How Grocers Can Maximize 1st-Party Data for Better Shopper Engagement

Grocers face an ongoing dilemma: The customer data they have collected continues to grow at an exponential rate thanks to recent meteoric growth in digital engagements. This should come at no surprise, given that 90% of the world’s data has been created in the past few years alone. While that doesn’t sound like an issue – the challenge lies in harnessing critical insights to make decisions that find new shoppers, drive loyalty and keep them coming back. 

Accelerated by the pandemic and the rise of grocery delivery apps, curbside pickup, and more, 37% of shoppers do not buy groceries at a physical store and another 39% are hybrid shoppers, adding to the complexity in capturing consumer shopping data across multiple channels. Further, the death of the cookie, elimination of pixels, and new legislative controls at both the federal and state levels have made a lasting impact on how grocers harness and use data from their customers.

[Read more: "3 Ways Grocers Can Provide Stronger Customer Engagement"]

Top Targeting Tactics to Improve Data Strategies and Insights 

Loyalty data has historically been the principal source of consumer insights for grocers, but today, data needs to be sourced from multiple channels, including third-party shopping apps and new pickup/delivery experiences. Grocery shoppers are still targeted effectively by geography, when promotional offers are adjusted based on zones of specific store groups. Some major grocers leverage digital offers to drive signups to their apps and loyalty programs.

We’re seeing grocers test out new methods for incentivizing shoppers. Social media, video, connected TV and out-of-home are now regularly included in media plans with more traditional channels. QR codes are deployed more often to direct shoppers to targeted digital experiences. We are also seeing retailers, which historically haven't sent direct mail to shoppers, send postcards or inserts with basket value offers to encourage more trips and spend. They’re also discounting newer online programs such as subscription to delivery, and offering deep discounts in loyalty emails to get shoppers to sign on.

The goal is always to grow market share and sales in comparison with the previous year. This involves gaining more spend from current shoppers (for example, by capturing more trips), winning new shoppers, and getting repeat trips from those new shoppers.

Trends in Consumer Engagement That Drive Your Data

Multiple inflection points over this calendar year have shifted the way that shoppers buy. Inflationary food costs – such as the 11% year-over-year jump reported in January of this year – have consumers rediscovering the use of savings and offers to help trim prices. We saw a more than 5% increase in redemptions for all savings types during the first half of this year compared with last year. Given the instability of prices looking forward, we expect this growth to continue as we close out the second half of 2023. 

With inflation, consumers are shopping around at a much higher rate than before. A 2023 U.S. shopper study from FMI-The Food Industry Association reported that shoppers are going to as many as 5.2 different stores a month to buy groceries, an all-time high. Once a retailer is in a consumer's consideration set for weekly grocery shopping, it needs to work even harder to get its fair share of spend from that customer. Also, government programs like SNAP are changing benefits more often, which can significantly affect low-income, large-family households. With student loan repayments starting up again, we will see funds tighten for those affected. 

It’s crucial to watch shifting demographics and how they respond based on new economic, social or environmental factors. For example, the multicultural population in the United States is young. They have a lot of future spending potential and engage with media differently. Grocers that focus on capturing this diverse population early will have a jump-start on the future.

[Read more: "Making the Most of Multicultural Marketing"]

Making the Data Do the Work for the Long Run

Today’s data dilemma is causing grocers to consider what investments and efforts they need to resolve this and make an impact with shoppers. The key is not solely to look for a tool or grouping of tools to manage data and make it actionable. Investment should be in people – find the smartest people who can solve specifically for the data challenges being faced, whether that’s someone brought on to an existing team or a third-party partner. 

There are several tools and technologies available to help grocers harness their data, but without the expertise to fully understand the data and make it actionable, the tools aren’t as effective. This is why harnessing first-party data and putting that data to work are so critical. From in-person to hybrid to fully digital shoppers, scalable data analysis is vital to targeting new consumers and audiences built from the DNA of a grocer’s own customer file. When done correctly, a grocer’s first-party data can inform all tactics up and down the conversion funnel.