Building and maintaining customer loyalty is essential for long-term success in retail. It is crucial to understand the difference between loyalty to a store and loyalty to a brand. In an interview with Abasto magazine, Becky Eldredge, Vice President of Commercial Loyalty at 84.51°, explained that distinct value exchanges drive both forms of loyalty. This distinction is critical for fostering strong customer loyalty in today’s competitive market.
According to a special loyalty study conducted by 84.51°, a retail data, insights, and media science company, 63% of customers prefer the retailer where they shop most frequently.
Understanding these dynamics is key to growing customer loyalty effectively.
Key Factors Driving Customer Loyalty
Store Loyalty Factors:
- Everyday low prices (60%)
- Sales and promotions (49%)
- Convenience of location (48%)
Brand Loyalty Factors:
Conversely, for brands, 84% of consumers value good quality-to-price ratios, while 56% cite trust as a determining factor. These findings underscore the unique motivations behind store versus brand loyalty, which retailers must address to cultivate enduring customer loyalty.
The Impact of Store Brands on Loyalty
Inflation and rising living costs have driven 52% of customers to choose more affordable store brands. These brands have significant opportunities to gain customer loyalty by consistently offering quality and value. Store-brand products, often perceived as more accessible, are a frequent choice for consumers seeking savings.
However, Eldredge emphasizes that price alone is insufficient. Customers expect store brands to deliver on promised benefits while maintaining good value.
Specific product categories, such as baby and pet food, exhibit stronger brand loyalty due to the trust they inspire. Retailers must focus on these critical factors to deepen customer loyalty.
The Role of Loyalty Programs in Grocery Retail
Loyalty programs are essential tools for retaining customers and fostering their loyalty. Eldredge explains that these programs aim to offer a value exchange that motivates consumers to keep shopping with a specific retailer. At Kroger, for example, loyalty programs reward loyal customers and create positive experiences that reinforce their commitment.
The success of a loyalty program depends on its ability to adapt to individual customer needs. Personalization plays a critical role in this process, allowing retailers to identify and meet specific consumer expectations, thus enhancing customer loyalty.
Diversity in Products as a Strategy
Offering a variety of products catering to different population segments is an effective strategy for strengthening customer loyalty.
Eldredge mentions that including options for Hispanic, Asian, and other demographic groups helps retailers connect better with their communities.
The study reveals that 74% of customers consider the retailer’s location necessary, while 72% value a diverse assortment of products and brands. This underscores the importance of understanding local customer preferences.
Providing a wide range of culturally reflective products increases satisfaction and also strengthens consumer preference for the retailer.
Related Article: Brand Loyalty Suffers in Times of Food Inflation
Fresh Products as a Decisive Factor
Fresh products, such as fruits, vegetables, and meats, are crucial in fostering customer loyalty. Eldredge highlights that consumers value quality and freshness when choosing a grocery store.
According to the study, fresh product categories are the most likely to drive customer preference for a retailer.
The ability to assess freshness directly increases consumer confidence and loyalty. Retailers who prioritize freshness can build stronger connections with their customers.
Understanding the Gap Between Consumer Intentions and Actions
While many consumers claim loyalty to certain retailers or brands, their actual behavior may differ. Eldredge explains that this gap often results from customer needs or priorities changes.
For example, while some consumers remain loyal to specific brands in categories like baby or pet food, others may switch brands more readily in fresh product categories.
Understanding how customer needs evolve allows retailers to adjust their strategies to remain relevant and strengthen their loyalty in a competitive market.
Recommendations to Improve Consumer Loyalty
Eldredge offers several key recommendations for retailers aiming to strengthen customer loyalty:
- Recognize the Value of Loyal Customers: At Kroger, a loyal customer is worth as much as 10 non-loyal customers, emphasizing the importance of investing in retention strategies.
- Identify and Meet Customer Needs: Retailers must develop a clear value proposition that fosters commitment and loyalty.
- Evaluate Changes in Consumer Behavior: Regular studies enable retailers to adjust strategies and ensure they continue meeting customer expectations.
Cultivating Loyalty in a Competitive Environment
In a market where consumers have numerous options, their loyalty becomes an invaluable resource for retailers.
Differentiating between store and brand loyalty, implementing personalized loyalty programs, offering diverse product selections, and ensuring freshness are proven strategies for strengthening customer commitment.
By prioritizing these approaches, retailers can enhance customer loyalty and secure a competitive edge.