Loyalty reimagined the future of shopper loyalty in a reconfigured retail landscape - TCC Global
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loyalty reimagined
the future of shopper
loyalty in a reconfigured
retail landscape
introduction
At tcc global, we pride ourselves on collaborating with our clients to Hypermarkets & supermarkets dominate the main grocery
create insight-based loyalty and marketing campaigns. Our campaigns shopping trip
are based on insights into megatrends; consumers; categories; shoppers;
Globally, although there is a degree of trip fragmentation, the ‘main’
and retailers. By combining these insights, we can create campaigns and
grocery shop is still a very real phenomenon. Overall, it is hypermarkets and
campaign platforms that are tailor-made for individual clients.
supermarkets that dominate in this core shopper mission – accounting for 72%
As part of these endeavours, we have recently completed the latest of main shopping trips between them. The only exceptions to this rule on a
iteration of the tcc global loyalty study, a piece of shopper research and national basis are Germany and Poland (where discount stores loom large in
analysis that seeks to gauge the attitudes and behaviours of shoppers the retail landscape) and Russia (where the market is dominated by the smaller,
around the world and pull out some actionable implications and convenience chains such as Magnit and Dixy).
recommendations for retailers.
This latest loyalty study has brought together responses from over 15,000
main shop - Big stock-up shopping trips are still relatively more
popular in north-west European markets like Italy
shoppers in 15 countries around the world, from regions including North global: and France where hypermarkets are a significant
America, Latin America, Europe, Africa, Asia and Australasia. channel, while in countries such as Taiwan and
Russia – which have a plethora of smaller store
By assimilating the research, we are able to identify some key challenges
concepts and convenience retailers, smaller and
and opportunities for all retailers globally, as well as calling out
more frequent shopping trips are relatively more
noteworthy similarities and disparities across different countries. Drilling
important than the global average.
down deeper into the data also enables us to gain insight into specific
hyper
retailers in individual markets. If you would like us to share the insights
29%
into your market or your business – please get in touch.
c&c / club convenience super discounter
2% 9% 43% 16%
As we’ve already noted, we have seen a slight fragmentation of shopping trips, An era of store proliferation
with the bigger stock-up shop increasingly being complemented by top-up
While some countries – perhaps most notably the United Kingdom – have
shops, and food-for-later and food-for-now missions. There is perhaps little
virtually reached saturation point in channels such as supermarkets and
surprise in terms of the correlation between shopper mission and store format,
hypermarkets with significant growth now coming only from discounters and
with hypermarkets over-indexing on bigger stock-up trips; supermarkets and
c-stores, there is still robust growth in store numbers in many other markets
discount stores performing strongly for top-up shops; convenience stores
around the world. The ongoing expansion of discounters and convenience
overachieving in trips for urgent or instant consumption; and cash & carries /
retailers (both in the shape of specialists like 7-Eleven and Couche-Tard as well
warehouse clubs predominantly servicing the main shop.
as the convenience divisions of broader food retail groups like Carrefour and
It is worth remembering, though, that all channels still host a broad variety of Tesco) has seen the level of choice available to the world’s grocery shoppers
shopper missions. For example, plenty of main shopping trips still occur in the reach unprecedented levels.
convenience channel, reflecting the dominance of smaller stores in Russia and On average, grocery shoppers across the world have 5.5 easily reachable
the saturation of c-stores in markets like Taiwan. grocery stores available to them, with each shopper regularly using 3.3
different stores. With greater choice comes greater promiscuity or, put
another way, less loyalty.
shopping mission by channel:
store availability:
average number of stores
total hyper super convenience discounter c&c / club
easily very easily shop in
big stockup shop 31% 39% 30% 14% 31% 47% reachable
reachable reachable regularly
small top-up shop 48% 46% 51% 39% 53% 41%
quick shop for 15% 11% 15% 29% 12% 10%
6.3 5.5 2.8 3.3
urgent need
shop for instant need 5% 3% 4% 18% 4% 1% In countries like the UK and USA, where the number of reachable stores has
reached 10.7 and 10.9 respectively, we can see that shoppers avail themselves
of 4.4 or 4.7 stores on a regular basis: shoppers are clearly very happy to
spread their spend across several stores when the choice is available to them.Store choice driven largely by functional considerations Shopper ambivalence
This increasing array of choice and shoppers’ willingness to shop across a The fact that store choice has increased - and that store choice is
significant number of the options available to them reflects the fact that they predominantly driven by functional hygiene factors – has created a relationship
are primarily driven by functional and transactional factors. Indeed, nine of the between shoppers and their main grocery store that might be described most
ten global drivers for store choice are functional (proximity, ease of access, charitably as ambivalence.
