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How Technology Enhances Grocery Store Marketing to Better Reach and Retain Customers

How Technology Enhances Grocery Store Marketing to Better Reach and Retain Customers

Optimized supply chains. Extensive product ranges. And the ability to offer unbeatable prices.

Whenever we analyze the increasing share of the grocery market being taken by retail giants like Walmart, these inherent advantages are the first to be mentioned.

And for good reason: These specific areas of strength are what mass merchants have leveraged to effectively appeal to modern consumers. It’s how they’ve grown their market share and increased cross-shopping.

Mass merchants are increasing grocery market share

What’s less discussed, however, are the formidable marketing budgets and corresponding marketing strategies used by larger retailers to emphasize the product availability, choice, and lower costs they offer.

After all, holding an advantage over the competition isn’t all that useful unless it’s being communicated to the market and properly utilized to increase profitability.

The Marketing Challenge for Regional Grocers

Regional grocers and independents know this all too well.

Not only are grocery stores competing directly with mass merchants for the grocery spending of American households, but they often lack the resources to market their own inherent strengths effectively and consistently.

A lot of the advice given to grocers on competing with big retailers centers around marketing: communicate a better customer experience, create effective customer loyalty programs, attract customers by engaging with the local community, etc. However, such advice too often assumes regional grocers and independents have the budgets and time necessary to engage in effective and consistent grocery store marketing strategies.

To compete with larger retailers and win back their market share, grocers need a solution that not only addresses critical areas such as customer retention but also provides their marketing teams with the means to better promote their unique strengths — consistently, cost-effectively, and resource-efficiently.

That means leveraging technology to automate and personalize marketing tactics.

Leveraging Technology for Greater Growth

The idea of using technology to fuel growth is nothing new to mass merchants.

At the recent GroceryTech ’24 conference in Dallas, Anshu Bhardwaj, SVP & COO of Walmart Global Tech & Commerce Technologies, emphasized the role of technology in Walmart’s marketing strategy including loyalty programs and bringing in-store and online shopping together.

In addition to introducing new tech-led initiatives like Store Assist and Route Optimization to make shopping experiences more streamlined for customers and reduce fulfillment costs, Walmart has introduced the concept of adaptive retail. This customer-centric approach uses technology to better adapt to customer needs, enhancing the shopping experience and increasing loyalty.

This only serves to enhance the compounded challenge facing regional grocers and independents.

Just as Walmart used its extensive product availability and lower prices to initially attract new customers away from the local grocery store experience, they’re now working to retain those customers through these tech-led initiatives. And because of their size, they’re able to employ a widespread marketing strategy to communicate the streamlined service these initiatives provide customers.

To keep up, grocers must leverage technology to understand their customers better and cost-effectively enhance their marketing. Traditional methods, like print ads and weekly circulars, are not only costly but fail to provide both the personalized touch that today’s consumers expect and the precision grocers need to reach a target audience.

Contextualized Commerce

At the very same conference that Bhardwaj shared how tech is being used to fuel Walmart’s growth, Mercatus presented its own workshop, introducing contextualized commerce as the overarching strategy grocers can employ to compete with Walmart’s tactics.

Like the adaptive retail concept introduced by Walmart, contextualized commerce is about seamlessly integrating the digital and physical retail experiences to the customer, but its aim goes one step further. The strategy is meant to allow grocers to extend the personalized, high-touch, in-store service they’ve traditionally provided customers to the digital experience, thereby creating and communicating a level of service that mass merchants can’t match.

How does contextualized commerce work?

It uses first-party data, operational insights, and predictive personalization (powered by proprietary algorithms and machine learning) to engage customers from initial impression to transaction, both online and in-store, ensuring a connected and relevant experience across all channels.

Contextualized commerce is the exact means by which grocers can adapt the personal approach of their traditional service model to the digital experience; and adopt the value and convenience drivers that larger retailers have appealed to so effectively to grow their market share.

It levels the playing field for grocers, and then provides them with an advantage over mass merchants.

The Cost of Traditional Marketing: Weekly Circulars

To better understand the benefits of this approach, let’s compare contextualized commerce with one of the traditional marketing tactics we mentioned earlier: the weekly circular.

For decades, the weekly circular has been a staple of grocery store marketing strategies. These printed ads highlight sales and promotions, and are distributed widely to attract customers to the grocery store. They aim to drive foot traffic and increase sales by showcasing discounts on popular items. However, this broad-spectrum approach lacks personalization and often results in wasted resources, as it reaches many who aren’t interested in the advertised products.

In addition to being inefficient, producing and distributing these grocery store advertisements are incredibly costly and do little for customer loyalty:

  • High Production Costs: Designing, printing, and assembling weekly circulars require significant financial investment.
  • Distribution Expenses: Mailing or delivering these ads to households incurs substantial costs.
  • Limited Reach and Engagement: Circulars often fail to engage the specific interests of individual customers, leading to lower conversion rates.

