Dive Brief:

• Schnuck Markets launched a new loyalty program, “Schnucks Rewards,” which allows customers to earn points redeemable for dollars off future purchases, the company said in a news release emailed to Food Dive. Customers who sign up for Schnucks Rewards will earn 10 reward points for every dollar spent on qualifying purchases. After accruing 1,000 points — or $100 in purchases — customers will earn $2 off a future purchase. They can redeem their money immediately or allow it to accumulate up to $500.
• Customers can participate by downloading the rewards app or logging in at www.schnucks.com/rewards.  Those with an existing Schnupons digital coupon account may use their current log-in.  
• The new app also features enhanced item-location information to help shoppers find specific items in any Schnucks store. Customers can also use the app to view the weekly sales ads, refill pharmacy prescriptions and access digital coupons.

Dive Insight:

Loyalty programs are nothing new to grocery stores, but in an intensely competitive environment, they continue to be an effective way to grow repeat consumers and sales. A recent report on shopper loyalty from the Food Marketing Institute found a $2 billion retailer with a gross margin of 25% can generate $70 million in incremental sales each year with a next-generation loyalty program.

That same report, however, showed just 9% of consumers shop at one store and a mere 7% said they spend more than 90% of their food budget at one location. Those numbers show that grocers need to focus not just on having a rewards program, but creating one that provides a great enough incentive that keeps shoppers returning instead of visiting a competitor with better deals of the week. They have to go beyond the card and take a more holistic approach.

Hannaford Supermarkets, for example, has launched My Hannaford Rewards, giving shoppers a 2% reward on 5,200 store-brand products, including fresh and center-store items — all without requiring consumers to subscribe to receive price discounts. Then there’s Southeastern Grocers Inc., which revamped its traditional loyalty program Plenti and replaced it with with SE Grocers Rewards. The new program enables customers at Bi-Lo, Winn-Dixie, Harveys Supermarket and Fresco y Más stores to earn points that can be redeemed for money off on groceries or fuel at participating Shell-branded gas stations. Customers can also use bonus points on hundreds of grocery products and find additional ways to earn points on their receipts.

Southeastern Grocers' choice to offer fuel savings is in line with consumer preferences according to data from Excentus-Ipsos, which shows it as the top preferred currency for loyalty programs. Not far behind gas savings is the desire for cashback. Other grocers offering similar programs include Hy-Vee, Giant, Stop & Shop, Albertsons and Safeway.

Schnuck’s new program shares similarities with one offered by fellow Midwestern chain Hy-Vee. Both loyalty programs include smartphone apps that offer customers exclusive savings, although Hy-Vee also offers fuel rewards.