Inside Supermarkets’ Supermarketing

The grocery landscape has become more frantic than the Aldi checkout. Inflation is pushing prices up, competition in some markets is fierce while in others, the eyes of government and consumer cast scrutinous eyes over the tiny number of businesses that control the market. And consumer loyalty is no longer something that supermarket brands can take for granted. It’s a sector that varies from country to country in terms of consumer quirks and market conditions but wherever you are in the world, supermarkets have a not-so-secret weapon at their disposal - oodles of data.

Loyalty has become one of the most interesting arenas for supermarket brands to play in. It’s by no means the biggest driver of consumer behaviour - indeed a recent YouGov poll of UK consumers found that across income brackets, lower prices was the most influential factor for more than half of shoppers. Brand loyalty was only deemed important by 11-13% of shoppers with low to mid level incomes - while it was influential for 24% of those with an income of over £100,000. 

But that hasn’t stopped supermarkets from doubling down on loyalty - and if they can’t win it through cosy brand feels, they’ll do it via increasingly elaborate and competitive loyalty schemes.

Indeed, shoppers are not only changing up the supermarket brands they’re choosing to shop at, they’re also changing how they shop, which is forcing retailers to rethink the whole customer journey and what shape their competitors are taking. “Retailers are also facing the fight for shopper loyalty. Gone seem to be the days where shoppers only had one store to do their weekly shopping; we are seeing multiple store purchases and multiple formats,” says Ann Marie Hardoby, VP, director of business leadership for Momentum Worldwide New York. “The mentality of shoppers has also shifted to an ‘and’ mentality. They will shop at their local grocery store AND do a fill-in delivery order throughout the week.”

Shoppers are likely to look up products and do their research before they buy and they’re also seeking out new, convenient ways to shop, says Xabier Novo, general manager at DAC Iberia. “According to a Google study, more than half of shoppers use search engines to research products before making a purchase, with many searches focusing on specific supermarket brands. This indicates that shoppers are more likely to search for their preferred supermarket brand along with terms such as ‘online’ or ‘delivery’, underscoring the growing importance of e-commerce and digital convenience. Additionally, 38% of global shoppers use Google to discover new products, including supermarket items, further highlighting the role of digital discovery in the customer journey.” 

For years, supermarket loyalty schemes were about earning points, but with consumers feeling the pressure on their wallets right now, grocers have changed things up. These days, loyalty opens up access to lower prices and loyalty schemes are enmeshed with supermarkets’ first party data practices, representing a value exchange.

But it’s easy to get swept up in the transactional. Yes, price might loom large in shoppers’ minds, particularly during a cost of living squeeze, but for supermarkets and their suppliers endless price cutting is neither sustainable nor practical.

James Calvert, head of generative AI at M&C Saatchi, says there’s a great deal of success to be found by leveraging the data created by loyalty schemes to create personalisation over blanket price cuts.

“Supermarkets are shifting from general price cuts to creating personalised value, often via data-driven loyalty programmes, addressing the cost-of-living crisis while deepening preferences,” he says. “Tesco's Clubcard Prices is a good example here, offering deeper discounts to members, making it both a financial and positive emotional win, an approach that helps Tesco stay competitive and hold on to more baskets.”

Perhaps the answer lies in reframing what value really looks like, thinking about it from a customer-first perspective and creating moments of real emotion. Ann Marie makes a point of approaching the idea from that deeper point of view.

“Value seems to be at the forefront of both brand and shoppers’ minds. We look to make sure that we position our clients as providing value to the shopper, which doesn’t always mean a discount or a coupon. Value can also take the form of an emotional connection or providing a solution that helps make the shopper’s life a little easier for that week,” says Ann Marie. “Portfolio promotions help provide both the value of a discount and the value of solving for several shopper needs throughout the week. We also work to lean into the right occasion for larger tentpole moments that really appeal to the shopper and drive that conversion.”

Indeed, at M&C Saatchi, that’s something it has harnessed for client Costa Coffee. “The magic happens when data meets creative and curious minds. Data is just bits and bytes, waiting to be turned into information. Yes, it can feel overwhelming, but in a creative strategist’s hands, it becomes powerful - it's not about the data points themselves, rather it’s how we use them,” says James. “At M&C Saatchi, with Costa Coffee's Treat Drop, we turned transaction data into preference signals that became personalised surprises, and ultimately moments of joy. This led to significant increases in engagement and repeat purchases, showcasing how creativity powered by data can deepen the bond between a brand and the people who actively choose it.”

Adam Blennerhassett is head of european retail marketing for Cheil UK and he sees the use of data to personalise marketing messages, deals and experiences as the cutting edge for grocers. He cites UK supermarket Sainsbury’s SmartShop app as a platform to watch out for. Allowing shoppers to ‘scan and go’, he suggests that as it accumulates more data, it should be able to generate offers and direct marketing straight to people’s apps and handsets as they shop.

