Grocery Shoppers Spread Dollars Across Multiple Channels

IRI report suggests that retailers must move current customers up the loyalty ladder to drive growth.

September 29, 2016

CHICAGO – Consumers’ grocery shopping patterns are quickly evolving as just-in-time shopping is becoming the norm. Since there are more places to shop, and more products to choose from than ever before, IRI is taking a closer look at how retailers can find true organic growth by maximizing the value of their current shoppers in today’s fragmented marketplace in its Times & Trends Report, The Omnichannel Journey: Translating Big Data into a Prescription for Growth.

Quick trips, the “I need it now” grocery excursions, account for two-thirds of shopping visits and one-third of grocery expenditures. However, these trips are not made at one store or even one channel. IRI suggests that there is a major shift in how consumers are approaching grocery shopping, because they are spreading their money across more channels and formats as they shop to fulfill their needs.

“Retailers are grappling to not only understand consumers’ varied shopping patterns, but also capture shares of their increasingly fragmented shopping trips,” said Susan Viamari, vice president of thought leadership for IRI. “Retailers really need a clear 360-degree view of shopper spending to grow. This perspective will help them know what their key and target shoppers are looking for, so they can engage the shopper where, when and how it matters most to them. Those retailers that can personalize the shopping experience move their customers up the loyalty ladder, increasing the lifetime value of those customers and supporting growth along the way.”

Industry experts estimate that it costs anywhere from five to 25 times more to acquire a new customer than it does to retain an old one. With this in mind, IRI encourages retailers to follow four steps to maximize the value of each and every one of those customers and capture share:

  1. Reward current customers
  2. Grow current customers
  3. Activate new shoppers
  4. Reactivate customers that have lapsed.

Since attracting new customers is expensive, the key to success for retailers is to get the most out of their current customers, rather than just focusing on attracting new customers, to minimize costs. To move customers up the loyalty ladder and also acquire new customers, retailers need to shift from the standard category management perspective to a customer management perspective, notes IRI.

The report also states that personalization will be the crux of future retail success. This does not mean retailers should abandon mass-marketing programs. Rather, the future will be about supplementing mass efforts with targeted programs aimed at deepening a customer’s relationship with a retailer. Getting this right means that retailers need to know their customers inside-out, so they have the right marketing programs, the right products and assortments with the right prices, and marketing messages aimed at positively influencing customer loyalty and driving activation.

“The path to purchase has become a maze of twists and turns, with thousands of points of interaction along the way,” Viamari added. “Retailers need to harness the vast sea of big data around shopper attitudes and behaviors and bring it together in integrated and real-time fashion. Only then will they understand what is moving the needle today, and predict and prepare for what tomorrow will bring, so that they can consistently serve their customers in a highly personalized and engaging fashion.”

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