Grocers should go online to generate new business
Many retailers use loyalty card data to nurture their existing customers, but what about the other customers - the prospects?
The contracting economy and events of September 11th are leading more and more consumers to eat at home, which translates into higher sales for the retail grocery industry. But this situation won't last for ever, so to sustain the upswing, retail grocers should look at all possible ways of consolidating this extra trade.
According to Sean Kellum, director, Retail Data Strategies Group, Accudata America, Inc., "For years, supermarkets have used price to attract customers. But today, it takes more than `weekly specials' to win shopper loyalty. Grocers need to connect with consumers by appealing to things they care about--like their families and their lifestyle."
What about the prospects? While many supermarkets use the data from their loyalty programmes to keep existing customers loyal and to target special offers at them, Kellum believes that it shouldn't end there: he says that it's just as important that they know the preferences of prospective customers and not simply of their own frequent shoppers.
This can be achieved by watching population segments. According to Progressive Grocer's 68th Annual Report of the Grocery Industry, two segments to watch are mature baby boomers (by 2005, those aged 50-59 will control a quarter of all household income in the US) and the pre-teens (75 million of them spend some US$35 billion on food each year).
The increasing demand for organic, natural and ethnic foods also presents an opportunity which should be seized. Kellum says that these trends are being reflected on grocery shelves, but not necessarily in marketing strategies. He suggests that the dot-com collapse may be deterring grocers from using email marketing, but points out that many of their best customers are online and could be redeeming online coupons.
High response rates According to Kellum, Accudata has discovered that businesses can generate response rates as high as 14% by using double or triple opt-in addresses and ensuring that the list hasn't been overused by the compiler. He expects a growing number of grocers of all sizes to conduct targeted direct mail campaigns in 2002. The larger operators are already interested but the independents still seem to be focusing on circulars, in-store promotions and direct mail.
Detailed profiles Kellum says that to get closer to their best customers, retailers will need detailed consumer profiles. These can be obtained by creating what he calls a "penetration profile", which involves analysing a retailer's in-house data and highlighting trends in geodemographic, psychographic and purchasing characteristics. If retailers don't already have this information it can be attached to their customer records. They could then, for example, target prospective customers who like Mexican foods with incentives like coupons, a weekly meal planner, or a Mexican food discount night.
Even on a laptop But how many grocers today are equipped to use techniques like this? Kellum says that innovative technologies will come to the rescue: "Supermarkets will move into extranet solutions, which manipulate customer and prospect databases in ways that make customized marketing campaigns possible. These systems allow marketers to Web-enable database querying and fulfilment from a mainframe to a PC environment. Instead of relying on someone from an information technology department or an outside service bureau, marketers can access data from their laptops easily and quickly, shortening their campaign schedules."