Reinventing loyalty in convenience retailing

Your local convenience store may soon become even more… convenient.

Over the past week or two, a couple of new mobile-based loyalty initiatives being launched by convenience stores have caught our attention, highlighting how approaches to loyalty are evolving in grocery retailing.

The first is Spar’s new partnership with Zapper, the e-payments and loyalty app. Zapper allows customers to use their app to scan QR codes at the till, making payments quicker and rewarding loyalty through vouchers.

The second is Irish-based company, Everseen, which is trialling a new technology that bypasses the need for checkouts and queues in stores. Customers register with the store’s app, their identity is verified when they enter the store and the system keeps track of products that they take from or return to the shelves. It’s very similar to Amazon Go, which was trialled 12 months ago with its checkout-less concept store in Seattle.

Clearly there are many challenges to navigate. The market is limited currently, with only the most tech-engaged people likely to take up these new technologies so soon. There are also problems around the technology, as highlighted by Amazon indefinitely delaying its wider roll out of Amazon Go. And keeping people engaged will be another issue, as a majority of apps fail to become established for exactly this reason.

 

However, more importantly, this is where grocery retailing seems to be heading towards in the future. In other categories, mobile-based loyalty systems are more established and evidently grocery retailing has much to learn from them. For example, Starbucks’ rewards app allows customers to place an order, pay for it and redeem rewards. Mobile-payment loyalty apps are also familiar to the fashion industry, with Harvey Nichols being a good example, as well as the travel and hotels industry, with Hilton leading the way.

All this just illustrates how retailers are redefining their approach to loyalty. It is now about so much more than just collecting points or getting vouchers. It is about truly helping customers by tackling pain points and making life easier. The premise is that making the purchase experience simpler, quicker and more pleasurable will encourage repeat visits and purchases. And in the convenience retailing space this is vital.

The benefits to retailers are clear, with evidence cited in a recent study*, that consumers who join payment-powered loyalty programs spend more and their frequency levels are higher.

Of course, for FMCG brands there are also opportunities to gather greater intelligence about customers, allowing for better response to shopper behaviours, emotions and purchasing patterns.

These brands should start thinking how they can delight shoppers if – or when – this technology becomes established. For example by:

• Delivering more personalised offers or ‘flash sales’ via the app, when people are in the right ‘shopping’ mindset.
• Activating ‘perks’ (ie freebies or other broader rewards) when people spend a certain amount on a brand.
• Enabling more brand discovery through cross selling product ranges.
• Offering price comparisons by benchmarking against competitor prices.

With FMCG retailing as competitive as always, the battle for customer loyalty needs to take every opportunity to engage shoppers through more targeted and creative routes.

*as reported in a recent study by ZipLine.