The grocery landscape in Australia is becoming increasingly competitive. With Aldi now holding an 8.9% market share and IGA not far behind, grocery market leaders Woolworths and Coles need to think outside the box to retain customers.
This increase in market share addresses a key finding that was reiterated in a recent Roy Morgan study: Australian supermarket shoppers are not loyal. Perhaps it comes down to perceived value of loyalty programs currently offered, or perhaps it’s because Australian supermarkets are more focused on obtaining new customers than on retaining them.
The partner channel provides grocery brands with the opportunity to not only drive customer acquisition, but to acquire loyal customers. This post will take a look at three overseas supermarkets who are using their marketing partners in more innovative ways to obtain new, loyal customers.
Tesco & Quidco: Using Cashback to Drive Loyalty
When we think of cashback sites, we often think of customers who are only after a discount or a deal. UK supermarket giant Tesco looked at it a little differently and took a more innovative approach with cashback partner Quidco. Rather than offering cashback for new shoppers only, Tesco focused on its delivery saver options.
When customers purchased a 6 or 12 month delivery saver package, they received more cashback than on a single visit. This meant that customers who purchased the delivery saver were more likely to repeat purchase and less likely to drift over to competitors. This approach could work very well in the Australian market to generate more loyal online shoppers, which is important as Australian shoppers typically spend twice as many dollars online than they do in-store.
Morrisons & Unidays: Targeting the Student Shopper
Students aren’t typically a key focus for supermarkets, with mums and families often being the primary target market. However, UK supermarket Morrisons realised the potential of gaining loyalty at a young age, and partnered with Unidays to devise a student-specific incentive in the partner channel. Morrisons offered students a 10% discount, with unlimited use over a period of three months. This discount could be used online or in-store and was the first of its kind in the UK.
By taking a more innovative approach to partnerships, Morrisons attracted an audience that is transitioning to financial independence and effectively secured their loyalty when other brands overlooked and undervalued them. The continuous use of the discount also ensured repeat business amongst this audience and discouraged shoppers from visiting other supermarkets. On top of this, as a first-of-its-kind partnership, Morrisons received a huge amount of press, increasing overall brand exposure.
Loblaws & Uber: Transformational Partnership
Click-and-Collect is an under-promoted service offering; however, has large revenue potential for Australian supermarkets. A recent Deloitte study found that although 21% of Australians said they would like to use click-and-collect, only 10% actually do.
Canadian supermarket Loblaws took advantage of this opportunity and joined forces with Uber to promote their click-and-collect offering. When customers shopped online with Loblaws, they were offered an Uber ride, up to the value of $30, to collect their groceries. This was an innovative partnership because it aligned Loblaws with inner-city residents who limit grocery purchases and spend due to not owning a car.
Each of these partnerships are great examples of supermarkets using innovation and thinking out of the box and can be easily replicated in the Australian market for both new customer acquisition and increased customer retention.
Ultimately, these international cases illustrate that when grocery retailers are devising their partner strategy, the most effective strategies cannot be defined in black and white terms. Indeed, the partner channel is an effective channel for new customer acquisition; however, it’s evident that retailers need to be more flexible and innovative in their approach to ensure success and customer retention.
If you’d like to learn more about diversifying your commission strategies and becoming more innovative with your partner relationships, reach out to the Performance Horizon data team today.