Using first-party data to drive loyalty and devotion
Macro-economic events have built upon each other during the last three years. The COVID-19 pandemic led many shoppers to change their lifestyles, disrupted the supply chain, and changed how and what food consumers purchased. As a result, e-commerce accelerated in the grocery channel. During the past year, inflation has been top of mind and a concern for many.
According to Alex Trott, director of insights at 84.51° each of these events have created massive shifts in consumer behavior in three distinct ways:
- Where consumers shop.
- What shoppers buy.
- How customers save.
“While most customers agree that inflation levels are highly concerning, there is no consensus on how long it will last,” Trott told Retail Leader. “Perspectives and predictions vary considerably by age group, with the younger generation most confident that inflation will last less than a year. In contrast, the older generations are more likely to think that this inflationary environment will last longer and potentially more than two years.
Online engagement
Convenience continues to be the top reason why consumers shop pickup or delivery for their groceries. However, 84.51°saw that saving money — either overall or by helping to reduce impulse purchases, is the second reason that customers use pickup and delivery.
“Those who are very price sensitive are especially likely to quote saving money as a reason they use e-commerce,” Trott said. “In fact, views of the Kroger.com digital coupon page have increased by 92% over the last year.”
84.51° asked omnichannel shoppers how they behaved because of inflationary pressures. The majority (70%) reported that they are looking for sales, deals and coupons. However, more than half are also cutting back on items — overall and on each trip. They are openly switching to lower cost brands as well.
“This puts significant pressure on brand loyalty, because when customers are disproportionately driven by price, they are increasingly willing to skip products that are considered ‘nice to have’ vs. a ‘must have,’ Trott said. “This can also mean that customers will switch to a competitor that may deliver a similar benefit at a cheaper price.”
Modal qualities
Overall, for omnichannel shoppers, 84.51° sees very few households falling in the extremes of claiming primarily shopping in-store versus online.
“We know that even the most loyal e-commerce shoppers find reasons to go into the store,” Trott said. “Even those most loyal to e-commerce households complete almost 40% of their grocery trips in-store. The most loyal e-commerce shoppers spend the most in our stores overall.
“For those less loyal, those we know are more price sensitive,” he adds. “They are going in-store for their grocery trips almost 90% of the time.”
An online shopping journey can also vary depending on what consumers are purchasing, 84.51° found. As an example, when the average online shoppers looked for dry grocery items, they can complete that online basket building in a half an hour. Dry grocery item shoppers were more reliant on their purchasing history through “start my cart” and added dry grocery items throughout their building journey. When they did search, the terms dry grocery shoppers used were mostly category focused such as water, cereal, peanut butter and chicken broth, 84.51° reported.
When 84.51°compared that to when a shopper included personal care in their basket, it found the consumer took longer to complete the order. Additionally, the shopper was more reliant on using digital coupons and added personal care items at the end of their basket. When searching, personal care shoppers were more likely to quote name brands in their search such as “Crest Toothpaste” or “Dove Body Wash,” and they had to scroll further in search results to find the item.
When 84.51° looked at another category such as seafood, consumers said they were not comfortable buying online, and basket building took even longer.
Seamless shopping experience
Recently, 84.51° asked omnichannel shoppers to define what a “seamless omnichannel experience” meant to them. More than 60% of those shoppers claimed they expect coupons, pricing and quality of products to be the same between offline and online shopping.
“Having a seamless experience has benefits across both modalities, as we also know that many households will use a retailer’s online experience to search for products, make lists or find digital coupons, but then ultimately go in-store to purchase,” Trott said. “Additionally, when shopping in-store, consumers will use their phone to look for digital coupons or reference their shopping list, which aids them in completing their journey.”
Additionally, 84.51° consistently heard that accuracy and availability is extremely important when shopping online. Omnichannel shoppers were also looked for digital coupons, quality substitutions and an easy site and app experience.
When addressing what can be done to meet those needs and increase e-commerce loyalty, Trott suggested:
- Supply – Ensure that during key selling periods, products are available both online and in-store to increase satisfaction.
- Online Accuracy – Make sure the items your shoppers expect to find in store can also be found online.
- Relevant Coupons – Does the retailer have the coupons that households are looking for online even if purchasing in-store?
- Offering quality substitutions – Make sure if a shopper's first choice is not available, a substitution is offered which with they will be happy.
Path to purchase online
84.51° found a couple of responses from omnichannel shoppers surprising, which highlighted the importance of getting the experience right and making sure it understood the customer's path-to-purchase online using data sources, Trott said.
The first was surrounding the importance of in-stock to online sales.
“It’s not surprising that accuracy and availability are most important when shopping online,” Trott said. “However, to hear from shoppers that 25% of them will go to another online retailer to find their out-of-stock item — some of them switching their entire basket — is both surprising and concerning. Affluent households are even more likely to quote that behavior. This is a reminder that getting that online shopping experience right, with what shoppers are looking for, is key to driving digital loyalty.”
Another surprising learning was consumers’ continued preference for trying new items while shopping in-store. For example, 10% of omnichannel shoppers noted that they don’t even realize if the items they saw online are new.
“Finding ways to increase shopper’s comfort for trying new items while shopping online — including the messaging — will be important to ensuring online success and a seamless in-store-to-online experience for shoppers,” Trott said.
“The journey for building an online basket varies depending on shoppers' propensity to buy different categories online and the ease of using a site or app,” he added. “Understand your brand’s and category’s clickstream to optimize for your brands and products.”