Only 1 in 3 Grocers Are Upgrading Their Loyalty Programs

PYMNTS data shows most grocers are missing the opportunity to secure shoppers’ loyalty with rewards.

The Context

Now, with sky-high food inflation and a prevailing sense of anxiety among grocery shoppers, deals and discounts can be key to driving consumer spending.

For instance, multinational grocery giant Ahold Delhaize, parent of a range of well-known supermarket chains, shared how its rewards personalization efforts are driving record-high digital engagement on a call with analysts Wednesday (Feb. 15), discussing the company’s fourth-quarter 2022 financial results.

“U.S. brand sales from loyalty programs and online orders reached an all-time high,” Chief Financial Officer Natalie Knight said. “This has been a trend we saw building throughout the year as our consistent investment in growing these capabilities again delivered incremental sales gains. Our brands’ direct customer engagement activities are a good example, now reaching around 30 million households and delivering over 10 billion personalized offers annually.”

Plus, in an interview with PYMNTS, Barbara Connors, vice president of commercial insights at 84.51°, the marketing insights subsidiary of grocery giant Kroger, shared how increasing cost-sensitivity drives demand for special offers, and this in turn affects purchasing habits.

“We know that very price sensitive customers are those that have lower engagement with eCommerce and are lower on the adoption curve, and those are the customers that are most likely to go into a store,” Connors said. “And one of the reasons is because they are looking for sales, deals and coupons, and it is easier for them to do that in-store than online.”

By the Numbers

Research from PYMNTS’ new study “Retail Payments Innovation Year in Review: How Real-Time Payments Drive the in-Store Customer Journey,” created in collaboration with ACI Worldwide, which drew from a survey of 300 U.S. and U.K. retailers, revealed that only 32% of grocers are innovating their loyalty programs.

That’s despite previous research showing that 74% of grocers think that consumers would be very or extremely likely to switch merchants if digital coupons and rewards were not provided.