With A Coupon Push, BJ’s Experiences 43% Digital Growth
In response to customers’ growing price sensitivity, BJ’s Wholesale Club uses digital discounts to increase engagement.
During a conference call with investors on November 10 to discuss its third-quarter profits, the warehouse club company said that “digitally enabled” sales climbed 43% year over year, aided by the brand’s effort to shift coupons online.
“Five years ago, we were worried that our primary promotional product was paper coupons, and nobody loves paper coupons,” President and CEO Bob Eddy said on the call. “Now, maybe three-quarters of our promotion is done digitally. We’ve made tremendous strides in product promotion and convenience as we’ve invested in digital, and we’ll continue to do that. The members that engage with us digitally are our best members.”
In addition, Eddy said that the chain has “gotten smarter about how we leverage data” to engage consumers, adding that digital shoppers tend to generate larger baskets and more frequent purchases.
According to data from research “Big Retail’s Innovation Mandate: Convenience and Personalization,” published in cooperation with ACI Worldwide, it is widely believed that digital discounts are vital to consumer loyalty. Based on a survey of 300 large retailers, the analysis indicated that 74% of grocers thought customers would be very or very inclined to transfer shops if digital discounts and incentives were not offered.
Indeed, many consumers seek digital bargains. 35% of online grocery customers reported that coupons, discounts, and promotions were essential to their shopping experience, according to research and Riskified’s study “Satisfaction in the Age of eCommerce: How Trust Helps Online Merchants Build Customer Loyalty.” The study was based on a survey of more than 2,100 consumers.
Others’ digital discounting attempts are becoming fruitful. Ahold Delhaize, a multinational grocer headquartered in the Netherlands, informed analysts earlier this month that its United States division, ADUSA, has seen its loyalty programmes generate more than $1.5 billion in incremental sales so far this year after customers experienced a 50% increase in personalized offers compared to the previous quarter. The supermarket boasted a nearly 80% penetration in loyalty sales in the United States.
Coupons might be beneficial when customers’ price awareness increases due to rising food costs. According to the most recent data from the US Bureau of Labor Statistics, grocery costs have increased by 12% annually, much higher than the overall inflation rate of 8%. These increases are influencing the buying habits of people.
In an interview this month, Barbara Connors, vice president of commercial insights at 84.51°, the marketing insights subsidiary of grocery giant Kroger, said: “Historically, the reasons why someone may continue to be brand loyal may not hold anymore because people are being forced due to financial constraints to make tradeoffs that they wouldn’t want to make.”
