STUDY SUPPORTS FREQUENT-SHOPPER PROGRAMS

GAIL ROBERTS

BOCA RATON, Fla. -- With supermarkets facing shopper loyalty challenges comparable to those that worry brand marketers, frequent-shopper programs can and should play a more prominent role in building store sales.

That was the conclusion of a major study commissioned by the Coca-Cola Retailing Research Council and presented last month at the Food Marketing Institute's Midwinter Executive Conference here.

Its findings suggest vigorous support of store-loyalty programs could be a golden opportunity for brands to strengthen ties with supermarkets.

The study revealed a startling 80% of a supermarket's customer base shop the store less than once a week, and up to half entirely stop shopping the store within a year.

And shopper loyalty to specific stores, it found, is in much shorter supply than previously may have been imagined.

To arrest this loss, retailers must "put golden handcuffs on their very best customers" by implementing card-based frequent-shopper programs, the study said.

Such data-based marketing will work best if it is the core element in a food store's marketing strategy, said Brian Woolf, president and owner of the Retail Strategy Center, Greenville, S.C., which prepared the study.

"It's a difficult step because it means that we must be prepared to differentiate the offers that we make to different customers. Differentiating our customers implies that we must love the loyals, smooch the splits, choke the cherry pickers and nurture the newly joineds," Woolf said.

The study, titled "Measured Marketing: A Tool to Shape Food Store Strategy," was based on information from 83 supermarkets ranging in size from single-store operators to the top 10 chains with combined sales of $160 billion.

"Our first major surprising finding was that our customers are not as loyal as we originally thought," said Woolf. "In fact, we found that the average customer was visiting the stores of a typical supermarket only about once every two weeks."

Another finding was that customers "had a defection rate of 25% to 50%. What this means is that in the companies we studied, for every 1,000 customers they had a year ago, between 250 and 500 are no longer shopping with them today," Woolf said.

Other study findings were:

Supermarkets' best customers not only visited stores more often, but also spent more on each visit. At one company, the top 10% of its customers accounted for about 40% of the store's sales.

The top 4% of a supermarket's customers shopped the stores about 1.6 times a week.

Many customers "split shopped." Although the study showed customers shopped a store about once every two weeks, a survey by FMI found that the average shopper visits a supermarket 2.2 times each week. "That simply highlights the enormous amount of split-shopping going on today," Woolf said.

The study also revealed that:

The top 20% of customers visited the store an average of 1.5 times a week, and spent $35 on each visit, or more than $2,700 a year.

The middle 20% shopped 0.4 times a week, or four times every 10 weeks, spending $17 per visit, or $354 annually.

The bottom 20% shopped once every 10 weeks, spending about $9 on each visit, or less than $50 a year.