SCOTTSDALE, Ariz. -- Supermarkets have the biggest asset of any retailer but need to do more to protect it.
That asset is a strong bond with the customer, who visits the same store location frequently. But research conducted by the American Greetings Research Council (AGRC) found supermarket retailers need to invest more in these consumer relationships. Among the findings were that frequent shopper programs don't have much impact on consumer loyalty.
The research was unveiled here in the form of preliminary findings at the Midwinter Executive Conference of the Food Marketing Institute.
"There's always more that can be done to build customer relationships," said Jenai Wall, president and chief executive officer, Foodland Supermarkets, Honolulu, Hawaii. "We can build a happier and more loyal customer base."
Joining Wall for a panel discussion of the topic were Norman Mayne, vice president and CEO, Dorothy Lane Markets; Bill Gilmore, senior vice president of merchandising, advertising and distribution, Sobeys Corporate Retail Stores; Douglas Blease, executive vice president and chief operating officer, D&W Food Centers; and Vic Orler, partner, strategic services, Andersen Consulting.
The AGRC research conducted by Andersen Consulting has been a two-year effort. Members of the AGRC -- who are senior officers of non-competing supermarket retailers in the U.S. and Canada -- will present the study's full results at the FMI's annual convention this May. The AGRC was established in 1991 and is supported by the FMI.
The AGRC presentation by Wall cited four areas of focus for retailers determined to protect their customer relationships:
COMMUNICATING WITH CUSTOMERS: This means "an ongoing dialogue, two way not one way," Wall said. "Have we asked what they would like? Forty percent of all customers do not speak to anyone in the store except the clerk at the checkout line."
The report recommends retailers develop a "communications strategy, communication vehicles and processes that ensure they have an ongoing dialogue with customers."
Citing an example of a successful effort, Wall said D&W developed a "customer intimacy program" for best customers to get input on how the store could improve. "Customers responded and sales increased," she said.
Other ways of getting feedback about customers include in-store kiosks and bulletin boards and polling shoppers and employees, Wall said.
SEGMENTING CUSTOMERS AND RESPONDING TO DIFFERENT NEEDS: "Analyzing buying patterns and profiles can help group customers," the report said. "This helps retailers better identify which needs are most pervasive and which customers are the most critical to your store's success."
Wall stressed that "customers shouldn't all be treated the same."
Segmenting customers can lead to decisions about the most appropriate store formats for a location, including conversions to formats more appropriate to a particular site, Wall said.
ASSIGNING ACCOUNTABILITY FOR CUSTOMER CARE: "Many council members concluded that their ability to improve customer care depends on assigning responsibility and accountability for improving satisfaction and retention ratings," the report said. "Without a systematic approach, it is too easy to let implementation slide and enthusiasm fade," it continued.
Wall noted that D&W made store managers accountable for top-tier customers. "Satisfaction surveys were sent out, and using feedback the stores developed action plans," she said.
CONFIRMING YOU ARE DELIVERING ON THE BASICS: The report said stores must keep evolving to address the changing needs of customers.
"What was a 'must have' five years ago may not be that important now -- witness the comeback of desserts or the varying enthusiasm for some ethnic foods," the report said. "You can't deliver on the basics if you don't know what they are."
In the panel segment of the presentation, participants said frequent shopper programs are relied on too heavily.
"Once we looked at frequent shopper as the only tool" Blease said. "But it can't be the only tool. It's important, but it's only one feature."
Blease also said stores should avoid trying to glean too much from the frequent shopper data. "We used to overanalyze information on frequent shoppers," he said. "But we didn't have the resources to do that analysis. It's better to make moves based on data you have."
Mayne stressed that positive reinforcement for employees will improve their role in pleasing the customer.
Gilmore said that retailers must insure that their company's bureaucracy doesn't interfere with building relationships.
Orler said supermarkets have a history of riding out challenges, but need to be aware of today's radical changes in consumer marketing.
"It's the game that's changing," he said. "Amazon.com can customize the shopping experience for consumers -- even for those who spend only $80 a year. How you develop and build customer relationships is key."
