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How to keep grocery store sales up and consumers loyal, even with a recession looming

Consumers are having a visceral, belt-tightening reaction to economic uncertainty. When profits dip, grocery executives’ natural first reaction is to cut costs wherever possible, or maintain margins by passing off some of the cost to consumers.

How to keep grocery store sales up and consumers loyal, even with a recession looming

But these traditional strategies are not designed with long-term goals in mind. Instead, they can leave loyal shoppers dissatisfied and push them to look elsewhere.

Smart retailers are capturing new customers ahead of the downturn. Read this article to learn the top 3 strategies how competitive grocers survive a recession.

  • Capture new consumers
  • Increase consumers’ trip frequency
  • Convert secondary shoppers into loyal customers

Content Summary

Why current strategies aren’t cutting it
Building new stores
Spending big on advertising and marketing
Bolstering your e-commerce presence
Passing off higher costs onto customers
Investing more in traditional loyalty programs
What the right customer-saving strategies look like
The key is focusing on a three-tier approach
Capturing new customers by…
Increasing shoppers’ trip frequency by…
Converting infrequent shoppers into loyal consumers by…
Your profitable grocery store sales, secured

Consumers are having a visceral, belt-tightening reaction to economic uncertainty The consumer price index rose to 91% in June, but fortunately, jobless claims have only risen slightly The most pressing concern for consumers isn’t losing income, but rather that the dollars they spend aren’t going nearly as far as they did before the pandemic.

When profits dip, grocery execs’ natural first reaction is probably to cut costs wherever possible, or maintain margins by passing off some of the cost to consumers But these traditional strategies are not designed with long-term goals in mind Instead, they can leave loyal shoppers dissatisfied and push them to look elsewhere.

As bold as it seems, the key to success in difficult periods is to focus on growth, not just cutting costs Rather than thinking about it in terms of big investments and burning through resources, consider how you can achieve growth through a tactical, cost-savvy approach — bucking those traditional, broad-based strategies by avoiding upfront costs and shrinking margins Let’s dive in and see how you can grow both your grocery store sales and the number of loyal consumers who visit your store (regardless of whether we’re headed into a recession).

The key to success in difficult periods is to focus on growth, not just cutting costs.

Why current strategies aren’t cutting it

Lower consumer spending power impacts the types and quantities of products shoppers buy When consumers spend the same amount of money at your stores but get less in return, typical grocery buying behavior shifts and consumers look for better prices at value stores While grocers juggle compounding supply chain issues and fleeing consumers, today’s strategies of offering blanket promotions to keep consumers in-store leave grocers unable to maintain current margins or prevent loss of market share ahead of this potential economic downturn.

Read on for a few common strategies you and your competitors may have already tried or are actively considering.

When consumers spend the same amount of money at your stores but get less in return, typical grocery buying behavior shifts and consumers look for better prices at value stores.

Building new stores

More real estate for your business gives you a wider base of consumers to draw into your stores But especially now, new storefronts and franchises are incredibly capital intensive — probably more than anything else on this list Expansion is best carried out as a result of high growth, not as a way to drive growth itself.

More importantly, this kind of approach is solely focused on growing your reach to new markets, but misses the opportunity to increase same-store sales at your existing locations The goal here is to think more tactically about how consumers shop and engage with your stores individually, rather than assume that entering new neighborhoods without a change in individual store practices will change the way people shop.

Spending big on advertising and marketing

Advertising and marketing are a pillar of any solid growth strategy Unfortunately, recessions are not the best times for a flyer blitz or digital banner buy-up Ad costs are astronomical right now, a byproduct of numerous other businesses trying the same tactics and driving up prices.

What’s more, these big ad campaigns are often not attributable — even if you get a few more folks coming to your stores, it’s difficult to tell what portion of your ad spend is responsible for the boost You’ll be trying to recreate that pricey success story over and over without a clear, proven strategy for growth that contributes to your grocery store’s long-term success.

Bolstering your e-commerce presence

The digital boom has fully captured the hearts and minds of millions, and popular apps like Instacart and Uber Eats saw some big returns throughout the pandemic Whether you had originally planned to or not, your stores probably embraced some level of digital expansion through marketplace partnerships or your own apps as a result of COVID-19.

E-commerce may seem like the right approach, and certainly, it’s important to maintain a healthy digital presence for an all-encompassing shopping experience But third-party online sales often result in contribution-negative sales, earning less and less per product sold In an effort to grow sales, you’re really just spending more money to achieve lower margins.

Passing off higher costs onto customers

Inflation is going to force price increases along the way, but assuming consumers will go along with hikes without hesitation is a flawed strategy.

One of the goals throughout this recessionproofing process is to keep long-time consumers from turning away While passing off costs may help in the short-term, those once-loyal shoppers will readily take their business elsewhere, especially now, when their budgets are tighter than ever What’s more, you risk changes in consumer behavior that will cost you both their individual transactions and future loyalty.

Passing off costs may help in the short term, but you risk changes in consumer behavior that will cost you in the future.

Investing more in traditional loyalty programs

Your loyalty programs have likely incentivized repeat consumers and bigger baskets But without precise measurement of each incentive’s impact on consumer behavior, you may even be cannibalizing your own profit by overcorrecting and offering larger incentives to consumers who would have paid full price.

