Grocery Industry Falls Short in Building Customer Loyalty

Consumers feel widespread dissatisfaction with their primary grocer - 73 percent of U.S. consumers said they feel either antagonistic toward or have no loyalty to their supermarket - and only 27 percent of grocery customers are acting as “advocates,” according to a recent IBM survey, writes MarketingCharts.

Advocates are loyal customers who recommend their grocer to others, buy more from their grocer and stay with their grocer instead of going to the competition, the study found.

Almost half (46 percent) of consumers, however, were identified as outright “antagonists,” who have a poor attitude toward their grocer and may be actively causing damage to the business’ reputation through their vocal displeasure.

Customers - advocates and antagonists - place a high value on quality, selection, employees, product availability and the emerging category of social responsibility. (See detailed chart of the importance of various areas for each type of customer.)

IBM’s analysis points to specialty stores’ focus on customer service and product selection, and quality giving it the edge over other grocers: 46 percent of customers who shop at these stores act as advocates.

Across grocery categories, supercenters fared the worst, with only one in five customers being advocates; national and regional supermarkets came in at the industry average for advocates. (See chart of advocates by grocery store category.)

The study also revealed that dissatisfaction is creating legions of disloyal customers who are sharing their negative experiences and shopping around for a better alternative:

• 31 percent of customers tell multiple people of their bad experiences.
• 48 percent of customers avoid stores based on the bad experiences of other people.

The survey results are part of a new study from the IBM Institute for Business Value titled “Why Advocacy Matters to Grocers” (pdf). The study analyzes the factors driving customer advocacy and recommends that grocers place a greater emphasis on understanding and catering to their most loyal customers.

About the survey: The online survey conducted by Zoomerang was fielded among a representative sample of 6,000 adult Americans in the first quarter of 2007.