value and promotions, habit, simple instore experience, on-shelf availability,
opening hours and low prices), while just one (friendly staff) has any sort of
“
emotional dimension. As we’ll discuss later, it is the more emotional aspects of
shopping that can create meaningful loyalty – so the current status quo must
create a degree of concern for retailers.
it would not matter to me if my “
top 10 drivers of banner choice: usual grocery store closed. I
would just shop somewhere else
54%
close
48%
easy to
41%
good
38%
good value
38%
a store
36%
to me get to selection offers / I always
of food promotions shop at
products Globally, store loyalty is fairly weak, with nearly 40% of shoppers agreeing
with the statement that “it would not matter to me if my usual grocery store
closed, I would just shop somewhere else.” This should be a concern for all
food retailers around the world, but perhaps most notably in markets such as
Russia and China and retailers active in the convenience sector where shopper
ambivalence reaches worrying levels.
36% 36% 34% 32% 31%
an easy / well stocked convenient low everyday friendly &
simple shelves opening hours prices knowledgeable
shopping staff
experience“ I travel further to ensure that I
“ Highest advocacy levels for C&C and discounters
It is not new news in the slightest when we say that the likes of Aldi and Lidl
can shop in the store of my choice
continue to exert significant disruption in markets around the world, taking
market share from incumbent supermarkets in countries as diverse as the USA,
48%
Australia and the UK as they continue with their robust store opening programmes.
It’s not purely about physical expansion though: the discounters are successfully
converting new shoppers into advocates and loyal customers. As the chart
indicates, discounters achieve the second highest Net Promoter Scores in
grocery retailing, in stark contrast to the more traditional channels of
This ambivalence is mirrored by the amount of effort that shoppers are convenience, hypermarkets and superstores.
prepared to make in terms of getting to their main grocery stores. Over half of An obvious reaction might be to attribute the high levels of advocacy that
all shoppers do not go out of their way to reach their store of their choice, with discounters generate to the fact that they offer low prices. While it is the case
Germany, Australia and France have the shoppers that typically put in the least that low prices are central to the appeal of discounters, it is worth pointing out
effort in reaching their preferred store with proximity being the overwhelming that our research indicates that shoppers recommend the discounters based on
consideration. In channel terms, the least effort is exhibited by discount other attributes too, namely strong private label ranges, the quality fresh produce
shoppers, while warehouse clubs and cash & carries see their loyal shoppers on offer and the discounters’ non-food selections.
expend additional energy to reach the outlet of choice.
Alongside location, prices are another key driver of choice, with nearly 70% likelihood to recommend formats:
of global shoppers agreeing with the statement “I go where I can find the
cheapest prices.” The most price-driven shoppers are those in Brazil, Portugal
NPS: +66 +55 +46 +45 +31
and Taiwan, while the statement applies – unsurprisingly – to those shoppers
most active in the discount and C&C channels.
promoters
47%
“
63% 55% 55%
72%
I go where I can find
“ neutral
22% 29% 35% 35% 38%
the cheapest prices detractors 6% 8% 9% 12% 16%
68% c&c / club discounter hyper super convenienceIt might surprise some that cash & carry / warehouse clubs do so well on NPS, When we assess these loyalty drivers by channel there are some channel-
but this is largely a function of two things: the strong affection that shoppers specific strengths and weaknesses for attributes that drive loyalty. For
around the world have for warehouse club operators like Costco and, secondly, instore experience, it is hypermarkets and supermarkets that fare best, with
the surging popularity of cash & carry chains like Atacadão in Brazil. With bulk discounters and c-stores quite some way behind. In terms of the retailer caring
value ranges, low prices and the fact they are open to all shoppers, these about the customer, it is again the larger store formats that triumph, although
Brazilian chains are growing strongly and prompting retailers like Carrefour c-stores outstrip discounters here by quite some margin.
to export the concept to other countries like Spain and Romania.
As we’ve already seen, the drivers of store choice are largely functional
issues such as prices, availability and location, and a similar logic applies to
loyalty drivers by channel:
the drivers of store loyalty. Looking at what drives banner loyalty in general,
shoppers choose to frequent retailers that offer low prices and are convenient,
convenience discounter super hyper
even if they are lacking on other aspects. Customer care and rewarding loyalty
are currently less important to shoppers around the world. experience
loyalty drivers: cares
low price 7%
low price
mainly due to
6%
convenience
rewards
experience 3%
loyalty
cares -8%
mainly due to
rewards convenience
-9%
loyalty
-0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2 0.25Low prices as a loyalty driver is something in which discounters excel, with
% of shoppers switched banner
hypermarkets coming a distant second. Hypermarkets and supermarkets, many
of whom offer loyalty cards and operate loyalty campaigns are perceived very in the past 12 months:
13%
highly in another main loyalty driver – offering some acknowledgement for the
loyalty demonstrated to them by shoppers.
