Dive Brief:

• Natural Grocers’ {N}power loyalty program now has 1.6 million members who account for 73% of the company’s net sales, Co-President Kemper Isely said during the company’s earnings call last week.
• Members that shop on a monthly basis spend around $53 per trip, which is more than twice as much as the $25 non-members spend, he noted.
• Natural Grocers reported strong results for first quarter 2022, with comparable store sales up 3.8% and net income up 145.5%, to $8.9 million. 

Dive Insight:

Natural Grocers’s {N}power membership ranks have steadily ticked up over the past two years. With its large assortment of supplements and strict product standards, the grocer has been able to draw in a sizable number of shoppers looking to take preventive health measures during the pandemic. 

But the company has also done its fair share to make sure it’s converting new shoppers into loyalty members. Last summer, Natural Grocers revamped its {N}power program to add more benefits as well as streamline point and reward accumulation. It has also added personalized promotions and notifications, and sends regular messages to members to keep their local stores top-of-mind.

“We message to those customers four times per week,” Isely said during the company’s latest earnings call on Thursday.

The program, which started in 2005 and offers points and special product discounts, hit 1 million members in August 2019. A year ago, it hit 1.3 million members, who accounted for 69% of new sales penetration. 

Grocers are investing more in their loyalty programs these days as they look to keep the millions of shoppers who flooded their stores and online platforms during the health crisis spending at a high level. It’s no secret that loyalty members are very valuable to a company's bottom line. Albertsons CEO Vivek Sankaran has noted in earnings calls that the company’s Just for U loyalty program members, which now number more than 28 million, are using their loyalty perks more and that members who redeem fuel or grocery rewards spend, on average, four times more than nonactive members. 

For specialty retailers like Natural Grocers, loyalty programs can be particularly valuable as a way to lock in spending among health-conscious, affluent consumers. As specialty chains like Sprouts Farmers Market and Earth Fare have struggled to convince shoppers that they offer something unique compared to traditional players, which have ramped up their offerings to offer a large range of natural and organic products, loyalty and membership programs could be a way to sharpen their pitch.

In addition to its loyalty growth, Natural Grocers reported strong profitability aided by the company passing along the 3% to 4% inflation rate it saw. Supplement sales also contributed to that metric, with comparable sales outpacing the company’s overall comps average for the third straight quarter, Isely said.