BJ’s Sees 43% Digital Growth With Coupon Push

BJ’s Wholesale Club is turning to digital coupons to drive engagement in the face of consumers’ rising sensitivity to price.

The warehouse club chain shared Thursday (Nov. 10) on a call with analysts discussing its third-quarter earnings results that “digitally enabled” sales rose 43% year over year, helped by the brand’s push to move coupons online.

“Five years ago, we were worried about the fact that our primary promotional product was paper coupons, and nobody loves paper coupons,” President and CEO Bob Eddy said on the call. “Now, maybe three-quarters of our promotion is done digitally. We’ve made tremendous strides both in product promotion and convenience as we’ve invested in digital, and we’ll continue to do that. The members that engage with us digitally are our best members.”

Additionally, Eddy noted that the chain has “gotten smarter about how we leverage data” to engage customers, and digital shoppers tend to yield higher baskets and more frequent purchases.

The accepted thinking across the industry is that digital coupons are essential to customer loyalty, according to data from PYMNTS’ study “Big Retail’s Innovation Mandate: Convenience and Personalization,” created in collaboration with ACI Worldwide. The report, which drew from a survey of 300 major retailers, found that 74% of grocers included thought that consumers would be very or extremely likely to switch merchants if digital coupons and rewards were not provided.

Indeed, many shoppers are seeking digital discounts. Research from PYMNTS’ study “Satisfaction in the Age of eCommerce: How Trust Helps Online Merchants Build Customer Loyalty,” created in collaboration with Riskified, which drew from a survey of more than 2,100 consumers, noted that 35% of online grocery customers reported that coupons, discounts and promotions were important to their shopping experience.

Other grocers are seeing their digital discounting efforts pay off. Netherlands-based multinational grocery retailer Ahold Delhaize told analysts earlier this month that its United States arm, ADUSA, has seen its loyalty programs bring in more than $1.5 billion in incremental sales so far this year, after customers saw more than a 50% increase in personalized offers than the previous quarter. The grocer touted roughly 80% loyalty sales penetration in the U.S.

Coupons can be especially key as consumers’ price sensitivity grows in response to rising food prices. Grocery prices are up 12% year over year, according to the latest U.S. Bureau of Labor Statistics figures, well above the inflation rate for all items, 8%. These increases are affecting consumers’ shopping behavior.

“Historically, the reasons why someone may continue to be brand loyal just may not hold anymore because people are being forced due to financial constraints to make tradeoffs that they wouldn’t want to make,”  Barbara Connors, vice president of commercial insights at 84.51°, the marketing insights subsidiary of grocery giant Kroger, told PYMNTS in an interview this month.