Contextualized commerce, however, uses data-driven insights to deliver personalized offers that are relevant to each customer’s shopping habits, thereby increasing the likelihood of conversion and customer satisfaction.

The Cost of Traditional Marketing: Weekly Circulars

Leveraging First-Party Customer Data for Personalization

It all begins with customer data.

First-party data, collected directly from customers through their past purchases, browsing history, and previous engagements with marketing campaigns, is invaluable for creating personalized shopping experiences. By leveraging this data, grocers can gain deep insights into individual customer needs and preferences, allowing them to tailor their marketing efforts more precisely.

For example, a grocer can identify that a customer frequently buys gluten-free products. With this knowledge, the grocer can personalize marketing messages and promotional campaigns to entice customers further by highlighting gluten-free options, recommending related products, and providing highly relevant discounts. And they can do all this automatically, at scale.

This level of personalization not only enhances the shopping experience but also builds customer loyalty by showing that the grocer understands and caters to their specific needs — just as grocery stores have done for decades in person.

Consolidating First-Party Data for a Holistic View of the Customer

To get to the point of influencing future purchases, it’s not enough to merely collect sales data.

There’s plenty of customer information already available to grocers. In the past, however, grocers have had to deal with disconnected data sources from point-of-sale systems, loyalty programs, their own eCommerce platforms, as well as multiple first- and third-party integrations.

Consolidating First-Party Data for a Holistic View of the Customer

To get to the point of influencing future purchases, it’s not enough to merely collect sales data.

There’s plenty of customer information already available to grocers. In the past, however, grocers have had to deal with disconnected data sources from point-of-sale systems, loyalty programs, their own eCommerce platforms, as well as multiple first- and third-party integrations.

To fully harness the power of all this data, it must be consolidated into a single, comprehensive view of each customer.

That means integrating data from all these different touchpoints into a unified customer profile. This holistic view of the customer provides grocers with a detailed understanding of their behavior across different channels and contexts.

Consolidating first-party data like this allows grocers to see patterns and trends that may not be apparent when data is siloed.

For instance, a customer might prefer shopping for fresh produce in a brick-and-mortar grocery store, but uses online shopping to purchase pantry staples. With a unified customer profile, the grocer can create a seamless and consistent shopping experience across both channels. They can also identify opportunities for cross-selling and upselling by understanding the full scope of the customer’s interactions with the grocer.

Automated and Efficient Marketing Campaigns

Contextualized commerce leverages the rich insights gained from this unification of first-party data to activate highly personalized campaigns through targeted savings that are timed to purchase cycles.

Using advanced algorithms and machine learning, contextualized commerce analyzes shopping data to predict future behaviors and preferences. This allows grocers to deliver the right message (personalized savings) to the right customer (targeted to a highly specific segment) at the right time (just before they regularly make their purchase).

Automated and Efficient Marketing Campaigns

If the data indicates that a customer typically purchases a specific brand of cereal every month, contextualized commerce provides grocers the ability to automatically send a personalized offer for that cereal just before the customer is likely to run out.

Similarly, if a customer has shown interest in a particular type of product but has not yet made a purchase, a personalization platform can trigger a targeted promotion to encourage conversion.

Sponsored Product Opportunities

In addition to automated campaigns around regularly purchased items, these campaigns can also include sponsored products, generating additional revenue and further offsetting the costs of implementing the contextualized commerce technology.

A customer who regularly buys organic snacks but hasn’t yet tried a specific brand of organic granola represents the ideal example.

By analyzing purchasing patterns and preferences, contextualized commerce identifies this opportunity and delivers a targeted offer for the sponsored granola brand. This approach not only introduces the customer to new products within their preferred category but would also align with the overall marketing objectives of the grocery store.

Consumer Packaged Goods (CPG) companies are often willing to invest in these targeted promotions, as they ensure their products reach the right audience. This strategic partnership allows grocers to benefit from CPG ad spend, enhancing their revenue streams while providing customers with relevant and timely product recommendations.

This win-win scenario underscores the effectiveness of leveraging first-party data to create personalized, impactful marketing campaigns.

Reduced Burden on Marketing Teams

In addition to all of the benefits of this automated marketing — increased active users, boosted average order values, and improved customer lifetime values — it also reduces the burden on marketing teams by streamlining the process of creating, launching, and monitoring promotions, including:

  • Time Savings: Automation handles repetitive tasks, freeing up time for strategic planning.
  • Consistency: Ensures campaigns are executed consistently and on schedule.
  • Efficiency: Reduces manual errors and operational inefficiencies.
  • Scalability: Allows marketing efforts to scale without a proportional increase in workload.
  • Analytics: Provides real-time insights and performance metrics, simplifying campaign adjustments.

