Hannaford, the Ahold Delhaize-owned supermarket chain which for decades resisted offering a customer loyalty program, is finally reversing course.
The company on Monday announced the launch of a new app-based loyalty platform built around rewarding shoppers for buying private label items while preserving the brand’s everyday low pricing and low-cost heritage.
The My Hannaford Rewards program, which launches in 11 stores around Burlington, Vt., is another outcome of the “Hannaford 2020” strategic plan that resulted in the introduction of a new store format last year, Hannaford president Mike Vail told SN in an interview. The loyalty program, which coincides with the release of a Hannaford app, provides participants with 2% rewards on all private-brand purchases.
It also, for the first time, provides the retailer with a platform for special offers based shopper history, and for manufacturers to target Hannaford shoppers.
Vail said Hannaford had bucked the loyalty trend for years over concern that it would interfere with its EDLP positioning, but acknowledged as part of its 2020 strategic planning that consumer expectations of retailers had changed with the rise of technology.
“We’d been a legacy EDLP, no-games, no-gimmicks, anti-loyalty company for decades,” Vail said, “but in 2014 we began to see that the landscape was changing. Until recently we felt like all of the loyalty programs were tied to two-tier pricing, and the way they were constructed would compromise our cost position and our ability to have the lowest prices on the shelf.”
He said offerings like social media feeds and e-commerce sites have made consumers come to demand customized value in all their interactions. “The more and more that [demand] came to light, the more disadvantaged we thought we were at Hannaford,” Vail explained. “It created the impetus for us to really attack this, and develop what we believe will be a very unique and important program for Hannaford.”
My Hannaford Rewards is built around 2% rewards on all private label items, including meat, seafood, packaged produce, deli, bakery and center store goods under Hannaford’s private brands which include Hannaford, Taste of Inspirations, Nature's Place, Home 360, Cha-Ching, and Healthy Accents lines, as well as items with the store name on the label.
Vail said Hannaford considered various reward strategies — including all fresh products and all products in the store — but settled on private brand because it represented all categories in the store — and emphasized items only available there. The rewards program also provides customers with personalized coupons based on purchase behavior as well as what Vail called offers to “delight and surprise,” like free groceries at sign-up and new item launches for the store and its suppliers.
Vail said he expected the Burlington pilot test to go through the end of the year with tentative plans to launch chainwide early in 2018. Hannaford expects that both shopping trips per year and the number of high-volume stock-up trips will increase among participants.
Results among employees who tested the program over the summer were encouraging, Vail said, with the percentage-back offer resonating most with those enrolled. The average basket of enrolled users was higher than those not enrolled, and the majority of users were “actively engaged” in the program, using it multiple times during shopping trips.