I’ve heard it said many times by more than one supermarket retailer that they believe they have a very loyal shopper following. Many of these same retailers are shocked when they discover that they are only supplying about half of these shopper’s grocery needs. In fact, I have tracked the “wallet share” of several retailers with strong “loyalty” programs only to watch a precipitous drop in their share of shopper requirements over the past five years, especially among their very best shoppers.
Yes, despite the best efforts of some very good retailers, they are losing their grip on their best shoppers. Certainly some this attrition is unavoidable. New competitors from other retailer channels are taking a bite out of the supermarket pie. On-line retailers, Amazon for sure, are now selling shelf stable center store products on-line to a growing audience. Big boxes and specialty retailers are taking significant share on both the “price” and the “fresh” pieces of the business. Finally, with the lingering recessionary environment, shoppers have drastically expanded their “consideration set” for all their sources of grocery items as they have adapted a renewed “cost-containment” mentality.
Yet, growing the business for many supermarket chains is still possible, all the bleak aforementioned realities withstanding. However, to be successful at winning back lost shopper share requires a plan that should include the following steps;
- The first step in operation “wallet recovery” is understanding where the leaks are occurring and how big they actually are. Both primary and secondary research will be needed in this step, but basic stuff, nothing terribly sophisticated needed to create this learning.
- The second step is developing a strategy to recover this lost business, given the limited resources you have to do so. This means not chasing every shopper, every dollar in every category. It requires customer data, analysis and actionable strategies.
- Thirdly, the retailer must understand that winning back their shoppers share of wallet is an ongoing, never-ending process that must optimize limited resources and involve merchandising, marketing, merchandising and even human resources. Consequently, great focus and commitment is required.
Customer loyalty is not dead, but it has changed. It more elusive and less sustainable. Successful loyalty marketing now requires new strategies and a focused, committed approach. More to come on this topic.