Supermarkets: An unlikely love story

t long ago that people decided which supermarket to shop at mostly based on proximity, product range, the specials on offer and whether or not it handed out plastic collectibles. There wasn’t a lot of love and loyalty for supermarkets up until a few months ago, although that seems to be changing, given their response to major world events, from the horrific bushfires during summer to the global coronavirus outbreak.

In fact, according to figures from Dunnhumby last year, consumer loyalty in Australia was far lower than other countries, with 52 per cent shopping across multiple supermarkets, versus 43 per cent in the US and only 29 per cent in Canada.

But it could be argued that this lack of loyalty may be shifting, now that like much of the rest of the world, Australians have found comfort in the continued operations of major supermarkets during such unpredictable times. Even when consumers began panic buying toilet paper, flour and frozen vegetables, supermarkets remained open and continued to quickly adapt. 

“In times of uncertainty and high anxiety, customers seek normality, regularity and structure. Supermarkets that have historically offered habitual, routine shopping experiences, provide this sense of normality and structure,” says Professor Gary Mortimer.

According to the Australian Leadership Index (ALI), consumer sentiment towards supermarkets has increased dramatically since mid-March when the outbreak first hit. In mid-April, it was revealed that 55 per cent of shoppers perceive supermarkets as demonstrating leadership for the greater good, either to a large or extremely large extent – this is twice as positive as ratings have ever been for national businesses and institutions since the index first launched in 2018. 

“This is quite a remarkable and unique result, and can be credited to the increasing ways supermarkets have acted to keep shoppers and staff safe while providing access to essential products,” observes Dr Jason Pallant, co-creator of the ALI and marketing lecturer at Swinburne University.

Going the extra mile – fast

In a crisis, it’s important that retailers are on top of their game and respond quickly; depending on what action (or inaction) they take, it may impact their future customer loyalty.   

But as the pandemic hit fever pitch in mid-March, it did not take long for supermarkets to quickly adjust to social distancing and put measures in place, while clearly communicating with customers to ensure they understood the new policies and how they would impact them. These include efforts such as dedicated shopping hours for the elderly, basket and trolley cleaning, handwashing stations, quotas for people in store and signal markers on the ground. 

“We have seen examples from the majority of grocery retailers going to extraordinary lengths to put customers and staff before profit – IGA, for example, has been selling toilet rolls to customers at zero profit due to increased supplier charges,” says Keri-Anne Jacka, commercial director at Dunnhumby.

“These measures have put staff and customers first, while also helping to alleviate some of the stress and worry that comes with the fear people have been feeling.”

Jacka adds that the more successful supermarkets have been those that implemented policies early, based on what they observed overseas retailers in recovery had already experienced.

Community spirit

In recent years, it’s been well-known in the retail industry that the modern consumer is more loyal to businesses and institutions that show support for environmental and social causes.

Since the coronavirus outbreak, supermarkets have offered their help to those in the community, from Woolies and Meals on Wheels working together to deliver groceries to the elderly to Aldi donating an additional $450,000 to charity organisations like Foodbank and OzHarvest.

During the bushfires in December and January, major supermarkets like IGA, Woolies and Coles also donated gift cards, food and services to rural fire services and hundreds of thousands of dollars to organisations helping to support affected communities.

These new programs and initiatives help to drive what Mortimer describes as “attitudinal loyalty”, a consumer’s deeply-held commitment to shop at a particular retailer over its competitors, despite other discounts, location and marketing efforts. Even before the pandemic, simply offering the biggest discounts was not enough for supermarkets to encourage brand love, he says.

“Shoppers are growing aware of how supermarkets are demonstrating their corporate social responsibility credentials, such as how they are treating their stakeholders, including vulnerable customers, suppliers and staff,” Mortimer explains. “Despite empty aisles of rice, pasta and toilet paper, supermarkets are now competing not just for shopper’s dollars, but for their hearts and minds.”     

People before profits

While both Woolies and Coles have both faced underpayment scandals lately, both major retailers showed how much they value their teams during the coronavirus outbreak.

Understandably, the pandemic has been the cause of much anxiety and stress for Australians, particularly shoppers who were met with empty shelves in the toilet roll aisle at their local supermarket and unfortunately, some employees suffered from physical and verbal customer abuse.

In an open letter published in national newspapers, four major supermarkets wrote an open letter to customers, asking for their patience. Coles CEO Steve Cain also said that while he appreciated the “compassion from customers respecting these limits”, he called for respect and support for team members who were working hard to manage the surge in activity.

“I would ask all customers to continue to respect and support our team members and our Customer Care and Coles Online call centres, particularly if a product is unavailable or the checkout queues are longer than normal,” he said.

While many other businesses were forced to lay off thousands of staff, Woolies and Coles picked up the slack and offered them new jobs to manage the rise in activity. Coles announced it was looking to recruit 5000 casuals in March, while Woolies offered employment to some of the 20,000 staff that had been laid-off by Qantas that same month.

According to Kylie Gleeson-Long, managing director at Dunnhumby, winning customer loyalty begins with engaged, valued and motivated employees, especially in a time of crisis when customers are watching.

“It might go against your first instinct of a customer-first approach, especially in a time of crisis. But recognising and rewarding your in-store team in the face of a crisis will go a long way,” suggests Gleeson-Long. 

“Your employees are the best loyalty-building team in the world. Once essential retailers have considered employee loyalty, they’ve built a solid foundation for customer loyalty.”

Beyond the pandemic

But will all this newfound support for major supermarkets continue beyond the pandemic? According to Pallant, it seems as though people have positively responded to the perception that supermarkets have been acting in the interests of the greater good, not just profits. 

Pallant also believes that shoppers are happy when communication is clear and they can see the additional benefits on offer.

 “I think this provides a blueprint for the post-COVID-19 future as well, as it could have lasting impacts on consumer behaviour. The message here is to focus on providing real benefits to consumers beyond price discounts,” he says. 

“Currently the clear need is around health and well-being, but as this situation settles, there is an opportunity to extend that focus.”

This story is from the May 2020 issue of Inside Retail magazine. Subscribe here.