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Are the discount grocery chains stumbling a ‘lidl’ on customer loyalty?

 In Uncategorized
There’s no doubt that discount grocery chains Aldi and Lidl are rapidly soaking up market share that once belonged to the supermarket giants such as Tesco, Sainsbury’s and Asda.You only need to walk around each store to witness the impact of their market share hoovering. The last time I was in Sainsbury’s, it felt like a quiet Sunday stroll along an almost deserted beach… wide, almost empty aisles, peace and tranquility, soft music in the background… I could almost imagine I was on holiday somewhere, as opposed to enduring the tedium of the weekly shop.
A visit to Aldi or Lidl, however, is a completely different kettle of fish. The aisles are heaving and you can almost feel your hackles rising as you see someone walking in the vague direction of the last few precious chocolate croissants that you so desperately need for afternoon tea. And this is all before you’ve even got to the frustrating standing in line bit of proceedings.

But even though it’s not exactly a walk in the park, the fact that Lidl and Aldi tend to be bustling with shoppers at virtually every moment of the day shows that they are clearly getting something right and must be offering a positive user experience, otherwise people wouldn’t keep going back and I’d be able to shop in my cloud cuckoo land frame of mind in whatever store I chose at any given moment.

Why, then, does research say that they aren’t winning the loyalty of customers?

According to results of the survey – carried out by loyalty specialists ICLP – Tesco customers were the most satisfied with their rewards (37% of respondents), with Sainsbury’s reward recipients in second place (34%).

Aldi and Lidl, however, rank with just 9% and 16% respectively from a loyalty perspective. In addition, those surveyed said they didn’t trust the discount giants with their data. (A tad unfair, perhaps, considering the Aldi data breach was across the pond in the US last year and didn’t impact UK shoppers).

In summarizing the results of the survey, Jason De Winne, general manager at ICLP, said: “The UK’s longer standing supermarkets are unlikely to benefit from engaging in a never-ending price war, and Aldi and Lidl have already built strong brand recognition for their deep discounts and no frills service. While their market share has reached impressive new heights, Aldi and Lidl lack a well-rounded relationship with their customers.”

Are discounts really of such ‘lidl’ significance?

To me though, the question is: what are these researchers actually referring to when they start talking about customer loyalty?

Yes, Tesco Clubcard is a clever and popular loyalty scheme (and, doubtless, the most popular of the many schemes out there from other large chains).

You get points for shopping in store or online, buying clothing and wine and even from using Tesco financial services and even on your gas and electricity bills (in E.On is your energy provider).

Plus, there are various options for redeeming the points: they can be offset against groceries, exchanged for airmiles or multiplied and used for rewards such as days out, eating out, experiences, home and garden or more.

But even though some of these schemes, such as Tesco’s, offer fairly impressive rewards, it’s still a fairly long haul to get there.

And this could be giving the researchers a tainted view of customer loyalty.

Yes, Mrs. Jones shops at said large chain grocery store every week and loves it when she gets coupons and offers based on her shopping habits.

What the researchers don’t know though, is that Mrs. Jones continues with her quest and returns every Wednesday without fail because she is ‘almost there’ on her Clubcard points: that cushion she’s coveted for months is almost within her grasp.

And once she’s got her hands on it? Well, she’ll keep topping up those rewards points of course, so that she will eventually have a sun lounger to put the favoured cushion on.

So, there’s no saying the major chains are seeing customer loyalty for the right reasons.

On the other hand the discount stores such as Aldi and Lidl – who are working hard to try and target middle-market consumers so they can shake off their ‘budget grocer’ image – take a different stance on ensuring that people return time after time.

An Aldi spokesperson said: “Our customers are incredibly loyal because we focus on consistently providing them with outstanding quality at the lowest grocery price in the UK, rather than confusing them with loyalty schemes or gimmicks.”

Lidl’s representative added: “Over the years we have seen customer loyalty grow further, with shopping frequency and spend continuously increasing,”.

And despite what the research claims, both Aldi and Lidl are clearly telling the truth: their figures and packed aisles show they are clearly doing something right.

There is obviously various ways of looking at loyalty.

Do research: the right research

Don’t get me wrong, I am not saying there is anything wrong with loyalty schemes: they can and do work well.

But to ensure you get it right and giving your users the experience they prefer, you need to be asking the right questions and getting invaluable feedback based on their needs.

I, personally, would rather save money each week on my grocery shopping than end up with a beautiful cushion: one that I could have probably picked up for a fraction of the amount it ended up costing me to amass the reward points. And when you look online at articles focused on loyalty cards etc., a lot of the consumer comments say the same:

“Do the people who run the big four not realise most shoppers want the best value, not purses full of vouchers and coupons, points or ridiculous 10 for the price of 8 offers?”

At the end of the day, it all boils down to meeting customer requirements but, to do that, you need to know exactly what market place needs are and that can only come from a detailed insight based on deep consumer connections.

So contact the experts at The Monachie Project and let us help you assess what your customers need and want to keep returning to you time and again.

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