What drives supermarket shoppers to buy certain products over others? In a tight economy, price often wins out over brand and even high quality. But one other factor appears to be driving sentiment and purchasing in 2023: loyalty card discounts.
According to new data revealed by NielsenIQ (now NIQ), more than 50% of UK retail customers say their choices are directly impacted by discounts they get from those accounts.
“Our recent survey indicates that during a period of high inflation, shoppers are looking for different ways to save money and loyalty card savings are a ‘win-win’ strategy as they reward both shoppers and retailers,” said Mike Watkins, NIQ’s UK Head of Retailer and Business Insight.
As food inflation (now at 15%) and energy costs put the pinch on shoppers trying to save a pound or two, the cards have been a blessing. Consumers indicated the most valued perks have been special price discounts and every day, low price points. When supermarket chains can show value and position those promotions accordingly, it can shape whether consumers would shop there or take their business elsewhere. So, what is it about loyalty card discounts that is such a difference-maker?
“They give meaningful savings and shoppers prefer the immediacy of the discount,” he said. “They are a promotional mechanic likely to influence where they shop, while also encouraging category purchasing.”
Any discounts can help improve sales. More than 40% of those surveyed by NIQ (and a not-so-surprising 55% in the lower-income range) indicated that coupons also drive their purchases.
Loyalty cards and other strategies could be crucial as further tightening could be on the horizon. Volume sales fell again by 3.9 while value sales rose more than 11% for the four weeks leading to 25 March. That’s been great news for Aldi and Lidl and not great for the big chains. But could that change?
“Whilst inflation greatly influences shopping behaviour, there is an expectation that we will hit ‘peak inflation’ in the new couple of months,” Watkins said. “If this happens, the big supermarkets are well placed to fulfil new and different mission-based shopping trips. This is helped by having different store formats, as well as the breadth of ranges, typically not available at a discounter. All of this should help volume sales to eventually return to growth after over a year of decline.”
And more good news: Easter sales were expected to exceed £3bn this week.
“Over the next four weeks, supermarkets should also be able to maximise the ‘little and often’ purchasing shopping trend over the Bank Holidays in May, which also includes the King’s Coronation weekend,” Watkins said.