and 3.3% market share respectively.

Against a backdrop of mounting competition in a highly fragmented market, retailers are now looking to new, effective ways of increasing their footfall, customer spend and ultimately, market share. Latest research from TCC Global explains how supermarket loyalty schemes, such as points and/or voucher collection campaigns, have become a powerful tool for building brand retention as well as winning repeat business.

Neil Saunders, managing director at retail research agency Conlumino, testifies how marketing promotions help give consumers a compelling reason to shop with one retailer over and above another store.

“Schemes such as voucher collection or earning points for rewards are more effective than using price alone, if only because they are addictive and ultimately deliver something of real value to consumers,” he says.

Quick to recognise the benefits of such schemes, Tesco is now harnessing the power of voucher promotions in the UK and Ireland. It has teamed up with TCC Global to launch campaigns which reward shoppers with big savings on branded cookware and glassware.

The current promotions follow an earlier campaign in the UK, which had a positive impact on shopping patterns, according to Tesco’s non-food marketing director, Kari Daniels.

“We are always looking for new ways to incentivise and reward our customers and build retention,” says Daniels. “TCC Global worked with us to create a promotion that would appeal to our customers. We have seen positive behavioural change from participating customers – it has proved to be a great success.”

Tesco is tapping into a promotional technique, which has already driven shopper footfall and an increase in basket spend at leading international supermarkets and convenience stores, as the following case studies demonstrate:

Case Study: Eroski
Eroski, Spain’s third largest retailer with over 1,400 stores, has deployed customer marketing campaigns to grow market share and sales of fresh foods in particular. In one 16-week programme, Eroski gave shoppers in 585 supermarkets the opportunity to collect a free three-piece Royal Doulton dinnerware set by collecting bonus tokens. Shoppers were given a token for every €10.00 spent on general shopping and for every €2.00 spent on fresh foods.

The results, measured by Nielsen, showed participating stores performed better than the rest of the chain and Eroski increased market share, as a result. Further, sales of fresh foods in stores running the programme outperformed non-participating stores and the overall market.

Case Study: Supervalu
In the US, Supervalu, the market’s second largest supermarket chain, has driven sales at its Acme, Albertsons and Jewel-Osco stores with reward-based programs.

In the latest campaigns, the retailer offered professional cookware as the motivating reward for shoppers. Over a 20-week period, customers were rewarded with a bonus point for every $10.00 spent.  Once they collected enough points, shoppers could redeem them for a piece in the professional cookware collection. The stores invested in advertising, attractive in-store signage, and social media to drive awareness and shopper excitement. As a result, there were high levels of shopper participation at Acme, Albertsons and Jewel-Osco with increases in basket size and total store sales.

As well as driving footfall and sales, marketing promotions can be used to create in-store theatre and drive shopper engagement by tailoring a promotion around a special event.

Case Study: Rewe
Rewe, the second largest supermarket chain in Germany, took this route with a campaign around the FIFA World Cup 2010, for example.

Rewe has been official fresh food supplier to the German national football association (DFB) since 2008 and uses the official DFB logo in its advertising and on own brand products.

In the run up to the FIFA World Cup, Rewe could also use images of the German players to increase shopper frequency and basket size in order to drive turnover.

The promotion, devised by TCC Global, featured trading cards of the players of the German national football team, which shoppers could collect over a seven-week period – one trading card for every €10.00 spent shopping. Shoppers could also purchase a collector album for €1.99 to display all 25 cards.

Rewe supported the campaign with advertising across TV, radio, print media and the internet, as well as a significant package of POS. The promotion met Rewe’s objectives with the retailer giving away more than 110m trading cards and selling over 1m albums.

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