The automated approach provided by contextualized commerce ultimately reduces operational costs and frees up marketing teams to focus on strategic initiatives that contribute further to attracting new customers, retaining lapsed ones, and ensuring loyal customers continue shopping at the same grocery store.

Nurturing Loyal Customers

These results simply aren’t achievable with the type of broad-spectrum marketing we referred to earlier in the section about weekly circulars.

Unlike mass merchants, regional grocers and independents can’t afford to cast a wide net with little precision.

That’s why the ability of contextualized commerce to tailor marketing content to individual customers is such a benefit to grocery stores. Features like Automated Journey Mapping and Programmatic Targeting ensure strategic campaigns are executed flawlessly, nurturing customer relationships and preventing churn far better than a static loyalty program that offers nominal transactional discounts.

Enhancing Customer Loyalty

Contextualized commerce goes far beyond these types of loyalty programs to actually nurture a deeper relationship between grocery store and customer.

According to sales statistics from Brick Meets Click, after four successful shopping interactions, a customer’s retention rate increases to more than 85%. That means that the more they shop the more likely they are to keep shopping and reuse the service that provided a great customer experience.

The type of nurturing that contextualized commerce provides — through targeted savings aligned to purchase cycles, all wrapped up in a highly engaging customer experience — creates an addictive experience for the consumer, in which their needs are consistently met and expectations exceeded.

Reducing Customer Churn

At the other end of the spectrum, contextualized commerce also provides grocers with the data they need to identify a customer is churning before the actual customer is aware of it themselves. This further allows grocers to nurture potentially lapsing customers and ensure that fewer shoppers are lost to larger retailers or other competition.

It’s all about ensuring that grocers can engage customers at critical moments in their shopping journey, fostering loyalty, driving long-term engagement, and ensuring the customers shopping at your grocery stores continue to do so.

AisleOne is the Solution Grocery Stores Need

We’ve designed and developed our AisleOne personalization and customer retention solution to provide grocers with the contextualized commerce described throughout this article.

We looked at the challenges facing grocers and realized it’s not enough to merely provide a solution that enhances the customer experience if this enhanced experience can’t be cost-effectively and consistently communicated to customers.

On top of the challenge of competing with big retailers in terms of experience, there are several marketing hurdles to overcome:

  • Limited Budgets: Smaller marketing budgets compared to large retailers like Walmart.
  • Resource Constraints: Fewer staff and resources to execute and manage marketing campaigns.
  • Broad-Spectrum Inefficiency: Traditional marketing methods, like weekly circulars, are costly and not targeted.
  • Lack of Data Integration: Difficulty in consolidating data from various touchpoints to create comprehensive customer profiles.
  • Technological Barriers: Limited access to advanced marketing technologies and tools for automation and personalization.

AisleOne overcomes all of these challenges by seamlessly integrating your first-party data and providing you with the capability to launch personalized campaigns that reach every single one of your unique customers — new customers, returning customers, lapsed customers — on a personal level by delivering the right message and the right offer at the right time.

Effective and Consistent Marketing Aligned to Brand

AisleOne overcomes all of the technical challenges that have hindered grocers from offering and marketing a truly personalized shopping experience in the past. Its automation capabilities, aligned to individual customer journey mapping, further ease the burden on marketing teams.

Not only will your marketing team love the ability to send millions of personalized product recommendations weekly, they’ll be amazed at how easily AisleOne customizes the look and feel of your digital brand experience with flexible content containers for mobile and web. 

Meanwhile, your technology team will appreciate how simple it is to integrate AisleOne.

Without the need for additional coding or development, and no in-house technical expertise required, both teams can focus on strategic initiatives rather than implementation and operational maintenance.

Regain Your Market Share Through AisleOne’s Contextualized Commerce

AisleOne is the solution that grocery retailers need right now. It provides grocers with actionable consumer insights, comprehensive strategy support and the ability to truly enhance their customer experience through predictive personalization.

In the face of increased competition and ongoing tech-based initiatives from mass merchants like Walmart, AisleOne has been created to drive profitable growth through:

  • Better customer retention;
  • Enhanced operational efficiency; and
  • Consistent and cost-efficient marketing.

The result for grocers isn’t just a vague reference to “a level playing field” with bigger retailers. 

There are tangible, measurable, and proven benefits, including:

  • Improved customer lifetime value;
  • Increased incremental activity and spending;
  • Better purchase consolidation; 
  • More customer retention; and ultimately
  • Regaining market share from Walmart and the other mass merchants.

Reach out to us today to see how AisleOne can get these results for you through more targeted, more consistent, and more profitable marketing.

Headshot of Emi Takeda

Emi Takeda, Director, Marketing and Brand, is driven to help grocery retailers embrace digital transformation.