Research Predicts $70M in Incremental Annual Sales via a Customer-Centric Loyalty Strategy


ARLINGTON, VA and TORONTO  July 
19, 2018 – The best way for food retailers to gain an advantage over digital retailers and other competitors is to have a large, loyal customer base. To achieve this, it is critical for retailers to take a next generation approach to customer loyalty and view it in 3D: Loyalty as a Strategy, Loyalty as an outcome of daily decisions and Loyalty as a Program.

According to a newly released report from the Food Marketing Institute and Precima, titled Next Generation Loyalty: Get It Right In Food Retail Part 2: Loyalty In 3D, food retailers have the ability compete successfully and sustainably in today’s highly competitive market by understanding and consistently satisfying shopper needs better than the competition. But retailers need to realize that they can’t assume that their current customers will remain loyal – they need to consistently earn the loyalty of their shoppers by aligning their resources and decisions with customer needs.

“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 touchpoints and not merely through a loyalty program,” explains 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 report, the second of two on the topic, provides a framework and roadmap for how food retailers can successfully approach Loyalty in 3D and take their efforts to earn customer loyalty to the next level. The intangible benefits from a comprehensive approach that includes all of these elements include the advantages of having a very loyal customer base and a purpose driven workforce that is energized and committed to delivering a higher level of value to customers. This one-two combination is difficult for any competitor to replicate or steal and provides an almost unassailable competitive advantage.

From a tangible perspective, next generation loyalty enables retailers to grow their number of valuable shoppers, sales per shopper and lifetime value per shopper. It allows the retailer to do this in the most cost-effective and lowest risk way by understanding and satisfying customer needs better than the competition. By way of a bottom line example, the report shows that for a $2B retailer with a gross margin of 25% this equates to $70M per year of incremental sales and $30M per year of incremental gross profit.

“With the intangible and tangible benefits that are possible from taking a shopper-centric approach, it is surely time for retailers to embrace next generation loyalty. As one of our member CEOs told us, ‘if you don’t like change, you’re going to like irrelevance a lot less,’” says Pat Walsh, senior vice president for industry relations at FMI.

The report, which is based on survey of more than 3,000 shoppers and 200 retailers, provides guidelines for how retailers should implement a next generation approach to loyalty. Central to the suggested approach is 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.

Note to editors: Graeme McVie and Pat Walsh are available for interviews through the media contacts. Both reports are available for download at www.FMI.org/Store.


About Precima

Precima is a global retail strategy and analytics company that provides tailored, data-driven solutions to retailers. Leveraging deep analytics, Precima helps companies improve their competitive position across assortment, price and promotion optimization, targeted marketing, and supplier collaboration. Precima can help you deliver on the full promise of customer-centricity with Total Store Optimization using machine learning to optimize merchandising and marketing decisions across the entire store for all categories simultaneously, the same way your customers shop the store. Precima is part of LoyaltyOne, an Alliance Data Fortune 500 Company.  For more information: www.precima.com.