Report: ​​Most Grocers Are Dissatisfied with Digital Loyalty Components

Has digital shopping made buyers less loyal? That’s certainly what the majority of grocers believe, according to a new report conducted by Incisiv, The Food Industry Association (FMI), and Loyal Guru, a loyalty management platform.

The Shopper Loyalty in the Digital Age report highlights the importance of offering seamless omnichannel experiences as a way for grocers to foster loyalty, as well as the challenges grocers face in their efforts to digitize existing loyalty programs.

Digital grocery sales are 4x higher today than they were three years ago, totalling a combined $128 billion annually. That rapid growth has reshaped shopper behavior in the supermarket, leading more consumers to look for features like same-day delivery and curbside pickups when deciding where to do their weekly shopping. It’s causing consumers to put convenience ahead of loyalty, and that’s creating concern among both smaller grocers and larger supermarket chains.

“Digital shopping has given shoppers greater transparency, convenience, and choice. It’s made it easy for them to try other brands — grocers or third-party apps. They can change loyalties with a flick of their finger and may choose to use different brands based on their shopping goals,” says Gaurav Pant, chief insights officer at Incisiv. “A shopper may decide where to shop based on product availability, speed of pick-up, and prices — all the things they now have visibility into.”

According to Incisiv’s report, 88% percent of grocers say a poor third-party experience negatively impacts shopper loyalty, and 76% of grocers believe a poor web and mobile experience negatively impacts shopper loyalty. 

Improving shopper loyalty has become a critical aspect for grocery retailers in recent years. Seventy-one percent of grocers now say that improving shopper loyalty is a C-level priority. 

Although the majority of shoppers say they’re satisfied with grocery loyalty programs as they stand, the same isn’t true for the digital components within most programs. Just 17% of shoppers say they’re satisfied with the digital aspects of their grocer’s loyalty program. Incisiv’s survey shows that grocers feel similarly. Sixty-nine percent are satisfied with their loyalty programs, but just 27% are satisfied with their programs’ digital components.

The biggest complaints? For starters, most supermarket loyalty programs make it difficult to track and redeem rewards online. The user interface in branded store apps can be challenging to navigate, as well. A poor web or mobile experience contributes to low satisfaction with the digital aspects of grocery loyalty programs in general. 

Grocers Prioritizing Technology Infrastructure Investments

With the increasing prevalence of digital grocery sales—an area of the market that was nascent, at best, prior to the Covid-19 pandemic—it’s even more important for grocers to prioritize technology and infrastructure investments to stay ahead of the competition.

Pant suggests that grocers focus on understanding shopper profitability and incentivizing more profitable shopper behavior if they hope to keep up in today’s competitive market. He was surprised to see that the majority of grocers in Incisiv’s survey didn’t rank incentivizing more profitable shopper behavior ahead of other goals. 

“Digital shopping in grocery is unprofitable, and grocers lost about $298 million in margin last year,” Pant says. “Grocers have to figure out the key levers needed to drive the margin of digital up — curbside, relevant offers, or ease of product substitution.”

With the rise of third-party apps and platforms, Pant says grocers are increasingly competing at the top of the funnel with their partners. As a result, shopper loyalty may be transitioning from a grocery brand to an app or platform.

“Loyalty is hard to win because legacy moats like location, established behavior, or loyalty programs are losing relative importance,” Pant says. “While the execution of the basics like product availability, price, and freshness is still critical, and a table stakes driver of loyalty, execution in three other areas is fast gaining traction — product differentiation and assortment, omnichannel execution, and personalization of the customer experience.”