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Grocery promotions and creating digital connections in a time of crisis

Author: Miya Knights, Head of Industry Insight at  Eagle Eye Solutions

As the effects of the coronavirus disease are felt across the globe, entire industries have had to adapt to the sudden and disruptive changes overnight. The grocery sector, although not immune to Covid-19’s impact, has experienced increased demand, particularly in its ecommerce channels, as some consumers move their purchases online. In the UK, the apparel sector is down by 20.6%, while grocery is up by 7.1%. In the U.S., apparel has taken a hit of 13%, while mass retail and pharmacy have experienced spikes of 8% and 9% nationwide, respectively. But online grocery is leading all categories, with the explosive growth of 84.5% during the week of March 15-21.
 
The grocery sector has responded twofold: addressing increased inventory demand, and adapting customer communications and promotional strategies.
 
While it may seem insensitive to talk about promotions in this climate, they are at the core of how grocers communicate value to consumers and drive traffic into stores. Operating in this environment is no exception; consumers are still making purchase decisions based on promotional offers, coupons, and BOGO deals. Their choices today may also be driven by availability instead of price alone, leading to stockpiling and supply chain strain. A recent survey by the University of Southern California found 22% of American consumers were stockpiling food and supplies. On March 17, the Food Industry Association (FMI) issued short-term guidelines for U.S. grocers to help them manage consumers’ panic buying through controlled inventory management and frequent customer communications.
 
But the behaviors are consistent; consumers are making lists, stocking up on essential items, comparison shopping, discovering new brands, and where possible, staying loyal to others.

Building digital connections earns customer loyalty

Consequently, many grocers are dealing with out-of-stocks, an inability to forecast what else consumers may need, and a lack of promotional agility. Rather than offend or disappoint customers, some promotional teams have stopped altogether.

But we contend that’s the wrong approach.

At a time when grocery brands have an opportunity to maintain and build even greater trust with customers, being present and relevant is critical. An EIQ survey found that 18% of American shoppers trust Walmart to provide the products and services they need during the crisis, followed by Target (6%), Amazon (6%), and both Costco and Kroger at 3%.

This is where the importance of having a digital connection with customers comes into its own. Having the ability to communicate with shoppers in real time is mostly lacking in the grocery sector. But it’s what consumers want right now. As they spend more time indoors during the coming period, with digital providing their primary connection to the outside world, their expectations of digital engagement with anyone they shop with, including grocers, will increase.

Read more about the importance of putting grocery customers center-stage here.

With heightened sensitivity around customer messaging, how can grocers ensure their promotions remain relevant and timely, as consumers move from panic shopping to resuming a normal life over the next few months?
 
Consumers’ reliance on digital channels while sheltering-in-place will impact grocery promotions
 
Consumers, naturally, aren’t spending money on items they can’t use right now. Purchases for future social occasions, including apparel, footwear, and accessories, are on hold when it’s hard to know when they will be able to use them. With consumers’ minds focused on food and other essentials, flyers and coupons remain a vital part of grocers’ customer engagement and promotional marketing mix. This can still backfire, especially in the US, where 44% of consumers still prefer paper coupons. Traditional paper flyers and coupon distribution take anywhere from 7-10 days to publish and distribute, meaning there’s no margin to adjust grocery promotions in the event of an overnight market shift or disruption, like the coronavirus.
 
Reliance on paper-based communications leaves grocers and their marketing teams exposed if they’re unable to adapt quickly, as digital promotions and coupons can enable them to. Using digital promotions would allow grocers to reach the two in every five American consumers who clip coupons online, and 38% who use their mobile device to store coupons. Canadians are most keen on emails as the most popular promotional delivery method.
 
Optimizing promotions and seasonal offers around Easter, Mothers’ Day, and even Cinco De Mayo will still be vital. Although spending levels will likely be down during these celebrations, consumers will look for creative ways to celebrate at home, and grocers have a chance to promote relevant, available items they can merchandise and fulfill for these occasions.
 
Having digital connections with customers also allows grocers to send personalized and timely content, for example, menu-planners and recipes based on recent purchases, or suggestions for getting more out of their “pandemic pantry purchases.” Other grocers have adjusted their promotions to focus on safety messaging, letting customers know about changes in operating hours, restrictions on the number of people allowed in the store, product restrictions or out of stock items, and how they are protecting customers and employees.
 
Being digitally enabled allows grocers to add value to their customers and drive advocacy by knowing who they are and what their needs are. Without that level of digital intelligence, relevant and personalized communications simply aren’t possible.
 
Adaptability, agility and knowing your customers are cornerstones to resiliency in a new world
 
The same EIQ survey found that 21% of American consumers are now doing all their grocery shopping online, joining the 26% of consumers who were already online grocery shoppers before the Covid-19 crisis hit. By comparison, 14.2% of UK shoppers started buying groceries online in the first two weeks of March, joining the other 31% of UK shoppers already buying groceries online.
 
The need for digital to enable all aspects of grocery operations cannot be understated. From a customer engagement standpoint, digital is the future. That means grocers’ digital transformation strategies that were already in play must accelerate over the next 3 to 6 months. It includes establishing a website, an app, or a mobile-optimized website or optimizing those already developed to account for a “new normal” operating environment. 
 
Having a robust digital infrastructure and agile “front-end” allows grocers to engage with customers in more immersive and consistent ways across channels. It will enable them to learn much more about their customers, who they are, what their needs are, what they might want, and how they can be engaged more effectively. Most of all, it allows grocers to have rich customer data needed for greater digital marketing, promotional, and operational agility and efficiency.
 
Reshaping the future of grocery starts with the customer: from loyalty to affinity
 
With all of the current upheavals to grocery operations, ensuring customer and employee safety, and in some cases, looking for thousands of temporary workers to meet online grocery order fulfillment and delivery demand, it may feel impossible to think about customer loyalty at this time.
 
But consumers are making decisions right now based on product availability, price, ease of online ordering, communications, and convenience – all of which impact how they feel about grocery brands. By showing consumers you understand what they are going through and that you can serve their needs, builds loyalty. More importantly, it can build their affinity. Whether that means adjusting the cadence of customer communications and promotions and advising customers there are alternatives to out-of-stocks instead of forcing them to trade up or down, in this time of crisis, grocers have an unprecedented chance to reshape their customer relationships alongside their operations. That starts with creating those digital customer connections and accelerating their digital enablement.
 
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