Discounters, increasing store choices disrupt global supermarket industry
Increasing supermarket options and the continued global disruption from discount grocery retailers has driven a widespread ambivalence and threatening loyalty to retailers from shoppers, according to TCC Global’s latest 2018 International Loyalty Study.
The research company said in a statement their latest study is based on the insights from in-depth interviews with over 15,000 grocery shoppers from 15 territories around the globe.
“While low prices are central to the appeal of discounters, our research indicates that shoppers recommend the discounters based on other attributes too. Namely strong private label ranges, the quality fresh produce on offer and the discounters’ non-food selections,” said Bryan Roberts, Global Insights director, TCC Global.
Globally, discounters have attracted many new main shoppers. Almost a third (27%) of Aldi’s UK shoppers switched their main shops to the discounter in the last year, one quarter (25%) of Lidl’s Portuguese shoppers and nearly a third (29%) of Penny’s German shoppers have done the same.
TCC Global said while loyalty to retailers remains poor globally, with 36% of shoppers agreeing with the statement “it would not matter to me if my usual grocery store closed”, there is a degree of regional variation. This sentiment is highest among Russians, with almost three in four (71%) agreeing, and lowest among German shoppers who demonstrate the most entrenched emotional ties to their favourite grocery store (19%).
The research shows on average, shoppers around the world have 5.5 easily reachable grocery stores available to them, with each shopper regularly using 3.3 different stores, suggesting a willingness to spread their spend across several stores when more choice is available. On average, shoppers regularly visit 55% of grocery stores that are reachable.
TCC Global further said hypermarkets and supermarkets dominate the main grocery shop, accounting for 72% of main shopping trips between them. However, discount stores continue to loom large in the retail landscape and are the destination for 16% of main shopping trips.
Ambivalence among shoppers continues to be concerning for some retailers, with store choice being primarily driven by functional and transactional hygiene factors such as proximity (48%), product range (41%) and low prices (32%), versus the emotional aspects of shopping that can create more meaningful loyalty between retailers and shoppers. Furthermore, over two-thirds (68%) of global shoppers said they go where they believe they can find the cheapest prices. This is particularly true within markets such as China and Russia where shopper ambivalence has reached worrying levels.
TCC Global said in addition to the growing market share enjoyed by discounters, they are also leading the way in converting new shoppers into advocates and loyal customers, achieving the second highest Net Promoter Scores in grocery retailing. They scored (+55) compared to the more mainstream channels of convenience (+31); hypermarkets (+46) and supermarkets (+45).
“To see discounters acquiring so many new main shoppers is impressive and an indication of how their low prices and improving propositions is really paying dividends. Shoppers’ increasing willingness to spread their purchases across a number of outlets available to them will create a degree of concern for some larger established retailers. Those that successfully move from being a mere provider of goods and services to be a partner organisation that can enhance the lives of customers in other ways will fare better in the long-term battle for loyalty,” said Roberts.
TCC Global’s latest research also found that, despite the data and insight advantages afforded to retailers by loyalty cards, they are becoming much less effective at retaining customers, demonstrated by just 5% of shoppers agreeing that they would switch to another retailer if their current store withdrew their loyalty card scheme.
Seven in ten shoppers globally said they wanted to see loyalty rewards that go beyond the traditional loyalty card, seeking in particular inspiration and guidance that can enrich everyday lives, such as inspiring healthy meals and cooking, offering solutions to make life easier in the kitchen, encouraging healthier eating among kids, and providing fresh and tasty ways to explore foreign cuisine.