Bryan Roberts, global insight director for retail marketing agency TCC Global, isn’t so sure about the prospects of customer loyalty in the grocery sector.

TCC recently released a study of more than 1,500 shoppers in the U.K. and Roberts believes that the research suggests that very few retailers can demand a genuine emotional bond between themselves and shoppers.
Roberts told Loyalty360 that loyalty cards are still resilient in the U.S.

“The middle ground is under threat in the market,” Roberts explained. “The entry of Lidl could wreak a fair degree of havoc. Choice is much broader in the U.S. than in other markets. Being a well-differentiated upscale operation is no guarantee of being insulated from the pressures experienced across the market.”

What’s more, Roberts offered his view of the grocery customer loyalty industry in the U.S.

“My view would be that the grocery loyalty industry in the U.S. is still predicated on functional, transactional, and financial benefits to the shopper, instead of trying to build a more personalized and emotional bond,” Roberts explained.

According to the TCC study, location is the key driver of grocery store selection in the U.K.

“Simply put, it is generally difficult to convince a shopper to travel past one retailer to get to another,” the report says. “For this to happen, the nearest store needs to be sufficiently bad, or the alternative store needs to be sufficiently compelling (usually in terms of quality, experience or price), for the shopper to sacrifice their time and forsake geographic convenience. Habit is another fundamental driver of store selection. Indeed, ‘I always shop there’ is the third main reason that shoppers cite for their choice of retailer. This habit, or put another way, inertia is often very hard to destabilize.”

For the grocery sector, the key drivers are convenience (‘easy to get to’), proximity (‘close to me’), range (‘a good selection of food products’), habit, low everyday prices, and promotions.

In terms of specific loyalty card mechanics, the most popular aspects of loyalty schemes are described by shoppers as points that are redeemable against future shopping trips, exclusive promotions, member benefits like free coffee, and fuel discounts.

U.K. shoppers are much less enthusiastic about loyalty cards compared to their U.S. counterparts.

“But, it is worth remembering that many U.S. retailers make loyalty card usage a precondition for receiving special offers and a large number of U.S. supermarkets also tie their loyalty cards to gasoline discount programs,” the report notes.

In an era with an abundance of choices for shoppers, “it has never been more vital that retailers go above and beyond to deliver genuine moments of interaction – be that a ‘welcome’ or a ‘thank you’ – that help foster an emotional bond between themselves and their shoppers,” the report says. “It is always worth remembering that the bulk of human decision-making is powered by emotional, rather than rational, thought processes and those retailers that learn to address the hearts of their shoppers, as well as their minds, will be the businesses set to thrive in an increasingly cut-throat market.”

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