In the face of rising food costs, grocers are challenged to find ways to assuage customers’ anxieties without overly narrowing their already razor-thin margins. To do this, many are leveraging their data about consumers to get as targeted as possible in their promotional efforts, ensuring that price-saving offers come with a commensurate boost in consumer loyalty.
Vivek Sankaran, CEO of United States grocery giant Albertsons Companies, parent company of its self-titled chains, Safeway, Jewel-Osco and many others, explained to analysts on a call Tuesday (July 26) discussing the company’s first-quarter fiscal year 2022 earnings results, how these efforts are helping the grocer gain market share.
“Everything we’re doing is driving stickiness,” Sankaran said. “When we get a customer, we want to engage them, keep them, get them to spend more with us, and what’s helping us do that is the digital engagement that they have in the eCommerce business that continues to grow. Once we get them, we’re able to personalize and keep them.”
The company’s digital ecosystems include its free Albertsons for U loyalty program, offering points-per-dollar rewards, discounts on gas and other deals and offers, as well as its paid FreshPass subscription program, which offers free delivery, double the points on certain items and other perks.
Sankaran noted that these digital platforms enable the company to be more efficient in its promotional efforts. He said across the industry, grocers are “better at the use of technology” and “much more digitally engaged” when it comes to deals and offers.
“Yes, we are promoting, but we’re promoting very deliberately in an extremely targeted fashion, giving people the promotions that matter for them,” he said. “And you will continue to see that [across the industry] in my opinion as we go forward.”
The Consumer Price Index for All Urban Consumers (CPI-U), reported by the U.S. Bureau of Labor Statistics (BLS) earlier this month revealed that food prices rose 10.4% year over year and food at home (i.e., grocery) prices rose 12%, leaving many consumers concerned about their food spending.
In this inflationary environment, as grocers look to woo customers away from higher-cost restaurant options and away from other grocery brands, many are turning to their loyalty and membership programs to drive affinity.
Earlier this month, leading U.S. pure-play grocer The Kroger Co. announced that it is launching its Boost program nationwide, which, like FreshPass, offers free delivery, fuel discounts and exclusive deals on the grocer’s private-label products for a set monthly or annual fee.
Read more: Kroger Joins the Members-Only Deal Club
Membership programs can certainly drive spending. Take, for instance, the world’s largest grocery retailer, Walmart. PYMNTS’ April study, “The Benefits of Membership,” which drew from a survey of more than 2,100 U.S. consumers, found that 60% of Walmart+ subscribers had made a Walmart purchase in the previous month, while only 16% of nonmembers had done the same.
Get the study: The Benefits of Membership
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More