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Lessons from the field amid the spread of the coronavirus

All over the world fresh food, grocery, drug retailers and their suppliers are working tirelessly to support their Customers and their communities to provide essential services as the coronavirus pandemic impacts everyone's daily lives.


We are in a time of unprecedented challenges for these retailers, their employees and their Customers. But even in these uncertain times, it has been heartening to see so many of these businesses put the Customer first and meet their most important needs, by listening to and caring for them, and adjusting their strategy and operational execution immediately – be it opening hours, services, pricing, product assortment or store experience. But in this time of crisis, it has also been crucial that retailers focus on those serving on the front lines of Customer engagement: the store and distribution colleagues. By recognising their contribution and making their lives simpler and easier, they can help them continue to serve Customers every day.

Alongside our local teams supporting many retailers and suppliers directly, by analysing changes in Customer behaviour and using data to help make decisions, we are also assessing learnings and sharing retailer responses from across our global network where retailers are at different stages of the pandemic, and some locations where social distancing has been in place many weeks.

Here are some of the learnings and highlights of responses in food retail we are seeing so far:

Learnings from China

The Chinese government implemented many practices in January and early February to control the coronavirus (during sales peak season of Chinese New Year, already a huge challenge to retailers) – extending the national holiday, suspending school and entertainment, limiting transportation, and reducing human contact with strict community-management measures.

Customer behaviour has changed over this period as more time was spent in the home and as we look at the pre vs post isolation period we are seeing a number of things:

  • Customer spend is up across all customer segments as supermarkets take on the role of "take home" services with restaurants, coffee shops, and quick service restaurants being closed. There has also been a move away from traditional wet markets to more hygienic modern trade.
  • Customer spend per visit has grown significantly whilst frequency of visits is overall much lower.
  • Many new customers or infrequent customers have reassessed their local stores, with small supermarkets seeing the highest rise in sales and visits as a result of customers shopping in their nearest store.
  • There has been a significant increase in online grocery especially in fresh food – ten times the average in sales before the outbreak. This has been driven not just by consumer demand, but the wider distribution of stores offering home delivery.
  • Consumption patterns in several categories have been changing, including:
    • Daily-meal related categories and instant food showing greater importance and strong growth as consumers chose to cook more at home and stock up on food.
    • Significant increases in personal hygiene and household cleaning as customers became much more health conscious
    • Chinese white wine, nut, and gifted products, saw much lower demand, often popular during Chinese New Year, as most consumers cancelled family gatherings.

Implications for other retailers

There's much to learn from the data coming from China and other impacted regions. And while it is too early to fully quantify impact and trends, we do have early indications of the massive consumer changes underway.

First, Customers have prepared themselves for lockdowns by stocking staples, baby and pet care. Fear-hoarding is going hand-in-hand with urgent shopping of basic hygiene products. Much of this short-term, "long-life" pantry loading will likely see a significant lag in future consumption sales, such as medicines, household, and canned food.

Second, Customers are doing fewer trips as "social distancing" and quarantine restrictions change habits and encourage nearby shopping. In doing so, consumers are trading up to larger packs, and more "full shop" missions not always typical in those smaller local formats. Sales per visit is increasing by up to 20% in these stores.

Third, Customers are shopping more online. Most grocers are reporting record sales through ecommerce, causing some retailers to scramble to keep their websites up, maintain inventories in line with their orders, and fulfil the demand for delivery and pick-up. Interestingly, we've found that fresh food is no longer reliant on offline retail, which could cause a breakthrough point for ecommerce expansion. As consumers' online shopping behaviour becomes more developed, with convenience and quick service as advantages, we expect online basket size and full grocery shops to help drive this channel expansion further even after the pandemic subsides.

Fourth, Customers are also adopting healthy living by being more conscious about personal hygiene and household cleaning. Though there are regional variations, prevention through improving hygiene practices is seen across the globe.

None of these challenges are trivial. It puts pressure on retailers to act immediately, with both clear strategies for Customer adaptation and operational agility. That said, to varying degrees of commitment, the world's top retailers are adopting three principles:

  • The paradox of "Customer First": especially in times of crisis, it's all about is putting the employee first. Recognise and reward your store teams for their super-human responses in the face of crisis. Review attendance and sick-pay policies.
  • A better way of embracing Customer loyalty. Understand that employees are the best loyalty-building team. They are members of the community, reflecting the values of their neighbours, speaking for their friends and families, and serving as the voice of your company back to the community. In the U.S. and other regions where the coronavirus is prevalent, they are also seen as belonging to one of two professions that are deemed as "essential" (the other is healthcare). Retailers must think about growing employee loyalty to grow Customer loyalty. Winning Customer loyalty begins with helpful, well-trained, and motivated employees. Your Customers are watching.
  • More than ever, it's about the retail basics, and serving and protecting your local community. Getting back to a solid basic level of service and dealing with demand is paramount for everyone who has just faced severe panic buying. Stock shelves with the most important items, continuity of supply is all that matters. Hard decisions need to be made to peel back the shopping experience to the most simple offer, to enable staff to get the basics done. This means trade-offs, with a long list of activities to be paused in store to make employees lives easier and get to a good basic service level.

