Retailers and fmcg brands are bracing for difficult times. Reports of shoppers tightening purse strings in the face of food price inflation are supported by our own research showing customers are becoming thriftier and more focused on finding a bargain.
We’ve been here before. In the years following the financial crash, the drive to retain increasingly savvy, promiscuous customers caused a race to the bottom on price. Faced with similarly tough conditions, retailers will feel tempted to reprise that strategy. But it wasn’t a sustainable tactic then, and it isn’t now.
Times have changed, from the landscape to the multitude of ways technology is shaping buying behaviour. An alternative to a focus on price alone is required.
Today’s consumers want savings on time and effort, as well as money. Thanks to the rise of technology, they’re used to a seamless experience and instant gratification.
This new generation of shoppers can get takeaways from their favourite restaurant and their grocery shop, all within one hour. And now, with reports of the imminent arrival of Amazon Go, UK shoppers may soon be able to enter a store, pick up products and walk out without having to go through a checkout. Amazon has never been the cheapest, but it makes shopping a little more seamless and that is considered worth a price premium.
Convenience and utility are the new bedrocks of customer loyalty. Many brands are already realising this. Online delivery bundles and subscriptions are becoming more common, and the time customers need to spend waiting for deliveries is shortening. Convenience features high in product development criteria, while stores are better laid out to help those in a hurry.
But convenience is not a one-size-fits-all game. Each shopper has their own needs and preferences and there’s no better way for a brand to gain loyal customers than to show it understands them. There are a number of ways they can do this and this is where the value of retailer loyalty programmes comes into its own. The data garnered from such schemes can help retailers develop a rounded picture of each consumer’s wants, habits and tastes.
By combining a seamless in-store and online journey with personalised aspects, businesses can provide customer experience to prove their worth. Convenient click & collect stations help retailers fit into shoppers’ routines, while saved shopping lists and suggested products based on frequently purchased items add that personalised touch.
This can all be supplemented with personalised rewards and offers that are not just relevant to the customer’s preferences, but also presented at a time and place that suits them. Real-time offers given to customers via their phones while they’re in-store, or rewards for their weekly staples, are just some of the options.
Utility, frugality and loyalty aren’t mutually exclusive. Whether it is providing personalised offers and rewards on the products that matter, or overcoming the challenge of time-poor shoppers, retailers need to prove their worth. Only this way can they remain relevant.
James Moir is MD at Nectar