As the cost-of-living crisis forces businesses in the UK to adapt, supermarkets are having to rethink their customers' shopping experience. Larger budget retailers such as Iceland and ALDI are changing their business model announcing they will be branching into smaller outlets with slimmed down product ranges in high-traffic locations. Bit by bit, retailers are slowly entering the express supermarket space.
The news of Iceland opening its rapid SWIFT stores, coupled with Aldi’s new Shop&Go trial suggests that budget retailers are beginning to cater to those in need of an accessible quick pit-stop. This shift will require some consideration in how retailers manage their data.
How data can help budget retailers be more effective
For data-enabled retailers, these smaller express outlets offer practical insights into not just what consumers’ individual preferences are, but also broader grocery buying trends that a retailer may be able to leverage across stores. For example, if a consumer purchases the necessary components for a summer BBQ on their way home from work, this helps let the outlet know that in coming weeks a lot of weekly shoppers may be planning BBQs of their own. The nature of these smaller shops and their locations mean customers pop in and out, picking up a few things. This trend can still be applied to the careful planner who has written out their grocery list and travelled to a larger outlet for the BBQ they have planned the following week.
Smaller stores face more data challenges
However, smaller stores face more significant challenges than their larger counterparts when it comes to managing data and understanding customers. In the typical mould of grocery shopping, consumers make occasional visits, stocking up on items for a week – or multiple weeks – at a time. Each visit is broadly representative of a consumer’s purchasing habits – enabling retailers to build a picture of their customer that accurately reflects their preferences. This in turn informs retailers’ stocking, supply, as well as special offers that they might put on in order to tie into customers’ buying habits.
However, when a consumer enters a smaller express shop, perhaps on their way home for work, they may only pick up a couple of items, and may instead make several smaller visits during a week due to convenience and shifting needs. Instead of the typical grocery shopping, where a visit reflects a more comprehensive view of a customer, for retailers that are not sophisticated with their data, trying to measure and profile customers across multiple smaller visits will yield smaller, subdivided insights corresponding to the nature of these pit stops.
Embracing loyalty schemes
Loyalty schemes that provide first-party data can mitigate this problem with small express supermarkets. Customer loyalty cards can be scanned at each transaction, enabling the retailer to understand each individual customer whilst keeping their privacy secure. Loyalty schemes enable smaller retail units to join up the dots between purchases over time in a privacy-driven way, creating comprehensive views of the customer. This insight builds an overview of habits and tastes, enabling smarter decisions when it comes to ordering and offers. Iceland has an established loyalty card scheme, and other supermarkets, such as Tesco, have reaped the first-party benefits from their Clubcard. Aldi, on the other hand, has yet to launch one which could be a key avenue for them to explore as they venture into a new shopping territory. By establishing a connection between disparate purchases, supermarkets can gain insight into who is buying what from their stores – across both the usual weekend stock-ups, as well as multiple pit stops over the course of the workweek.
Structuring data for best insight
Gaining this insight into consumers also enables another, deeper level of insight and capabilities: Collaborating with trusted partners through a secure digital clean room empowers retailers to access a wider pool of data which can help them to understand their customers beyond the four walls of their own stores. This builds out a more holistic profile of their customers which is essential knowledge for supermarkets to stock the right products and offer the desired shopping experience, particularly in a challenging economic climate.
These budget retailers will be taking stock and considering the changes in purchasing patterns and most crucially, how it will impact their understanding of their consumer. By intelligently utilising loyalty schemes and more importantly, collaborating with privacy-orientated partners in a safe space, they can succeed in both the express retail units and larger ones. The current popularity of these supermarkets offers them an incredible opportunity to expand and prosper.