Key strategic insights shaping the future of grocery loyalty, where purpose, personalisation and emotional connection matter more than points and perks.
At a Glance
Changing consumer behaviour is challenging traditional approaches to loyalty. The article covers highlights of shopper insights, consumer trends and retail innovation helping leading retailers create stronger emotional connections, reward loyalty more effectively and stand out in an increasingly competitive market.
Our new report on shopper loyalty assesses the current state of play, what we can learn from outside the grocery retail industry and the future direction of travel. All in all, the current situation can best be described as a morass of homogeneity. Member-only-prices, stretch targets, earn & burn, unconvincing coalitions and diluted rewards are the hallmarks of bland, interchangeable loyalty programmes and it is rare to encounter a loyalty scheme that creates genuine differentiation or engagement.
Part of the problem is that we are – as an industry – collectively forgetting the point of loyalty programmes: loyalty schemes’ main raison d’être is to say thank you to loyal shoppers. They are there to reward loyalty, not create it!
This is linked to another common misconception: that shopper loyalty is an objective. Our contention would be that it is not an objective, but very much an outcome: a result of getting the basics of the value equation right and delivering on the fundamentals of retailing. Once this customer satisfaction creates a degree of loyalty, we then turn to loyalty programmes to acknowledge and reward it.
Sadly, this basic truth concerning loyalty programmes is being overlooked as retailers join in the glorious stampede towards the retail media goldrush. Often, the quest for data, insights and retail media infrastructure appears to be the main motive for loyalty programmes – and this is not hard to spot from a shopper perspective.
Another issue besetting loyalty programmes is the absence of any higher purpose. These loftier objectives need not be permanent, but it is worrying that loyalty programmes with more noble aspirations are very much the exception rather than the rule. We are deep in the mire of environmental and health crises but one would barely notice by glancing at most loyalty programmes. Where are the incentives for smarter choices for health and the planet? Shoppers would appreciate some nudges, both explicit and implicit.
Another key point of the report is that grocery retailers suffer from tunnel vision: too often looking at a narrow competitor set and therefore limiting the art of the possible.
We would argue that there is a lot to be learnt from any consumer-facing enterprise in sectors such as hospitality, FMCG, financial services, travel, telecommunications, utilities and non-food retailing. Echo chambers are comfortable but rarely revelatory: the grocery industry needs to foster curiosity beyond its peer group.
It’s not all doom and gloom though: While homogenous earn and burn seems to be the thin gruel that shoppers are destined for in the foreseeable future, there is a degree of innovation and differentiation within grocery loyalty that provides grounds for optimism.
Beacons of progress include:
Broadening ecosystems
Becoming more inclusive for a broader set of consumers and-shoppers including pets, younger shoppers and families.
Healthier outcomes
Retooling loyalty programmes to encourage physical activity and incentivise smarter health choices at the shelf-edge.
Restoring simplicity
Retro, maybe, but restoring ‘spend & get’ mechanics can bring clarity, immediacy and a tangible sense of accumulation and reward.
Gamification
A well-established part of a successful loyalty toolkit, gamification looks set to enter a new golden age as more retailers and FMCG brands embrace it as a means to enhanced commercial performance via higher frequency and better engagement.
Subscription renaissance
Better subscription schemes can elevate commercial outcomes.
In-store activation
Loyalty need not just exist in the digital realm. Physical manifestations can be meaningful.
The report wraps up with a roadmap for the future of loyalty in grocery retail: a six-step process to assess where retailers stand and where they can head next to deliver ‘loyalty to live for’.
Read the full report
Loyalty to live for
Discover why loyalty is evolving from points and perks to purpose, personalisation and emotional connection. Exclusive to Retail Analysis subscribers.
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