“While this [loyalty schemes] may not seem like a major shift in supermarket marketing, we must ask ourselves why brands are promoting these schemes so heavily. The answer, of course, is data. The more information that retailers have on their individual customers, the better placed their marketing teams are to make informed decisions on what adverts and/or content to show in specific spaces, in order to sell more,” says Adam. “This data-driven personalisation is becoming the new frontier of competition in the sector. As more data is gathered, we are likely to see marketing evolve into hyper-targeted experiences. Imagine push notifications with tailored offers being sent to shoppers' phones as they walk through specific aisles, or AI-driven recommendations based on personal buying patterns. This personalised marketing could soon become a key differentiator for retailers.”

Xabier at DAC Iberia agrees. “Supermarkets dominate retail advertising by combining mass-appeal creativity with advanced CRM systems and superior customer experience (CX). At DAC, we believe that true ‘supermarketing’ comes from seamlessly integrating these elements while leveraging data to drive personalised customer interactions,” he says.

According to Amanda Skudlarek, ECD, and Kristyn Bertrams, director, at Clear M&C Saatchi , this is also where brand building comes in. “How can supermarkets go beyond transactional relationships to capture both the wallet and the heart?” they ask. “It's not enough to add more discounts and services; the opportunity is to create an authentic, simplified shopping experience that is deeply connected to the local community and to each consumer’s unique needs and desires. A supermarket that is thriving is a place where customers don’t just have to shop, but it’s where they love to shop.”

Of course, as complex and involved as supermarkets’ data-driven experiences and marketing is, it’s easy to forget that supermarkets are also some of the biggest creative marketers out there. In the run up to the holiday period, as we’re seeing now, supermarkets go all out to win the festive food fight and win over shoppers with emotional, quirky crowd pleasers broadcast far and wide.

“Creativity is crucial in this space,” says Adam, who argues it’s not an either-or when it comes to creativity and data. “With all supermarkets accessing similar data and offering similar products, creativity is what makes the difference in how that data is translated into marketing campaigns and in-store experiences. Retailers who push boundaries with innovative campaigns, experiences, and personalised digital content will capture customers' attention and foster lasting loyalty.”

Ann Marie at Momentum agrees. “With the need to provide value and the competitiveness at the shelf, it is more important than ever to stand out creatively, which is also why we believe in rooting everything in a strong strategic foundation. If the bones of the strategy are good, then it only makes the creative better. Identifying who the shopper is and how best to talk to them can help inform a strong creative direction that will appeal to the shopper. Also, we like to have strong partnerships with our brand above the line agencies to have a stronger pulse on creative relevancy and strong creative directions that can be used across the full funnel.”

Depth of strategy and strength of creativity are key to ensuring that, when people are bombarded with content and messaging from not just your competition but from, well, everyone, that your brand has a chance of cutting through. “With so many players in the sector, the biggest challenge is often over-communication, with consumers becoming overwhelmed by excessive information,” says Adam.”This can mean a supermarket’s proposition gets lost, and consumers don’t understand the story the brand is telling. To succeed, the best brands keep messaging short, concise, and consistent, drumming in savings, choice, and service as their USPs.”

The other major creative challenge is that, now supermarkets have their sophisticated CRMs, loyalty programmes, apps, instore platforms and all the rest of it, their brand, story and message is consistent. “Brands like Tesco, with its omnipresent’Every Little Helps’ messaging, show the power of a unified narrative in building customer loyalty,” says Adam.

Ultimately, creativity is the key to the long term success for supermarkets, beyond the minute-to-minute hustle getting shoppers to fill their baskets with them. James Calvert points to recent M&C Saatchi work with Woolworth’s in Australia. Their ‘Fresh Fuels the Best in All of Us’ platform shows how fresh Australian produce fuels not just bodies but the dreams and aspirations of Australians. Notably, they’ve been working with Paralympic swimmer Col Pearse to reinforce that point and frame the brand as a supporter of local communities.

“Creativity is the game-changer. In a sector with, for the most part, similar products, it cuts through the noise, makes a brand memorable, and even in price-driven markets, it is a powerful asset for fostering long-term effectiveness,” says James. “By leveraging this creative approach, we cut through the competitive clutter, make the brand memorable and foster a deeper emotional connection. 

“Even when products are similar and people are drowning in choice, a creative and emotionally resonant message can differentiate a brand, build lasting relationships, and drive long-term effectiveness. So, in a world where consumers have endless options and want to be inspired, and brands need to go beyond just product and price, the question isn't whether you can afford to invest in creativity, but rather, can you afford not to?”