Dive Brief:
- Kroger took four of the top five spots in a report ranking grocery stores based on customer loyalty, according to a release from inMarket, the mobile marketing company that conducted the research. Banners earning a spot in the top five included Kroger and its King Soopers, Fry’s Food & Pharmacy, and Harris Teeter brands. Pittsburgh-based Giant Eagle rounded out the top five.
- Grocers were ranked by inMarket based on a customer loyalty score measured from January through June 2017. The technology firm used geo-location technology to measure repeat device visitation and gave each retailer a score based on visits per device. A retailer that received 10,000 visits from 4,000 devices, for instance, would receive a score of 2.5. The average score amongst retailers was 2.01.
- Higher scores indicate more repeat visits from customers. This sort of customer loyalty, inMarket notes, is more cost effective for grocers than acquiring new customers, and can result in a "healthier and more efficient" overall business.
Dive Insight:
Kroger — along with several of its banners — tops the charts in terms of having the most loyal shoppers, according to a new report from inMarket. This is good news for the nation’s top conventional supermarket chain. Retaining existing customers is certainly much cheaper than trying to attract new ones. Additionally, loyal customers — or what Kroger calls its “best customers” — typically are more lucrative than other shoppers. That is, they return to the store frequently, they spend a lot while there and they tend to shop the entire store, not just cherry pick for deals and sale items.
Give credit to Kroger’s Plus Card loyalty program and the retailer’s use of sophisticated data analytics in attracting and keeping an immensely loyal shopper base. Through its 84.51° analytics arm (formerly part of dunnhumby), the grocer applies predictive behavior modeling to segment shoppers and creates individualized experiences — including personalized promotions and tailored pricing — for its Plus Card members. The deals often are quite compelling, which keep Kroger shoppers returning again and again.
In addition, Kroger and its divisions are working hard to improve the in-store shopping experience as well. Denver-area King Soopers, for example, has been busy upgrading many of its locations with bistros and sushi bars, as well as adding non-grocery goods like apparel and toys. King Soopers earned a loyalty score that was 49% higher than the average grocery store in the inMarket study as a result.
Other initiatives Kroger has embarked on in recent years to retain its edge and grocery leadership position include investing in its mobile app, quickly scaling up its ClickList click-and-collect service, and expanding and upgrading its store brand portfolio. It has made a substantial investment in the natural and organic space with its Simple Truth brand of products.
With more grocery options available to consumers than ever — including online vendors, meal kits, and discounters Aldi and Lidl among them — retailers have a battle on their hands trying not only to attract but also retain shoppers. Research firm Magid found that half of American grocery shoppers visit three or more stores to buy food and household supplies. This translates to a fragmented shopping experience where many types of stores stand to win.
But Kroger has proven time and time again that retaining loyal customers benefits business. The retailer’s performance speaks for itself. Perhaps the best thing other grocers can do to increase customer loyalty is closely study what the country's largest supermarket chain has done.