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Continuing our regular series exploring Grocery Retail's response to the Coronavirus pandemic, this week we analyse the results from dunnhumby's latest piece of consumer research, the increasing importance of Category Management, and the actions that Retailers need to be taking now to ready themselves for an eventual recovery.



Checking in on Customer concerns

In our last post in this series, we unveiled the dunnhumby Customer Pulse, a survey of consumers from 19 global markets conducted at the end of March. Keen to develop our understanding of how Coronavirus continues to shape Customer demands, we moved ahead with a new wave of surveys using the same geographic and demographic framework.

Once again, three key issues came through loud and clear from our respondents.

  1. As worry declines, Customer perceptions are changing The 'worry score' – the number of respondents in each country who self-identify as concerned about Coronavirus – went down for more countries than up. While this may not be surprising in isolation, where worry scores decrease, so too does interest in the preventative measures being taken by Retailers. As worries ease, many Retailers may find themselves pressured to loosen restrictions faster than originally planned.
  2. Customer satisfaction is on a knife edge Across all markets, we found little evidence to suggest any correlation between preventative measures and Customer satisfaction. Instead, satisfaction is dictated primarily by one defining issue: stock levels. Where customers acknowledge having noticed out-of-stock items, their satisfaction levels are likely to be much lower than those who have not. Raising prices on, and limiting availability of, virus-related items can have a similarly corrosive effect on Customer satisfaction.
  3. Simple actions can have a big impact While Retailers may continue to find stock levels difficult to control over the coming weeks and months, other avenues may help them to mitigate dwindling levels of Customer satisfaction. Actions that are seen to have a major positive impact on perceptions include removing delivery charges for certain Customers, discounting virus-related products, and increasing the frequency of store cleaning.

A third wave of the dunnhumby Customer Pulse will be available soon.

Keeping pace means clever use of Category Management

As is apparent from the results above, one of the only constants for Grocery Retail during the Coronavirus pandemic is the speed at which Customer demands continue to change. While it might not be possible to prepare for every eventuality, adapting or refining your approach to Category Management can be a smart and effective way to keep pace with those shifting need states.

We believe that Retailers should funnel Category Management activity towards three areas.

  1. Aim for nimble management of product assortment As product shortages and changing demands continue to impact Customer experience, agility is vital. Customer decision trees and need states should be used as a guide when managing supply levels, emphasising higher-order needs in each category. Breadth – not depth – is one of the most pressing factors here, and Retailers can best serve Customers by ensuring that the most important need states are addressed above all else.
  2. Ensure your Private Brand is fit for the future Customers are looking to find increasing value in every shop as household budgets come under intense pressure. Private (Store/Own) Brand labels can provide shoppers with just that kind of reassurance, and we believe that now is the time for Retailers to shore up those lines. Reassessing the relevance of Private Brands on a category-by-category basis is a good starting point, as it is likely to reveal prominent gaps or areas that would benefit from further investment.
  3. Maintain your investment into essential online channels Soaring demand for online grocery has become one of the defining trends of the past few months, and there are no signs that this will change post-pandemic. Loyalty data can be a major differentiator here, providing an opportunity to create a frictionless experience by surfacing in-store favourites and relevant recommendations in a similar manner online. Retailers will also be well served by ensuring the accuracy of substitutions (particularly by arming packers with good suitability metrics) and emphasising issues of hygiene and quality around fresh produce.

The journey towards Recovery

Much of the work we're doing to help Retailers through these unprecedented times revolves around anticipating changing Customer needs at three distinct stages of the crisis: Insecurity, Transition, and Recovery. As we move through Transition, we believe that Grocery Retailers must take action now to ensure their business is ready for the new challenges ahead.

  • Reset your categories to focus on what Customers care most about The product assortment you have today may not be right for tomorrow. With economic challenges almost certain to trail the Coronavirus pandemic, Retailers need to begin looking at wholesale category resets that will make assortments leaner, fitter, and more relevant for cost-conscious Customers. Prepare to maximise shelf space for categories where variety is essential and scale down categories where it is not.
  • Bring a Customer First approach to assortment and space planning Reviewing your latest customer data sets will identify changing category roles and importance of key marketing levers such as price, variety, and channels. There are already new adjacency and layout opportunities to implement by looking at the changing mix and frequency of purchase in the Customers shopping basket, especially in categories like personal hygiene and cleaning, fresh food and cooking from scratch missions. As Customer behaviours continue to change, understanding and monitoring these changes by different customer groups and different shopping missions will be critical in order to make the most informed and best retail decisions.


