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  The Herman Trend Alert

June 13, 2018

Misperceptions of Loyalty

A new study from precima and FMI titled "Next Generation Loyalty Get It Right in Food Retail". Part 1: The State of Shopper Loyalty tells a fascinating and surprising story about people's misperceptions regarding their own loyalty.

Loyalty defined
This study defines Loyalty as "when shoppers choose to allocate a majority of their budget and shopping time to a retailer because they trust that retailer to consistently meet their needs".

Shoppers believe themselves to be loyal
We were astonished that 80 percent of the shoppers surveyed believe they are loyal to their primary grocery store. In addition, if one store could meet all of their perceived needs, 58 percent responding would prefer to shop at only one store.

Their loyalty is not what they thought it to be
However, reality is quite different from their perceptions. Only "19 percent of shoppers shop at only one store and only 7 percent of shoppers spend more than 90 percent of their budget at their primary grocery store". Interesting!

What these insights mean
The interpretation of these insights is that though shoppers have a desire to be loyal and believe they are, all of their needs are not satisfied by their primary grocery store and therefore, they do not behave loyally. So, loyalty is earned not by cards or games, but by consistently satisfying the needs of shoppers better than the competition. For food retailers to take advantage of this finding, they must understand the needs of their shoppers and consistently take actions to satisfy those needs across multiple aspects of their business. The reward is obvious: a higher percentage of the family food budget spent in their stores.

The role of employees in customer loyalty
Well-trained employees also play a huge role in the shopper experience. With the thousands of SKUs (Stock Keeping Units) retailers put on their shelves, finding just what consumers are looking for can sometimes be a daunting task. The chain H-E-B in Texas and Oklahoma does an extraordinary job of training their employees so that they know exactly where items are in their store; they are also trained to stop their other work and personally lead customers to the products they are looking for. Consumers in Texas have shared that shopping at other stores takes longer and is less satisfying.

Marketing to Millennials
The study also found that while all shoppers were looking for some "core shopper experience elements": clean stores, good customer service, short checkout lines, Millennials have higher expectations; they want "personalized offers [and] ecommerce and digital engagement", as well as "prepared meals, meal kits, and in-store dining".

Food for Thought
Wise food retailers will take this information to heart and all retailers would do well to read this study for any implications the findings might have for their businesses. Do you think your customers think they are being loyal to you, but, in reality, are not?

To read the entire Part 1 of this study, visit download here.


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