the
best
customer
guide
Get our free weekly marketing briefings...
"They're always useful, and always brief"   :-)
Enter your email address to get started!
Falling grocery market share figures in the UK may have done little to bolster the retail sector's low spirits, but there may be light at the end of the tunnel, according to research from retail marketing experts TCC, which found that global retailers are rapidly adopting new ways of increasing shopper frequency to help drive sales, often with remarkable results. This article is copyright 2012 The Best Customer Guide.

According to figures Kantar Worldpanel, the UK's grocery market as a whole grew by 4.2% in the 12 weeks to 22 January 2012, well behind the 5.7% rate of inflation. Asda and Sainsbury's maintained market share to the same period last year, with a share of 17.5% and 16.7% respectively, while Tesco and Morrisons each saw slight declines in market share, down to 29.9% and 12.3% respectively. Some retailers reported their lowest point in almost seven years.

Against this backdrop of disappointing sales and increasingly price-savvy consumers, the grocery sector has responded with aggressive price war campaigns, from Tesco's the Big Price Drop, to Brand Match from Sainsbury's and Morrison's Price Crunch.

But could there be a more effective way to buy customer loyalty and increase basket spend? TCC's research highlighted how supermarket loyalty schemes, such as voucher collection campaigns, have become a powerful tool for building brand retention as well as winning repeat business.

Neil Saunders, managing director at retail research agency Conlumino, testifies how marketing promotions help give consumers a compelling reason to shop with one retailer over and above another store: "Schemes such as voucher collection for rewards are more effective than using price alone, if only because they are addictive and ultimately deliver something of real value to consumers."

Being quick to recognise the benefits of such schemes, Tesco is now harnessing the power of voucher promotions in the UK and Ireland. It has teamed up with TCC to launch campaigns which reward shoppers with big savings on branded cookware and glassware. The current promotions follow an earlier campaign in the UK, which had a positive impact on shopping patterns, according to Tesco's general merchandise marketing director, Kari Daniels: "We are always looking for new ways to incentivise and reward our customers and build retention. TCC worked with us to create a promotion that would appeal to our customers, and we have seen positive behavioural change from participating customers."

Tesco is tapping into a promotional technique which has already driven shopper footfall and an increase in basket spend at leading international supermarkets and convenience stores, as the following case studies demonstrate:

  1. Case Study: Eroski (Spain)
    Eroski, Spain's third largest retailer with over 1,400 stores, has deployed customer marketing campaigns to grow market share and sales of fresh foods in particular. In one 16-week programme, Eroski gave shoppers in 585 supermarkets the opportunity to collect a free three-piece Royal Doulton dinnerware set by collecting bonus tokens. Shoppers were given a token for every €10.00 spent on general shopping and for every €2.00 spent on fresh foods. The results, measured by Nielsen, showed participating stores performed better than the rest of the chain and Eroski increased market share, as a result. Further, sales of fresh foods in stores running the programme outperformed non-participating stores and the overall market.
  2. Case Study: Supervalu (US)
    In the US, Supervalu, the market's second largest supermarket chain, has driven sales at its Albertsons and Jewel-Osco stores with reward-based programmes. In the latest campaign, the retailer offered cookware as the motivating reward for shoppers at both chains. Over a 20-week period, customers were rewarded with a bonus sticker for every $10.00 spent. Both fascias invested heavily in advertising to drive awareness and shopper excitement. As a result, there were high levels of shopper participation at Albertsons and Jewel-Osco with increases in basket size and total store sales. As well as driving footfall and sales, marketing promotions can be used to create in-store theatre and drive shopper engagement by tailoring a promotion around a special event.
  3. Case Study: Rewe (Germany)
    Rewe, the second largest supermarket chain in Germany, took this route with a campaign around the FIFA World Cup 2010, for example. Rewe has been official fresh food supplier to the German national football association (DFB) since 2008 and uses the official DFB logo in its advertising and on own brand products. In the run up to the FIFA World Cup, Rewe could also use images of the German players to increase shopper frequency and basket size in order to drive turnover. The promotion, devised by TCC, featured trading cards of the players of the German national football team, which shoppers could collect over a seven-week period - one trading card for every €10.00 spent shopping. Shoppers could also purchase a collector album for €1.99 to display all 25 cards. Rewe supported the campaign with advertising across TV, radio, print media and the internet, as well as a significant package of POS. The promotion met Rewe's objectives with the retailer giving away more than 110m trading cards and selling over 1 million albums.

With voucher promotions having been proven to drive shopper frequency, win customer loyalty, and increase consumer spending, loyalty programmes clearly provide a win-win proposition for retailers. As they see their sales increase and they ultimately gain market share from competitors, the future should look a little bit brighter for the grocery sector.