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3 ways grocers can boost basket size (and compete with Amazon)

Jack Mackey | Jun 16, 2017 Jack Mackey 06/16/17

Let’s start by stating the obvious. There’s been a ton of speculation in recent days around what Amazon’s purchase of Whole Foods means for the grocery industry. One thing all observers can agree upon? The competitive grocery landscape is now far more complex than it was just last week. So let’s take a stab at making it simple again and focusing on the one thing you can execute more successfully than Amazon: finding what your customers like and delivering it better than anyone else.

Amazon founder Jeff Bezos once said, “We know customers like low prices. We know customers like big selection. We know that customers like fast delivery. And we know those things are going to be true ten years from now. So we can count on those things and we can 'put energy into them.'”

In Bezos’ own words, “know what your customers like” and “put energy” into consistently delivering those things. Then manage and measure your customer experience to be significantly superior to your competitors in those few crucial areas. In the view of your customers, are you pulling ahead, slipping behind, or just treading water? Without reliable data about your customer experience—and the customer experience your competitors deliver—there’s really no way to know for certain.

SMG partners with many large clients in the grocery retail space. We actively help them connect with customers in real time to understand what matters most and which locations are delivering it best. We also help them understand the competitive landscape and where they win and lose visits. Our client brands use the critical insights we deliver to make important business decisions and take fast actions that improve customer satisfaction—driving up return visits, basket size, and overall customer loyalty.

Here are 3 proven concepts we share with our grocery clients to help them increase visit share and average basket. 

Turn browsers into buyers

Value is huge for grocery shoppers. Many will eagerly visit multiple stores if it means they can get a better deal somewhere else. But value doesn’t always mean a lower price—it can mean a better experience, too.

Grocery purchase chartOne of our clients noticed less than half the customers visiting their beer and wine section were making a purchase that included alcohol despite spending time in that department. 

To help convert those browsers into purchasers, the retailer monetized and created a new management position to focus on the beer and wine department. They improved product training for wine consultants, cross-trained associates in other departments, and added new services for customers to enjoy while they shop.

The results? The client saw a 3% bump in transactions that included a purchase from the wine and beer department—more than making up for the labor adjustment. This situation proved that creating value for customers can go beyond just reducing your prices. Proving your knowledge about your products can help customers feel more confident in their selections, which leads to more purchases and a better bottom line for your brand.

Use incentives to keep them coming back

Grocery stores know customers love clipping coupons, and including a coupon as a survey incentive is another great way to deliver what customers want. Providing your customers with a percentage discount or dollars off their bill in exchange for their feedback is a great way to improve sample quality, hear from a broader range of customers and experiences, and strengthen your insights.

While coupons may at first seem counterintuitive to increasing basket size —that’s simply not the case. Offering incentives has been proven to increase basket size, create a faster return cycle for customers, and boost margin. SMG research shows customers who redeem incentives actually spend significantly more than the average customer—and incentive coupon redemption rates are up to 9 times better than the average coupon rate.

Grocery incentives

Choosing the right incentive has a tremendous impact on the quantity of feedback received. When one of our clients surveyed their customers to find out which incentive would be most attractive to them, they found the new incentive they employed more than doubled their response rates. That proves the right incentives not only give customers the value they crave, but also provide your brand with a more representative sample, while improving your bottom line and driving up loyalty. 

Deliver on what your customers love the most

Delivering in the departments your customers love most is the best way to turn your sometimes customers into always customers. It can also help you take back a percentage of your customers’ spend from competitors. Consistently provide more of what your customers want and turn your brand into a one-stop-shop for good.

One of our clients found their customers were spending 60% of their grocery budget with competitors. They ran a utilization index and discovered the top two departments preferred by customers were also their two most under-utilized—Fresh Meat and Fresh Produce. Our client was able to pinpoint the issue and learned product availability in these departments was declining throughout the day. 

Grocery-Blog_2 (1)

The client introduced more interactive store features to encourage cross-department shopping throughout the store, and enhanced promotions in Fresh Meat and Fresh Produce to help win back more of their customers’ spend. By assessing what their customers wanted most and how their brand delivered in those departments, our client kept customers shopping with them for more of the items on their list.

Bottom line

Value means more than just low price to customers. Take a hard look at what your customers want most from your brand—and what your brand can do to deliver this more consistently. It’s not only good for your customers, it’s also great for your bottom line. Customers will reward you with bigger baskets and increased loyalty—and that’s how brands win.

Want to get some real action one of our grocery clients took on their CX insights? Check out the Top Partnership Insight here

Jack Mackey
Chief Evangelist and VP, Customer Engagement