Retailers who do this rapidly and best will help their communities though these difficult times and win trust with the most Customers, today and in the ever-uncertain future.


white and blue magnetic card

Photo by Avery Evans on Unsplash

Most companies attempting to drive customer loyalty fail miserably—and few so-called customer-centric companies generate sustainable customer loyalty that drives measurable business results. Why? Because they get three key principles completely wrong, right from the start:

  1. Loyalty is about the company acting loyally to its customers, not vice versa.
  2. It is about a loyalty approach, not a loyalty program.
  3. Loyalty is about the store, not only about the CRM.

1. Loyal to Customers

We start to act loyally to customers when we understand them to a level of detail that ensures that we remain responsive to changes in their behavior, relevant to ever-changing customer needs and rewarding in the way we treat customers.


Acting loyally is about adopting a loyalty mind set of managing customer segments as strategic business units (aligning with how we think about a category management strategy as managing categories as strategic business units). This context demands change that is both incremental and transformational—evolution, but with a bit of manageable revolution.

What customer loyalty is, and is not:

  • Acting loyally (responsive, relevant, rewarding) to our customers; not about customers being loyal to us
  • An overall approach throughout our business; not a proposition or program
  • Earning customer loyalty; not thinking that customers should become loyal
  • Collaborative partnerships to win customers together; not tolerant of internal conflict between areas of the business or with suppliers
  • Transparent; not opaque
  • Driving sales and cash margin; not customers being responsible for percent margin

2. Loyalty Approach vs. Loyalty Program

We demonstrate loyalty to our customers by taking a loyalty approach wherein we commit to rewarding and delighting our customers with products and experiences that meet their wants and needs.

  • We call this putting customers first—when we decide on priorities and actions based on insights from our customer data.
  • By doing so, a retailer becomes an even more prominent choice in the customer's consideration set. This is not a tactic; it is a long-term strategy that makes the customer the focal point of our business decisions and objectives.

The loyalty program is an important element within a loyalty approach, as the key source of the data that enables customer intelligence, and as the channel that enables us to talk to our customers personally. I call the loyalty program the "little l" in loyalty, with the loyalty approach as the "big L."

But a loyalty program is not required to act in a loyal way to customers. Here's how to think of "big L" loyalty:

A loyalty approach, simply put, embeds customer insight throughout the retail organization to enable better, faster decisions and thereby increase sales and profit sustainably. Best-in-class practitioners have seen an incremental sales uplift in the early stages of a loyalty approach of between 1% and 2% and later stages between 3% and 4%, quarter over quarter and year over year.

3. Loyalty Is About the Store, Not Just the CRM

As I used to say to my retail colleagues, "If the store is lousy but we deliver brilliant targeted CRM, the store will still be lousy."

Even if the personalized CRM is perfect, customers need to perceive that tangible changes have been made in the store itself before they will respond by giving more of their custom. We must put customer insights into action within the "hardwiring" of retail practices—pricing, promotion, assortment, adjacencies, new products, the checkout experience and so on.

In a previous article, I shared several examples of being loyal to customers in store by simply making the shopping experience easier—setting the yogurt section by customer need rather than by brand blocks, for example, and by setting product adjacencies according to how customers shop, rather than by how items are sourced in the supply chain.

3 Ways to Activate a True Loyalty Approach

  1. Make better business decision by putting the customer first. Everything is better when you start with the customer. Start with the data you hold on customers—understanding how they shop and behave, what is important to them and how they engage with your business. This insight will identify a number of opportunities for better decisions using the data.
  2. Improve the customer experience by using data-driven insights to improve your retail offering, such as assortment, pricing and promotions. Use insights to connect you to your customer through the store. Think of the mantra "data to insights to actions"—this is how improved like-for-like sales growth and customer loyalty is delivered.
  3. Transform the organization using customer-driven insight to help you better understand, anticipate, measure and continually respond to your customers. This is realized through empowering, aligning and equipping your people with relevant insights, values, goals, strategies and actions.


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[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at David.Ciancio@dunnhumby.com].

Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.


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FOR RETAILERS

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Better understand and activate your Shoppers to grow sales.

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