Grocery retailers have always operated on paper-thin profit margins. Squeezed by ever-rising grocery prices, today’s consumers are cutting back on purchases, even making fewer trips to the store, thanks to $4/gallon gas. This has given rise to more loyalty programs than sesame seeds on a Big-Mac bun. Some are tiered to offer price discounts to frequent shoppers; others offer discounts per specific product. The list goes on and on.
Sacramento-based Raley's recently launched its “Something Extra” program for all of its 120 Raley's, Bel Air and Nob Hill Foods stores. The flashy customer card rewards shoppers with a “grocery list” of perks, and is tailored more to individual shopper habits than those offered through traditional price-discount cards.
“This represents a paradigm shift that has occurred in our own thinking," said Mike Teel, Raley’s president and CEO. "In the past, much of what we did was based on what the manufacturers wanted. From this day forward, we're going to be customer-driven, doing what they want."
Developed in partnership with dunnhumbyUSA, a joint venture of the Kroger Company and London-based retail/branding data company dunnhumby, the Something Extra program has already registered over 70,350 shoppers.
Something Extra is unique to the West Coast. Unlike a traditional two-tier pricing program (which offers a lower price for club members), Something Extra enrollees get extra benefits, rewarding customers for who they are, what they buy and what they care about. Specifically, enrollees get one point for every $1 spent on eligible products, plus extra points for certain items and for participating in key promotions. Accumulated points appear on quarterly reward vouchers that enrollees can use to save on future purchases.
"By learning from our customers' shopping preferences, Something Extra will deliver customized offers on the products they purchase most, which will make their shopping experience easier and more satisfying," said Teel. "As our customers continue to engage in Something Extra, we will evolve and grow the program to respond to their needs.
Taking things a bit further, monster retailer Walmart recently launched its Vitality HealthyFood program, which offers a 5% discount on produce items to HumanaVitality members. Customers get a “credit card” they can use within five business days on subsequent Walmart purchases.
The program’s 5% discount applies to produce items labeled with the "Great for You" icon, which are foods considered part of a healthy diet. The Vitality HealthyFood program is the first national program that unites a major retailer and healthcare company in an effort to save and eat healthier foods. Walmart notes that the program is part of a commitment to make healthier food affordable and accessible, following First Lady Michelle Obama's lead of a healthier lifestyle for Americans.
"Price is an important factor in incentivizing wellness in America. By offering affordable, healthier foods, we will help make our customers healthier and reduce costs to our healthcare system as a whole," said John Agwunobi, M.D., president of health and wellness at Walmart U.S.
If you’re a grocery retailer, you might want to take heed, think outside the box and develop new “lifestyle” rewards programs for your company.
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