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Retailers that offer contact-free payment methods and rewards programs, as well as omnichannel shopping options, are more likely to generate long-term loyalty, says Bill Darley of Cardlytics.

Viewpoint: Even the essential businesses have room to grow

How leveraging purchase data can help online and in-store grocers drive additional spend

Bill Darley is vice president, advertiser partnerships at Cardlytics, a native advertising platform in digital channels. The views expressed here are those of the author.

As people across the country are spending more time at home during the coronavirus pandemic, few industries have fared as well as grocery. Even as restaurants reopen, grocery spend remains up over 6% year over year, as of August 19. But with many Americans struggling to make ends meet and no clear timeline for a return to pre-pandemic habits in sight, grocers must be thoughtful about adapting to the ongoing needs of their customers to continue to thrive.

Online grocery skyrockets
Much of grocery’s growth can be attributed to online spend, which was up 100% year over year in mid-August. But understanding how these customers are spending outside of online grocery can help brands determine share of customer spend left uncaptured and use it to drive additional sales. For example, one grocer found that their most frequent customers were making half of their online purchases with direct competitors. This allowed the grocer to shift their targeting strategy to aggressively invest in driving greater loyalty with frequent shoppers.   

Declining brand spontaneity 
With the health risks of COVID-19 weighing on consumers’ minds, grocery customers are shopping with 5% fewer brands compared to this time last year. This shift to a smaller group of brands highlights the importance of retaining current shoppers and building trust, which hinges on providing a convenient and safe experience. 
For instance, the virus has altered preferences, with shoppers moving away from in-store purchases, or payments with cash and paper coupons. Now more than ever, grocers should make sure that consumers can shop, pay and save however they want. Brands that offer contact-free payment methods and rewards programs, as well as omnichannel shopping options, are more likely to generate long-term loyalty. 

Fewer trips, bigger baskets
Shoppers may be venturing out less but they’re making up for it with larger baskets. In-store grocery trips were down 15% year over year as of July 8 and basket sizes were up 29. Facing fierce competition from their online counterparts, the stakes for traditional grocers to get consumers in store are even higher.

To compensate for the decline in foot traffic, grocers should provide shoppers with offers they can use in-store or online. Saving them money on everyday purchases will also encourage future visits. While it’s clear we’ve hit a tipping point for online grocery adoption, it’s paramount to maintain a strong store footprint and provide customers with a seamless omnichannel shopping experience.   

As COVID-19 continues to impact the country, grocery will experience increased demand. But despite the boom in business, grocery brands shouldn’t take a business-as-usual approach. Instead, grocers should focus on the uptick in online grocery spend, shifting brand loyalty and increasing basket size, in order to keep shoppers happy while increasing sales.

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