Grocers are increasingly concerned with the impact of the digital age on customer loyalty, as options have proliferated and made it easier for shoppers to cross over to competitors, according to a new report from Incisiv, The Food Industry Association (FMI) and Loyal Guru.
Nearly three-quarters of grocers responding to the survey (74%) said e-grocery has made shoppers less loyal, while 71% report that improving loyalty is a C-level issue. A higher percentage, 88%, felt a poor third-party experience negatively impacts shopper loyalty, while 76% said a negative web and mobile experience has the same effect.
The percentage of revenue from grocers’ loyalty programs is projected to grow from 56% in 2022 to 63% in 2025. Last year, e-grocery accounted for $128 billion in sales, 4x growth from three years ago and representing 14% of the total, up from mid-single digits.
Pandemic gains in e-grocery were substantial, but the stickiness has been coming somewhat unglued this year. Sales in the category dropped 1.2% in February and again by 7.6% in March, according to the monthly Brick Meet Click/Mercatus index, mostly driven by cost pressures on delivery and pickup services.
While both grocers and consumers expressed satisfaction with loyalty programs – 69% and 63%, respectively – those figures dropped substantially when asked about digital aspects of those programs (27% and 17%).
“One possible reason for the low satisfaction … is the lack of seamless integration with the overall shopping experience,” the companies said in the report. “For example, many shoppers may find it difficult to track and redeem their rewards online or through a mobile app. Additionally, the user interface for these digital components may not be user friendly, making it difficult for shoppers to navigate and understand their rewards.”
The number-one goal of loyalty programs in 2023 was reducing the impact of inflation on shoppers, expressed by 93% of grocers who responded to the survey. This was followed by customer acquisition (85%) and retention (77%). While not at the red-hot levels of 2022, inflation has significantly eroded consumer buying power over the past year, with many households reducing discretionary spending.
In order to improve loyalty, grocers “must also focus on improving personalization, offering high-quality product assortments and providing a seamless shopping experience to build strong relationships with their shoppers,” the companies stated in the report.