Strong Customer Loyalty Drives Advantages for Brick-and-Mortar Retailers: Report

New research from the Food Marketing Institute (FMI) and Precima makes a case for the importance of customer loyalty and how it can give brick-and-mortar a competitive edge over digital retailers. 

To achieve this, the Next Generation Loyalty: Get It Right In Food Retail Part 2: Loyalty In 3D report, urges that it is critical for retailers to take a “next-generation” approach to customer loyalty. 

“Food retailers need to reboot the way they think about loyalty, taking advantage of the latest tools to truly engage shoppers and earn their loyalty across all customer touch points and not merely through a loyalty program,” said Graeme McVie, chief business development officer at Precima. “They need to align their strategic, tactical and operational decisions across merchandising, marketing, store operations and supplier collaboration so a clear and consistent message is sent to the market that the retailer is working hard to earn the shopper’s loyalty.”

The new report, the second of the two on the topic, can be viewed as a "road map" for retailers to navigate a successful approach to "loyalty in 3D," and outlines the advantages of a one-two tactic in which a retailer implements a holistic customer loyalty strategy and cultivates a purpose-driven workforce that is committed to delivering value to customers.

According to the report, a next-generation approach to loyalty will enable retailers to "grow their number of valuable shoppers, sales per shopper and lifetime value per shopper" in a cost-effective and low-risk way by "understanding and satisfying customer needs better than the competition."

By way of example, the report shows that a $2 billion retailer with a gross margin of 25% can generate $70 million in incremental sales annually, and $30 million per year of incremental gross profit, with a next-generation loyalty platform that enables retailers to grow their number of valuable shoppers, sales per shopper and lifetime value per shopper as a result of deeply understanding and satisfying customer needs better than the competition.

"As one of our member CEOs told us, ‘if you don’t like change, you’re going to like irrelevance a lot less,’” said Pat Walsh, SVP of industry relations for FMI.

The report was based on a survey of more than 3,000 shoppers and 200 retailers, and also offers a "Crawl, Walk, Jog, Run" strategy to "capture then retain the attention of the customer and build momentum at the company and with its trading partners."

Both reports are available for download at www.FMI.org/Store.