The retail grocery space can be incredibly competitive. As a smaller chain, you might be up against the likes of mega-chains like Target and Walmart, which have the ability to offer deeper discounts. Especially in this economy, most people are looking for the ways to extend their dollar further.
This year, in the natural health space, industry leaders such as Whole Foods Market (500 locations) and Sprouts (384 locations) have seen growth compared to previous years. Meanwhile, compact grocers, which are stores that are no larger than 20,000 sq. ft, have seen astute numbers in terms of growth.
Compact grocers are smaller, which can create a homier, more intimate experience for shoppers. If you've ever been in a Trader's Joe, the store is laid out in a way that feels transparent and efficient while dawning that signature organic-rustic feeling. As a customer, you may bump into staff and educators more frequently if the store is more diminutive. Trader Joe's has been rated in the for several years. Another winning point from the likes of Trader Joe's, Natural Grocers, and Aldi is that they carry unique, private label brands catering to the organic, natural product sector. This allows them to offer good quality products at a lower cost.
As explained in the last article, sales in the natural/organic sector are not stalling anytime soon. However, it remains important for retailers to focus on customer retention, especially given the current economic climate. Here are some tips to enhance brand loyalty to ensure retail success.
Imagine investing in products you think will do well on the shelf, only to have them sitting idle for months. Surely, there must be a more predictive way to gauge whether a product will sell before you invest in an entire lotDo your research on the brand. Do they have a successful track record in other stores? Select well established brands and pioneering brands in the category, like DōMatcha®in matcha business sector.
How do they communicate? Communication is critical in this industry. A supplier with slow response time or dodgy responses should be seen as an immediate red flag, especially if you run into issues with supply later on. The best way to test is to order a few products and test them out at your store for a month to see if the product moves and how the customers respond to the product. Are customers curious about it? Are they asking questions about the product, picking it up, analyzing..etc? Doing test runs and participating in educational training sessions with the supplier are a few ways to optimize for success.
Customers return to your store because they know they can reliably get their desired products. Keeping on top of consumer trends is beneficial to ensure you're well-stocked on the items that go quickly. The greatest disappointment to a customer is when they make an effort to come in store only to realize that the item they're looking for is out of stock. If you're a larger retailer, consider digitalizing some of these efforts. Creating a store app is likely the easiest way to collect customer data, plus having a mobile ordering option allows people to see in real-time what you have in stock. A buy online pick up in-store model allows for efficiency (no waiting in lines) and an opportunity to upsell your customers if they come physically into the store.
The advantage of having an app depends on a couple of factors:
Personalization is key. It shows the customer that your company is sophisticated and you 'care" about them, and you're not blasting the exact, repetitive offers to everyone. For example, suppose a customer purchases a specific type of eco-friendly detergent every 90 days. In that case, the supplier might send text messages every 90 days from the day of purchase with a special discount, encouraging the customer to buy from that supplier again.
People join clubs, fitness classes, and hiking groups to feel part of something. It's very common for people to form communities around brands, products, and movie/TV franchises. Building a community around your store can be critical to preserving customer loyalty.
Think about this feeling of belonging when mapping out your store or planning community events. Having a giant communal calendar somewhere in your store can be a great way to evoke feelings of "togetherness." You can also have a box to collect customer feedback and suggestions on what products they like to see. You can write those suggestions on a large chalkboard in your store. Post-Covid, more people are leaning towards different ways to connect with their community—Zoom-free. Get creative-- community events don't have to center around what you sell, but they can be related to your customer's interests. For example, if you run a small health food store, your customers are likely young people into health and wellness or older demographics who desire to maintain their health. These audiences will have different problems and desires, so tailor the events for both.
For example, you might have a running group or cocktail night for the younger crowd and a walking group and seminar on joint health for the older crowd.
When you associate your store with more than a place to shop but a place to experience, learn, and bond, this can fortify customer loyalty.
Brand Loyalty Builds Repeat Business and Higher Deal Value
Brand loyalty is instrumental to success for the following reasons:
Despite rising inflation, consumer reports show that experience is still paramount. According to the Shopper Preference Report, 98% of customers can think of at least one case where they would buy something based on experience as opposed to price. In Bazaar Voice's research, more than half of consumers prefer that retailers have digital in-store experiences like self-check, auto check-out, online ordering and mobile offers. The one hassle that North American shoppers dislike is long wait times. If designed well, mobile check-out and self-checkout help increase efficiency. On the other hand, having self check-out devices that are hard to use or glitchy can negatively impact customer experience.
Customer experience is another key factor to retail success. Take a look at Starbucks, for example. Although you can get coffee elsewhere for a dollar or two cheaper, people are loyal to Starbucks for a couple of reasons.
With the proliferation of online shopping, consumer expectations are constantly evolving. They expect the same type of service, both online and offline, and much of this concerns customer service. The benefit of having an in-store customer rep is that customers feel like they're talking to a human being, not a robot. Automated robots can deviate from customer trust if they don't answer the customer's questions properly. Customer reps also have an opportunity to upsell customers who are already in the store.
If you have a website, having FAQs can be a game-changer, especially for general questions like return policies and holiday hours. In fact, QA features on websites are known to increase conversion rates by as much as 98%.
Loyalty Programs: What's the Deal?
Everywhere you look, there seems to be another loyalty program. This has historically worked well for the food service industry as the order frequency is usually higher, and the incentives, like a free meal or a drink, are more appealing than coupon offers at a grocery chain.
This is where retailers can exercise some creativity if they decide to implement a loyalty program. Some common incentives are 'member only discounts at the store. However, there's also a way to connect with consumers on an emotional level besides traditional discounts and perks. Research shows that social causes are increasingly influencing people in their purchasing decisions. Companies that give a percentage of their profits to non-profits, charities or communities tend to fare better in a modern economy. For example, grocery stores like Whole Foods Market advocate strongly for Fair Trade and ethical partnerships with the community. They also have their own foundation, Whole Planet Foundation, that provides microlending programs that help alleviate global poverty from the countries they source their products for.
Trade Joe's has donated $411 million dollars worth of food to non-profit partners across the US through the Neighborhood Shares program. They are committed to donating 100% of their unsold food to people in need.
ShopRite's loyalty program is an example of one that does it right. Not only is a charitable incentive included (every time a member shops, points for equipment and school supplies are added to the supported school), but customers get personalized check-out coupons on the items they previously purchased. They also have a seamless omnichannel shopping experience, where customers can buy in-store, on the app, or website.
Many grocery loyalty programs are partnered with local gas stations and pharmacies, allowing customers to collect points on everyday purchases.
Private Label Brands
Some prevalent examples of private label brands on the market include:
Numerator estimated that 72.7% of shoppers in America buy Great Value products.
More companies are focusing on customer retention, and there's a good reason for doing so. Not only is it less costly and more lucrative to keep customers, but it also encourages new shoppers to come in through word of mouth. Retailers will need to meet digital users and in-store purists in the middle, providing optimal customer service in online and offline channels and finding ways to synchronize those touchpoints. A seamless and personalized experience is the name of the game. And the good news is, people are more likely to spend higher amounts at your store if doing so leads to interesting perks and benefits. Your store can become a meeting place of sorts; to connect people to people, experiences, and exciting consumer products.
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