For us, the implications here are clear. The supermarkets and hypermarkets
can do little to correct the situation that cause them to score poorly on price RUSSIA ITALY BRAZIL
global 22% 16% 16%
and location – it is virtually impossible to defeat discounters on price and
there is little they can do about the convenience of their store locations.
Instead mainstream grocery retailers should seek to build on their strengths
rather than embark on a race to the bottom elsewhere. By investing in instore
PORTUGAL SOUTH
POLAND
experience; by embarking on more initiatives that demonstrate that they care AFRICA
as a business; and by seeking to reward loyal shoppers, the hypermarket and
supermarket operators can create a differentiated proposition that makes their
16% 15% 14%
disadvantages in price and physical convenience lesser issues. On the flipside,
it seems that discounters and c-store operators should look to improve their
instore experience to bolster their existing strengths. In channel terms, supermarkets are the largest overall benefactors of switching,
although discounters have also seen a significant gain over the last 12
Switching continues unabated months. Given that there are more than four times as many supermarkets than
With the growth of store choice and the ambivalence exhibited by shoppers discounters across the 15 analysed markets, to see discounters acquiring so
towards retailers, it should come as little surprise that switching between many new main shoppers is impressive and an indication of their low price
retailers continues to be an issue. 13% of global grocery shoppers have strategy (and improving proposition) being in line with consumer expectations.
switched their main retailer over the past 12 months, with the highest rates In terms of country and retailer impact, discounters have typically been
being seen in Russia (22%), Portugal (15%) and Brazil (16%). the main winners in terms of attracting new main shoppers, with strong
benefactors including Aldi in the UK, Lidl in Portugal and Penny in Germany.
Non-discount retailers that have seen strong numbers of new shoppers include
Carrefour in Poland and Russia’s Perekrestok.retailer gaining most new main shoppers What of loyalty cards?
The world ‘loyalty’ in retail is often synonymous with the distribution of
in past year by market: millions of small plastic rectangles to a retailer’s shopper base. Loyalty cards
can absolutely be an effective way of creating a thread of loyalty between
retailer and shopper, but it seems increasingly clear that they are losing a
degree of efficacy in this regard.
The levels of data and insight that can be generated through loyalty card
RUSSIA GERMANY UK PORTUGAL POLAND schemes are significant and can create real competitive advantage in terms of
36% 29% 27% 25% 25% merchandising, promotions and communications. Our 2018 loyalty study data
indicates, however, that – from a shopper perspective – there is a degree of
fatigue setting in.
On average, global grocery shoppers hold four loyalty cards but only use two,
with shoppers in Brazil, France in the UK most guilty of sitting on a few unused
CZECH loyalty cards.
ITALY BRAZIL SPAIN REPUBLIC AUSTRALIA
23% 20% 19% 19% 17%
overall, average number of:
SOUTH
FRANCE
CHINA CHINA
3.8 2.1
AFRICA TAIWAN SHANGHAI BEIJING
loyalty loyalty
17% 16% 10% 8% 8%
cards cards
owned owned
and usedThe overriding sentiment is that, while loyalty cards are fine in their own right,
they are no longer as effective as they used to be in generating any meaningful
sense of loyalty. In fact, seven in ten shoppers globally wishes to see loyalty
rewards that go beyond the traditional loyalty card.
“ If the loyalty card was no
longer available, I would stop
“
shopping there
5%
“ I want to feel rewarded for
my loyalty by more than just
“ agree
another loyalty card
70%
This is reflected in our data which shows that the cessation of loyalty card
schemes would barely impact shopper behaviour: just 5% of shoppers would
switch to another retailer if their current store withdrew their loyalty card scheme.
What shoppers really want
In addition to all of the basic hygiene factors and functional attributes that
With so many shoppers sitting on unused loyalty cards (and accumulated shoppers are looking for from their retailers, shoppers are also seeking other
points) and with many retailers scaling back the benefits of loyalty scheme qualities from businesses to which they devote a lot of their time and money –
membership (while at the same time glancing nervously at stacks of namely a degree of inspiration, education and guidance as they go about their
unredeemed points), it is becoming evident that loyalty cards are not quite everyday lives.