Traditional loyalty programs work well to retain existing consumers, but they won’t help bring in new ones Potential new shoppers are rarely convinced to choose one store over another simply based on its in-house loyalty program, especially considering that at this point, every brand has its own program to offer Without bringing new consumers into the fold, your growth has a limit.

All in all, you need to know each dollar you spend has a direct influence on consumer behavior, just like how your consumers want to feel like their dollars have more spending power in your stores In the face of a recession, business-as-usual spending won’t cut it You need to shake up your approach and think more tactically, down to each individual shopper.

You need to know each dollar you spend has a positive influence on customer behavior, just like how your customers want to feel like their dollars have more spending power in your stores.

What the right customer-saving strategies look like

The good news is there are real approaches you can take right now to keep existing consumers and draw new ones into your stores Rather than trying to tackle all aspects of a recession in one fell swoop, you can focus on each key issue that plagues your business in uncertain financial times and promote low-cost strategies to target and tackle each one head-on.

The key is focusing on a three-tier approach:

  • Capturing new customers
  • Increasing shoppers’ trip frequency
  • Converting infrequent shoppers into loyal consumers

These three levels pinpoint the critical buyer behaviors that profitably drive your grocery store sales and keep the dollars coming in Within each are actionable strategies to increase your likelihood for success with attributable and profitable investments that will actually grow your business.

Capturing new customers by…

MEETING THEM WHERE THEY ARE with digital platforms to entice new (and especially younger) shoppers New mobile marketplaces aren’t just for e-commerce and shopping online — they can also be tools to get eyes on your brand and shoppers in your store Keep an eye out for the platforms that can cast a wide net for potential new consumers, but that don’t charge you just for views or clicks that don’t impact your bottom-line.

INCENTIVIZING THEM TO CHOOSE YOU with personalized promotions With the right partner, you can use the data you already have to account for both your available margin and historic consumer purchasing data to generate personalized offers for consumers These kinds of offers help bring in first-timers, showing them the quality and attention you put into your shopping experience More importantly, they kick off the three-step process that leads to primary shopper conversion and — finally — the glorious title of “loyal consumer.”

Increasing shoppers’ trip frequency by…

REACHING THEM ALL ALONG THEIR CONSUMER JOURNEY, like when they’re running errands and deciding where to buy groceries The goal is not just to win a sale here and there, but to fundamentally change how and when they shop at your stores If you can become a regular part of their routine, you’ll win yourself a loyal consumer.

KEEPING YOUR BUSINESS AT THE TOP OF THEIR MINDS even when they’re not necessarily shopping for groceries With a strong digital presence across the right multi-use marketplaces, you can keep your brand in the consumers’ peripherals, even if they’re just out to grab a bite to eat or fill up on gas These quick, one-off impressions build a lasting footprint in your shoppers’ minds.

The goal is not just to win a sale here and there, but to fundamentally change how and when they shop at your stores If you can become a regular part of their routine, you’ll win yourself a loyal consumer.

RECRUITING THEM TO YOUR STORE’S “LOYALTY BASE” by converting those infrequent consumers into fans Though investing solely in loyalty programs is a limited solution, pushing your in-house platform as part of this three-step shopper conversion process is a major asset in boosting buying frequency.

Converting infrequent shoppers into loyal consumers by…

CHANGING THEIR BUYING BEHAVIOR through personalized promotions that target these shoppers and win them over from competitors Consumers who have come into your store once or twice are not loyal, and will shop at a rival business if they see a better price or find it more convenient To get ahead of this, use your consumer data to see how and why each of these consumers shop and give them the offers that will win over their wallet.

DRIVING SHOPPERS TO CENTER-STORE toward your staple, private-label items Store-brand-heavy baskets are an integral part of boosting your grocery store sales and widening those margins Incentivizing a deeper exploration of your store’s offerings means more time spent shopping, bigger overall basket size, and higher margins thanks to those private-label items.

Customers who have come into your store once or twice are by no means loyal to you, and will happily shop at a rival business if they see a better price or find it more convenient.

When applied together, these winning strategies are essential to powering your stores for both immediate and long-term sales growth The key is to put these tactics into practice with the right tools and platforms that set you up for success.

Your profitable grocery store sales, secured

Recessions are not kind to businesses or consumers, but that doesn’t mean you’re defenseless against them.

A combination of proactive, personalized approaches for targeting consumers alongside your existing programming will help you capture new consumers, increase shoppers’ trip frequency, and convert infrequent shoppers into loyal consumers.

Remember, the goal is to break out of instinctive cost-cutting habits to find more tactical ways to drive grocery store sales We’ve talked a lot about helpful strategies when a recession is on the horizon, but these strategies can benefit your stores indefinitely going forward While investing in growth (instead of cutting costs) might be a fundamentally different approach than what your business is used to, it’s business-critical to think about your shoppers through a personalized lens and harness new digital marketplaces.

However you strategize protecting your store from the recession, remember the forward thinking it takes to survive economic waves By taking an innovative approach, you’ll come out on the other side stronger than before with loyal, happy consumers and proven strategies to grow your business into the future.

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