Quan Yao Peh, senior analyst at Euromonitor International, gave insights into the successful strategies employed by retailers and grocers to increase sales and marketing success within the FMCG sector.
One key aspect was that many have improved and strengthened digital capabilities, leveraging Q-Commerce and introducing loyalty programmes for spending with them.
“Pan-Asian Grocery retailer DFI Retail Group launched its new Yuu loyalty program in Singapore in October 2022, allowing consumers to earn rewards points and exchange them for products from participating merchants,” said Peh.
This system was accessible through the retailer's mobile app, with the Yuu loyalty programme’s point of difference central to its popularity and success. Its rewards club has participation from well-known brands present across various daily activities for most Singaporeans, including grocery retail, food service, recreation, and payments. This versatile range of areas for rewards to be collected from cater to differing consumer needs, making it a significantly successful loyalty programme suited and popular for its versatility and ability to appeal to a broad consumer base.
In China, a range of supermarket operators have partnered with Q-Commerce platforms for faster and more convenient grocery deliveries to consumers, allowing the industry to leverage the online channel to grow sales per store without the costs associated with increasing selling space.
The rise of e-commerce has meant a surge in the strength of private labels and exclusive products, which helps to differentiate retailers from competitors, drawing customers in-store. Another aspect that retailers have used to lure customers to stores has been to highlight stores as more than a stop for buying groceries, but a destination locations for a unique shopping experience where customers can find everything they need under one roof, which includes expansion on in-premises cafes, restaurants, pharmacies, playgrounds and more.
Peh explained that the Asia Pacific grocery retail landscape was diverse, with a wide disparity in development level across its many markets. The pandemic accelerated E-Commerce development for grocery retail as leading players improved digital capabilities and fulfilment infrastructure.
“Each channel has its distinct advantages. Retail Offline stores offer consumers instant gratification and the opportunity to indulge in in-store experiences. In contrast, E-Commerce offers the convenience of shopping from anywhere and a virtually unlimited product range.”
Retailers must find an equilibrium across retail channels that optimises sales success, tailored specifically for them, with strategies aligned with retailers' individual value proposition, product offerings and customer engagement strategies.
“Price and value remain key considerations of the weekly shop. Offering competitive prices and good value for product quality remains important.”
Despite this, Peh said that to maintain customer loyalty amidst the competitive landscape, retailers must offer value beyond the product's price. Secondly, retailers must carve precise brand positioning and provide a pleasant customer experience throughout the shopping journey by incorporating experimental retail features, such as food service.
Prudence Lai, senior research analyst at Euromonitor International, said that value for money is the top priority for loyalty programmes.
When consumers shop for essential products and earn transactional loyalty rewards, typically rewarded through repeated purchases, earning customer points and monetary rewards, this is the key to customer acquisition and retention for retail businesses.
“Sixty percent of global respondents to Euromonitor’s Voice of Consumer: Loyalty Survey in 2023 participates in loyalty programmes to receive discounts or offers,” said Lai.
Transactional loyalty is highly competitive amongst FMCG and grocery players, and modernising respective loyalty programmes to suit evolving consumer preferences is key.
Despite motivations for transactional rewards dominating, particularly concerning the economic outlook and pressures of the high cost of living, Lai said that consumers are increasingly purpose-driven and keen to look for more authentic connections with retailers.
“Revamping loyalty programme structures to embed emotional loyalty strategy is key to appeal to shifting consumer preferences. Growing interest for personalised features is observed.”
Lai explained that there was an increased selection of features, such as ‘recommend products to me based on my needs’, ‘personally recognise me based on my past visits’ and ‘welcome me by name when I visit’ when identifying influential loyalty features amongst global respondents, according to Euromonitor’s Voice of Consumer: Loyalty Survey in 2023.
Other than personalising promotions and pricing, alternative emotional loyalty strategies such as gamification can enhance the brand experience, increase the number of touchpoints with the customer and drive customer stickiness. The shift from one-way communication from brand to customer to two-way communication, placing customers in the driving seat, personalisation, and gamification are strategies retailers should look to utilise for gaining and maintaining customer bases.
Global retail e-commerce is expected to grow at seven percent CAGR from 2024 to 2027, showing strong momentum in the online landscape. Convenience continues to be the primary motivation for online shopping, as the top three online shopping motivations are the best price, the ability to order at any time, from anywhere, and free shipping.
“Providing seamless, omnichannel brand experience such as free delivery, together with personalisation of pricing and promotions and incorporating gaming in the brand experience helps a brand to differentiate and retain customers effectively in the short-term.”
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