Pillar Deep Dives

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Discounts, Rewards & Information is defined as relevancy and ease of redeeming discounts and coupons, rewards for shopping, and providing relevant Information. Like Speed, which shot up from least to most important in the Covid Era, this pillar also became much more associated with success in 2020 than in previous years – sitting behind Speed and alongside Digital.

Out of all the pillars, the increased importance of Discounts, Rewards & Information seems to be truly a Covid Era phenomenon. While Discounts, Rewards & Information was associated with some success in 2020, long-term, the more a retailer leans on Discounts, Rewards & Information instead of improving base price, the poorer positioned they tend to be for financial success. Two factors seem responsible for the increase in importance of Discounts, Rewards & Information during Covid: perceptions of higher food prices and supply chain disruptions. Customers are not only noticing a rise in the cost of food but also that deals and discounts are less frequent than they were before Covid, creating a sort of double whammy for price conscious customers. They are also noticing that when deals are available, customers swarm the items and leave empty shelves. It's about quality offers and promotions rather than quality. So, retailers who did offer accessible, easy-to-use discounts and rewards earned repeat visits from grateful customers, and tended to have more momentum in 2020.

Fareway made a notable jump on Discounts, Rewards & Information during Covid. While this helped the retailer's strong momentum score, Fareway also happens to rank first in the market in the all-important Speed pillar for the Covid Era and is above average in Operations.

Speed


For this study, speed is defined as getting in and out of the store quickly and a fast checkout. In the Covid Era, Speed became synonymous with Safety, more strongly correlated than any other driver. Shoppers wanted to avoid crowds and get in and out fast to stay away from germs. But Safety also threw unprecedented hurdles at shoppers to execute a quick shopping trip with the safety measures that stores enacted, such as one-way aisles and lines to get in the store

Furthermore, it was not uncommon that when shoppers would get in the store, some of the items they had lined up for wouldn't be there, feeling like time wasted. So, retailers who helped shoppers overcome these hurdles, save time and stay safe during Covid increased the likelihood of capturing bigger baskets and a greater share of trips during Covid. Albertson's and Raley's improved customer perceptions of Speed compared to last year. Raley's coupled their Speed gains with established Digital performance to achieve above average momentum and a move up the RPI ranking.

Speed and Covid:Voice of the customer

"One-way aisles take much longer to navigate, especially if you forget an item & have to go back or want to compare prices on items in different aisles. Also entering the store on one end & exiting it on the other creates a greater distance from where I normally park."

Operations


Operations combines the in-stock availability of products that consumers purchase regularly and price consistency. Unlike other amplifier pillars such as Digital, Operations became only slightly more important in driving retailer preference during the Covid Era compared to pre-Covid. Meaning, Operations maintains the same tertiary level of importance in contributing to both the long-term success and short-term Covid gains or losses for grocery retailers.

The Top Quartile for Operations are mostly a mix of wholesalers and traditional retailers. Note that Ralphs, Trader Joe's, Fry's Foods, and ShopRite all tie for 7th place in Operations, with Trader Joe's and ShopRite as the only two of these retailers making it to the First Quartile Overall. These distinguish themselves from the other two banners in their strong Price and Quality performance with customers.

Of all the pillars, retailer rankings in Operations showed the most volatility versus past years, likely due to retailers' varying ability to grapple with supply chain challenges and manage Covid-induced panic buying. The typical change in rank amongst retailers was the highest for Operations, with a retailer fluctuating around seven spots on average. Such fluctuation hints that gains in this area might be temporary. HyVee and Smith's made the greatest leaps in their Operations ranking this year. Both retailers remain situated squarely in the Third Quartile Overall, but both HyVee's and Smith's showing in Operations combined with their Discounts, Rewards & Information performance did nudge their Covid momentum and contribute to short-term market share gains. Fareway's twenty-two spot vault in improving Operations customer perceptions combined with its impressive performance in Speed helped secure it a spot in the Second Quartile Overall.

Operations and Covid: Voice of the customer

"In the beginning of the Covid experience, it was very hard to find common items, but that has improved over the last 2 months. Prices have gone up on everything."

Digital


The Digital pillar is defined as: easy ways to shop online or with an app, and usefulness of information provided. During 2020, Digital increased in importance to drive short-term financial performance. Walmart Chief Financial Officer Brett Biggs said the shift in customer buying behavior at the start of the pandemic amounted to "three to five years of acceleration in eCommerce, really in a period of weeks and months."

As Covid accelerated a dramatic lift in web search, website traffic, and conversion. According to Microsoft Advertising, food, grocery, and cooking content searches jumped 53.8% YOY. And traffic to grocery websites increased 34.8% from January to October 2020. According to Edge Ascential, overall grocery eCommerce was projected to grow 50% in 2020.

Digital is ubiquitous today with every retailer offering some form of delivery. However, we found Digital became less important in driving long-term emotional connection with customers, indicating they likely shopped online out of necessity, rather than preference - driven by out of stocks or to avoid the risk of Covid. Poor experience with online shopping might also explain why Digital can negatively impact emotional bonds, as consumers mentioned being frustrated by the lack of Quality produce, wrong substitutions, and difficulty finding pickup slots. If customers maintain their Covid Era online shopping habits, only retailers capable of delivering a positive Digital experience will retain them post-Covid. Brookshire's Grocery and BJ's Wholesale made a leap in Digital customer perception compared to last year. Brookshire's Grocery had the biggest jump in position than any other retailer in any other pillar, going from 33rd on Digital to 9th and sitting comfortably in the First Covid Quartile. BJ's Wholesale paired strong performance in Digital and Operations to have one of the highest Covid Momentum Scores, and making one of the biggest moves in the RPI study this year.

Digital and Covid: Voice of the customer

"Out of stock items are especially challenging when ordering online, because you don't find out until the order is packed that the items aren't available, so you can't add new items or adapt your menu plan for the week as well as if you are in store."