Two years ago “the rise of the discounters” was the phrase on everyone’s lips. Loyalty schemes were seemingly fast becoming outmoded.
That was two years ago - where are we now? Aldi and Lidl are still prospering and the media’s trumpeting of discounter brands is unabated. However, where we’ve seen a real shift is in how the more established grocers are moving towards giving a more personalised experience.
If the past two years have been defined by a race to the lowest prices, 2016 will be defined by brands’ ability to cater successfully to their customers’ needs.
Such was Selfridges’ success when it let shoppers customise Nutella jars back in 2014, it’s been brought back. This is a microcosm of a much bigger trend.
Last year, we saw Waitrose launch its myWaitrose card, allowing customers to pick their own offers. Sainsbury’s has also changed the way customers earn Nectar points, focusing on a more personalised experience. M&S launched its own loyalty scheme, Sparks, which gives members individually tailored offers.
Loyalty schemes are no longer a simple points and prizes trade-off between customer and retailer. They are now a grocer’s most powerful tool in understanding individual customers.
In 2016, what will give brands the edge is their ability to turn customer data into a high-quality customer experience. This means communications appealing to customers’ individual needs, preferences and habits. It means the online shopping experience being intuitive. And it means ensuring rewards are relevant to the customer’s lifestyle.
The idea of visiting the local grocer who knew your shopping list, not to mention your preference for ripe bananas, may seem like history. But if brands use loyalty programmes and data analysis correctly, it could define the future of grocery retailing.
Let’s be clear. Discounters are here to stay and price wars will remain. But Lidl’s recent ‘Smarter Shopper’ loyalty trial suggests even the discounters are starting to recognise the need to provide a personal touch. The race to the bottom on price is slowing and building personal relationships is taking centre stage.
Jan-Pieter Lips is president for the EMEA region at Aimia