Last week’s news that Amazon acquired Whole Foods for $13.7 billion sent retail stocks plummeting and left many to wonder about the future of the grocery industry. The downward trend isn’t new, however. Grocers have been experiencing profit losses due to increasing competition from online vendors and discount stores. According to Forbes, grocery stores and grocery wholesalers are “widely known as volume businesses so their margins reflect the nature of the competition and the industry in general.” In order for companies with small margins to stay afloat, they’ve got to bulk up their sales volume and decrease overhead costs. In this blog, we’ll explore some strategies grocers can employ to increase profit margins. Keep reading to learn the major questions grocers should be asking themselves to ensure they’re armed and ready to take on the competition.
Do I have a single view of the customer?
You likely have many channels through which you’re collecting data, but what are you doing with that data? Can you do anything with that data? In order to enable the tailored, personalized brand experience that consumers demand (and also make setting up a simple campaign a more effective process), grocers need a way to tie all their data together.
How would it impact your organization if you had the ability to tie together the data from your CRM system, your pharmacy’s CRM system, your email marketing system, your employee database and your mobile app? The implications of having a single view of the customer likely affect not only marketing efficiency, but also overhead costs.
Do I know how much money I’m losing from mass discounting?
Many grocery stores have “loyalty programs” that consist of generic, physical cards. With this approach there is little to distinguish the value and benefit of your card from another grocer’s card. It also lacks personalization, underscoring the finding in a recent study by Periscope that “66% of consumers said they saw “no evidence” that stores they visit regularly know them as a consumer.”
Besides the physical loyalty card, grocers tend to favor a spray and pray to discounting. Sending the same, standard discount to your entire customer base is like throwing spaghetti at the wall and hoping something sticks. Besides lacking focus, you’re likely to send discounts to customers that would have otherwise purchased the item at full price, the result of which is potentially millions in annual losses. What’s the alternative? More on that next.
Can I send personalized, closed loop offers based on a customer’s purchase history and other known data?
Every grocery store is slashing prices and offering discounts. How can you stand out with everyone doing the same thing? The answer is–you can’t. Instead, you need to provide a unique brand experience for each and every customer. Discounts should be personalized based on a customer’s previous purchase behavior and other known data about their habits and preferences.
By replacing spray and pray discounting with highly targeted offers, grocers can achieve more traffic, more sales and higher margins. For example: with a single view of the customer you can feed your POS data back to the customer’s profile to push offers and content into the point of sale, enabling real-time offer redemption.
Can I make product recommendations based on what a customer is most likely to buy in order to upsell and increase basket size?
With actionable customer data, there’s a science to upselling customers and increasing their basket size. By taking a customer’s historical purchase data and calculating the products the consumer is most likely to purchase, grocers can then create campaigns with offers based on the calculated values. For example: Sarah typically purchases peanut butter and a loaf of bread when she shops. Send her an offer with a discount for a jar of jelly, valid for this week only.
Now is a more crucial time than ever for grocers to focus on ways to stand out from competitors. Achieving these goals starts with unified, actionable customer data, which enables organizations to go from mass discounting that cuts into margins to a strategic, science-backed approach to customer engagement (that actually helps to move the bottom line). More sales and less overhead? Sounds like something worth checking out.