Where grocery loyalty falls short, and how to fix it

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By: Wise Marketer Staff |

Posted on November 15, 2007

Consumers in the US have revealed their widespread dissatisfaction with their primary grocery provider, according to new research from IBM which found that 73% feel either antagonistic toward - or at least have no loyalty toward - their local supermarket.

The study found that this dissatisfaction is creating legions of disloyal customers who are sharing their negative experiences with others, and who are actively shopping around for better alternatives.

Impact on consumer choices
This wave of consumer dissatisfaction, IBM reports, is directly impacting the choices that many consumers make from day to day. Only 27% of grocery customers reported acting as "advocates" for their favoured store, (i.e. recommending their grocer to others, buying more from that grocer, and not defecting to competitors). However, these advocates tend to place a very high value on quality, selection, employees, product availability and the growing business aspect of corporate social responsibility (CSR).

According to the survey, almost half (46%) of consumers were identified as "antagonists". These are customers who have a poor attitude toward their regular grocer, and who may be actively causing damage to the grocer's reputation through highly vocal displeasure. These customers were found to place a high value on the same attributes that advocates do, but they feel their primary grocer falls short in these aspects.

Price wars to blame?
"The customer loyalty card efforts across the grocery industry have fallen short of their goals as grocers sacrifice customer experience to focus on lower prices," explained Fred Balboni, global retail industry leader for IBM Global Business Services. "Building differentiation with today's savvy and vocal consumer requires a whole new approach for businesses. Grocers that emphasize using deep customer insights throughout their business operations, applying them in a personalised and tailored way, will tend to build strong advocates and loyal customers."

The study, entitled 'Why Advocacy Matters to Grocers', analysed the factors driving customer advocacy and recommends that grocers should consider placing a greater emphasis on understanding and catering to their most loyal customers instead of cutting prices indiscriminately.

IBM's analysis points to specialty stores' focus on customer service and product selection, as well as quality, giving them the edge over other grocers. The survey found that 46% of customers who shop at these stores act as advocates.

"Specialty stores tend to fine tune their operations to the specific needs of the local community, offer more local assortments, and are generally better equipped to develop truly personal relationships," concluded Balboni. As part of its ongoing consumer research programme, IBM has made the full research report available to customers via its web site - click here.

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