Inflation, Grocery Shopping, Loyalty, and Everything In Between

June 16, 2022 | AppCard Team

We have all hoped and wished coming back to normal would look differently. After years of uncertainty, COVID, quarantine, and working from home to name a few, we could only wish to see this coming summer as the relief we all were looking for. Sadly, with government and independent data confirming 40 years inflation highs and Wall Street entering a bear market, it seems as if plans might need to be pushed a little once more. 


To already prevailing challenges such as product availability, supply chain and labor shortage, one can add price increase for everyday goods including food and gas. Recently, studies published by major banks and other financial institutes such as Fidelity, MassMutual and others show that consumers are gearing up to make the needed adjustments in their spending behavior and habits with eating out (85%), travel (66%), and buying new clothing (64%) expected to experience the most significant hit. 


That said, all reports indicate that grocery is not bearing the brunt of shoppers’ pullback. 


What does that mean for grocers in general and independent grocers in particular? 


The past two years changed grocery shopping trends from “eating shoppers” back to “cooking shoppers.” Shoppers sought not only meal solutions, but also an experience that evolved to a lifestyle—and oftentimes turned dinner back into a family event. We saw ecommerce rise, balance back, and rise again. We saw the shift to digital coupons from the old-fashioned FSA (mostly thanks to the increase in print and paper cost and the closure of local newspapers). We experienced the rise of private label and decrease in brand loyalty, thanks to product availability—or lack thereof. 


At the same time, we saw the rise of shopper’s expectations for better communications, value, and relevance. With the availability of better alternatives through big box grocers and online giants including Instacart, independent grocers will continue to be challenged to remain relevant and justify their claim to fame of being the center of their community. 


Value, Valued, Values 


As the cost of everyday goods continues to increase (often even at the same day/week) and gas prices reach an all-time high, shoppers’ behavior is expected to change once again. Gas prices have already pushed shoppers back to e-commerce in efforts to save on unnecessary gas consumption, which in turn opens the alternative to a wider variety of options than the local independent grocery store. Additionally, similar to shopper behavior in the beginning of the pandemic, we will see shoppers aggregate and centralize their shopping trip to one store rather than splitting their shopping trip among several stores where they prefer buying their produce vs. meats. 


As a result, grocers in general and independent grocers in particular will need to focus on delivering an ongoing value to their shoppers, often derived well beyond the discount—value that will be sustainable and result in earning the shopper’s loyalty. 


In this inflationary environment, shoppers will shop where they feel valued and where the values of the store resonate with theirs. These attributes set the independent grocer ahead of their competition. However, shoppers will also still be looking forward to saving money—and AppCard users are already saving! Our data shows a nearly 49% increase in monthly coupon engagement across AppCard grocers since January of this year. Without the ability to communicate with shoppers, identify shoppers, and send relevant offers, rewards, and digital coupons, independent grocers will see their business revenues decrease to levels that were similar or even before the pandemic.


Earning shopper loyalty is a must!


Loyalty is often thought of as a nice thing to do or something you enroll your shoppers in. However, loyalty is something one earns. Loyalty can be to a store, brand, or person. Loyalty is a bond, a relationship—the outcome of a sensitive balance between give and take or pull and push. Loyalty in inflationary times is measured not just by the loyalty of a shopper to a store, but by loyalty of the store to its shoppers. 


The simple premise of continuously delivering value to those who have been loyal to the store, top shoppers, is crucial to earning shopper loyalty. Appreciation of top shoppers (12-15% of shoppers) who often represent 45-60% of sales is key, but without a proper rewards program, grocers at inflationary times like today, will see this group shrink. In addition, the mid and new shoppers will constantly be looking for more value for the reasons stated in this blog. To prevent shrinkage from happening, grocers will need not only to introduce or enhance their rewards program, but do so in a way that makes data actionable through smart data capture and machine learning to ensure personalized experience, alongside offering robust digital coupons and CPG offering to entice the vendor community to take part in this journey.


AppCard is a personalized marketing, shopper analytics and digital coupons provider that helps more than 1500 independent grocers throughout the country build long lasting relationships with their shoppers by making data actionable and delivering the right offer/rewards to the right shopper at the right time and at the right touch point. 


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