Unclogging the Discount Chain Drain

Earlier this year, InMarket’s State of Grocery Report revealed that value and convenience were the biggest motivators for grocery purchase decisions. As shoppers of all income levels shifted their focus to price and value, grocers needed to adapt to meet their evolving demands to compete with the rise of discount retailers as go-to grocery stores.

In fact, in a recent lapsed/lost analysis, InMarket found that grocery was the most susceptible category for losing customers to discount stores for a leading mass merchant. 

Now more than ever, customer retention and loyalty, alongside driving brand and sales lift, are pivotal. It’s why discount chains have doubled down on enhancing their grocery offerings and established grocers are heavily investing in their private label lines to keep up.

Not only do private label offerings fit those needs, they also drive higher profit margins for grocers, which helps soften the impact of lower visitation levels year-over-year as shoppers frequent discount chains.

For grocers looking to uplevel their private label strategies, here are three instrumental tips for driving success:

Learn: Double Down on the Competition & Key Categories

In order to improve, grocers need to understand what products are doing well and what categories present the biggest opportunities. 

Most importantly, pay attention to the competitive landscape. Tapping insights like a lapsed/lost analysis is critical for uncovering your competitive advantage in order to identify both your advantages and shortcomings.

For example, a recent survey from CSPI found that 74% of dollar store shoppers feel the discount chains should have healthier offerings. If your lapsed/lost analysis revealed your chain is most susceptible to losing grocery customers to discount stores, this type of insight can help inspire a new line of healthy-conscious private label offerings that can attract health-conscious, discount shoppers.

Once you understand who to target, connecting with these customers when and where it matters most is essential. Leverage both top and bottom-of-the funnel strategies and tactics to orchestrate messaging and optimize results. By coordinating these messages you not only remain top of mind, but can improve engagement and conversion. A recent CPG client found when combining top and bottom-of-the-funnel digital marketing tactics, performance increased 15% vs. just implementing bottom-of-the-funnel strategies.

Build: Be Intentional About Promotions & Targeting

As shoppers are inundated with promotions, it’s essential to ensure promotions are delivered effectively and efficiently. 

The Wall Street Journal recently reported that the number of promotions has reached an all time high since 2019. As a result, grocers must create personalized experiences that breakthrough the noise and keep their private label offerings top of mind for key customer segments. 

In order to stand out, you first need to ensure you’re targeting the right customers and the right time. In a saturated marketing landscape, it’s critical to go beyond solely ‘who’ your customer is, and ensure you understand ‘when’ and ‘where’ they’re making their purchase decisions. Most importantly, it’s essential to understand the ‘why’ or the key motivators like value and convenience that are at the crux of their decision-making. From there, you’ll be able to more effectively adapt your media and messaging strategies and strategize more engaging and creative campaigns. 

Alongside the traditional ways to enhance the value proposition, get creative to drive consideration and sales lift—the possibilities are endless. One way to make your products stand out is to incorporate immersive and engaging elements into your ad units. 

A great example is digital circulars. As shoppers hunt for the best deals, digital circulars offer the unique ability to update pricing and availability information based on location and date, ensuring shoppers won’t be disappointed to find the items they saw in the ad are out of stock. Unlike print circulars, digital circulars also enable brands to actively monitor the performance of the ads and gain critical insights like top-performing product categories. 

Measure: The Importance of Measuring Visit & Sales Lift

In order to stay ahead in the competitive grocery landscape, it’s essential to have a constant pulse on performance. Gone are the days where post-campaign analysis is the end-all-be-all. 

Focus on the media that will allow you to stand out by meaningfully connecting with customers and provide opportunities for real-time measurement to ensure you drive ROAS and gain helpful first-party insights for optimizing in-flight and future campaigns.

An InMarket study found that brands who used real-time optimization both reduced ad waste up to 94% and optimized over 75% of impressions. In a highly competitive industry, it’s critical to keep a close eye on performance to identify new opportunities or challenges without having to wait for your next campaign. 

Adapting a new measurement approach also opens up an opportunity to refresh KPIs. Clicks no longer tell the full story of performance. Instead, focus on a holistic measurement approach, encapsulating brand, visit and sales lift to better understand how each private label product and campaign are impacting brand awareness and the bottom line. 

As consumer spending normalizes and the economy steadily rises, grocers are presented with additional opportunities to capture new customers and drive increased revenue with their private label offerings. By incorporating these simple considerations into your private label strategies, you’ll be on your way to seeing the incredible impact on brand awareness, sales and ROAS.