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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Memories of panic buying may be fading here in the UK but have resurfaced elsewhere1. The near constant threat of another wave of Covid-19 may yet prompt another round of hyper demand. Whilst there is little hard evidence to determine the underlying drivers of panic buying2, there are numerous theories that the retail industry may benefit from exploring.

Feroud Seeparsand, dunnhumby's Senior Consumer Psychologist, outlines some likely theories to explain the 'why' behind the 'panic buy' and some implications for retailers to prevent it reoccurring in future.

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The dunnhumby Consumer Pulse Survey is a multi-phased, worldwide study of the impact of COVID-19 on customer attitudes and behavior. We surveyed more than 27,000 respondents online in 22 countries, with interviews conducted for Wave one from March 29 – April 1, for Wave two from April 11 – 14, and for Wave three from May 27 – 31. Due to the rapidly unfolding crisis in North America, dunnhumby conducted Wave four from July 9 – 12 in the U.S., Canada and Mexico only. Here are highlights from the study:

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In a series of posts published earlier this year, we covered the results of the dunnhumby Customer Pulse – a global study designed to explore changing consumer mindsets during the COVID-19 pandemic. Over three waves, conducted between March and the end of May, we polled thousands of people from more than 20 countries on subjects including supermarkets' responses to the outbreak, the economic outlook, and how their shopping behaviour had changed due to COVID.

At the beginning of September – three months on from the previous wave and with supply chains stable and the changing nature of lockdowns – we wanted to revisit the Customer Pulse to see what, if anything, had changed. Below are some of the standout findings from this fourth tranche of research.

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assorted fruits at the market

Photo by ja ma on Unsplash

In the decade since Richard Thaler and Cass Sunstein's Nudge: Improving Decisions About Health, Wealth and Happiness was published, nudge theory has enjoyed unprecedented success.

Predicated on the idea that individuals respond better to indirect suggestion than outright commands, nudge theory is commonly used as a way of subtly influencing our behaviour towards positive choices. The idea has gained such traction, in fact, that many governments around the world have created "nudge units" in a bid to tackle thorny issues like obesity and the climate emergency.

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Are you looking to increase your contactable Customer base? How much money are you losing on incorrectly identified Customer communications? Throughout our 30 years of big data experience working with clients across industries around the globe, we have found that maintaining contact through relevant Customer engagement is a crucial component of putting the Customer First.

Essential to preserving contact data is ensuring that you have the most up-to-date information from your Customers; not an easy task. On average, people in the United States will move an average of 12 times in their lifetime. United States Postal Service data indicates 14% of the population change addresses annually. As email contact has grown, it's important to note that, on average, 30% of people change their email addresses each year. This is driven by ISP or job changes, or just to stop being spammed. As people move away from home phones to primarily mobile devices, phone numbers are stabilizing as consumers maintain the same numbers through physical moves.

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FOR RETAILERS

Smarter operations and sustainable growth, powered by Customer Data Science.

FOR BRANDS

Better understand and activate your Shoppers to grow sales.

Retail leaders must objectively understand how their business currently considers Customers before trying to set a more Customer-centric direction and focus. There are some formal assessment methodologies, like dunnhumby's Retail Preference Index (RPI) and Customer Centricity Assessment (CCA), which offer detailed evaluations of a business' capabilities, strengths and weaknesses based on Customer perceptions (RPI) or global best practices (CCA).

The approach outlined below is not intended to replace these formal tools; rather, these observations are intended as a kind of 'toe in the water' to help retail leaders form early hypotheses and points of views. These are rules of thumb, heuristics culled from global experience. Later, leaders might use these observations to informally check progress from time to time as a way of assessing whether the "program in the stores matches the program in our heads".

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dunnhumby’s Prophets of Aisle Six, Episode 2: Heinen's Fine Foods

The Prophets of Aisle Six is the first online reality series focusing on innovation in the food retail industry. In this episode, Jose Gomes, dunnhumby's North America Managing Director, travels to the downtown Cleveland store of Heinen's Fine Foods. Jose meets with Tom and Jeff Heinen, co-owners and brothers, and learns how they are evolving their grandfather's mission of delivering excellent customer service. With 23 stores in Northeast Ohio and the greater Chicago area, and a 90-year legacy, Heinen's is proving that being a small retailer can be an advantage when it comes to data.

In this series, dunnhumby tours the globe and speaks with some of the world's greatest brands, exploring their biggest challenges and how they are using customer data science to meet those challenges.