the potential game-changer that they used to be. Shoppers around the world are mindful that there are improvements that
could be made in terms of health & wellness, home cooking, family-time and
community. There are very real opportunities for retailers to play a greater
role here: moving from being a mere provider of goods and services towards
becoming a partner organisation that can enrich the lives of their customers.what shoppers want retailers to offer: When we asked shoppers for the top ways that retailers could help them
lead better lives, there were five leading responses:
• Inspiring everyday simple healthy meals & cooking from scratch
42% 35%
• Offering simple solutions to make life easier in the kitchen
• Encouraging healthier eating habits among kids
inspiring everyday simple healthy offering simple solutions to • Helping you spend quality time with family and friends
meals, cooking from scratch make life easier in the kitchen • Providing fresh and tasty ways to explore foreign cuisine, learning
new skills along the way
27% 22%
encouraging healthier eating providing fresh and tasty ways to
habits among kids explore foreign cuisine, learning
new skills along the way
23%
helping you spend quality time
with family and friendswinning retailers
Cares: M&S (UK) & Waitrose (UK)
These two leading premium retailers in the UK sit alongside Perekrestok
(RU), Costco (TW) and Trader Joe’s (US) as retailers that are perceived as
caring about their customers. Initiatives such as free coffee for loyalty
cardholders have no doubt contributed to Waitrose’s success in this regard,
as have the various community and charity initiatives that it undertakes
in each store. Likewise, M&S’ rigorous endeavours in areas like clothes
recycling and other environmental concerns have stood it in good stead.
Rewards loyalty: Kroger (US) & Tesco (UK)
Alongside operators like Tesco (CZ), Esselunga (IT) and Sainsbury’s (UK),
Kroger (US) and Tesco (UK) are recognised for rewarding shoppers for
their loyalty. It is noteworthy that both businesses place a huge priority
Value: Aldi (UK) & Lidl (FR) on the data and analytics behind their loyalty card programmes. Tesco
has also recently introduced innovations like enhanced mobile payments
It’s no great surprise to see these two retailers lead the way in terms of value,
and contactless loyalty cards to boost its loyalty infrastructure, while
with other well-regarded retailers including Poundland (UK), Aldi (FR), Lidl (UK)
Kroger is using data from different platforms to improve promotions and
and Shoprite (ZA). It’s not just low prices that see these retailers score highly
communications with its shoppers across all touchpoints – including instore.
on value perceptions. Both retailers have made great progress on their ranges,
marketing and the look and feel of their stores while Lidl has also unveiled a
number of loyalty campaigns in the French market. Convenience: IGA (AU) & Co-op (UK)
Alongside other retailers also perceived well for convenience, including
China’s Lianhua and the Polish chains Stokrotka and Zabka, Australia’s IGA
Experience: M&S (UK) & Waitrose (UK)
and the UK’s Co-op lead the way in the convenience field. This doesn’t just
While competitive pressures are being heaped on these two retailers, they
reflect extensive store networks (although that helps!): IGA is a very eager
are up there with Woolworths (ZA), Globus (CZ) and Trader Joe’s (US) for having
participant in community and healthy eating initiatives, while the Co-op
a glowing reputation for instore experience. Both retailers still prioritise customer
in the UK has been further enhancing the convenience of its proposition
service and both are also adding in new instore features such as sushi bars to
though new payment technologies and improvements to its assortment
further the accentuate the shopper journey instore.
and merchandising.conclusions contacts
• Whilst hypermarkets and supermarkets still dominate the global grocery This research can be conducted for your market, assessing shopper attitudes
market, the disruptive march of the discounters continues across many you and your competitors, and delivered to you in person by tcc global. If this
markets is of interest, please do not hesitate to contact:
• Store loyalty is weak due to the vast amount of choices available to
Bryan Roberts
shoppers, making convenience the number one driver of store choice.
Group Insights Director
Low prices also remain important – and discounters are virtually
bryan.roberts@tccglobal.com
unbeatable here
+44 (0) 7989 513 558
• This, combined with increasingly strong competition on non-transactional
aspects of grocery shopping results in discounters enjoying a far higher Footnote on research & methodology:
NPS score than that of mainstream grocery formats like hypermarkets Shopper research conducted via 15,165 online interviews with main grocery
and supermarkets shoppers in 15 markets in March 2018
• Whilst hypermarket and supermarket formats are most strongly associated
with ‘rewarding loyalty’, this is largely driven by loyalty cards which are no
longer effective in engendering genuine loyalty - only 5% of users would
stop shopping in a store if it withdrew its loyalty card
• As such, current loyalty reward schemes are not enough to successfully
differentiate mainstream retailers from discounters as shoppers don’t
necessarily see the value in them compared to the offer of lower prices
from discounters
• There is however still some appetite for more premium shopping
experiences above and beyond low price, with shoppers in many markets
preferring to shop in more upmarket banners, leaving the mid-tier
retailers squeezed from both sides
• To combat this, shoppers are typically open to loyalty campaigns which
have more meaningful loyalty rewards, particularly those which inspire
healthy home cooking and family activitiesLOYALTY REIMAGINED WWW.TCCGLOBAL.COM
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