Aldi Uses Social Media to Boost Loyalty Program
As grocers compete for shoppers’ loyalty across digital and physical channels, the bar for building relationships with customers is getting higher. Yet, a traditional rewards program is not the only route to do so, as discount grocer Aldi has found.
Aldi Retail Payments Leader Teresa Turner spoke with PYMNTS about how the grocer leverages social networks to connect with its customers without a loyalty app.
“We don’t have a traditional loyalty program, so we have to rely heavily on other areas,” she said. “We have quite a bit of social media presence with people loving our Aldi finds, and they tell us what they like and what they don’t like and what they want more of. We also have an amazing buying team that sources these incredible Aldi finds items that go viral and become the talk of various social media groups.”
She added that the company prioritizes offering customers quick checkout over taking the time to identify loyalty members and log their buying data, and instead the company relies on “nontraditional channels” to gather data about shoppers’ habits.
PYMNTS and ACI Worldwide’s study, “Big Retail’s Innovation Mandate: Convenience and Personalization,” which drew from a survey of 300 major retailers in the United States and United Kingdom, found that Aldi is in the small minority in this nontraditional channel. Seventy-nine percent of grocers said they believe consumers would be very or extremely likely to switch merchants if not provided with a mobile app, and 74% said they believe they would do the same in the absence of digital coupons and rewards.
Can’t Touch This!
While some grocers have been radically transforming their payment capabilities in reaction to industry changes, trying everything from cashierless checkout that automatically charges to shoppers’ saved accounts to own-device scan-and-pay, Aldi is taking an if-it-ain’t-broke approach.
“In regards to payments, not so much has changed,” Turner said. “We’ve enabled contactless since several years ago, and obviously there was a huge spike in contactless payments in the pandemic.”
Yet, the company did not even accept credit cards until 2016, a decision that came in response to customers asking for the capability. Turner reflected that the grocer “still [has] a long way to go” in that respect, especially when it comes to leveraging digital technologies in the payment process.
There, Aldi is in good company. The PYMNTS and ACI study found that, of the grocers included, 37% were innovating the channels through which they receive payments, and the majority (55%) were innovating with respect to their available payment methods.
Bricks and Clicks
In that vein, the company is building out its eCommerce capabilities. The grocer’s U.S. arm announced in late October that it is working with eCommerce solution provider Spryker to create its own online shopping site powering grocery delivery or curbside pickup orders. Currently, the grocer’s site is informational, and its pickup and delivery tabs link out to Instacart-powered pages.
“We will be bringing that [third-party aggregator] customer over to [our] own platform in 2023, which is super exciting,” said Turner.
The addition of direct online ordering may boost the grocer’s ability to keep its finger on the pulse of what its customers are looking for. After all, when orders are made through Instacart, the aggregator retains the transaction data, improving its own loyalty-building capabilities rather than the merchant’s.
This data disparity did not matter as much when eCommerce represented only a fraction of all grocery sales, but the industry has shifted toward digital channels.
Research from PYMNTS’ October study “Super Apps for the Super Connected,” created in collaboration with PayPal, which drew from a survey of more than 9,900 consumers across the U.S., the U.K., Australia and Germany, found that 76% of millennials in these four countries had bought groceries online in the previous month. Moreover, even for the generations least likely to do so, that share remained around two-thirds.
The DIY Approach
In addition to building out its eCommerce capabilities, Aldi is also turning its innovation focus to the in-store experience, adding self-checkout capabilities to many locations. Turner noted that the grocer is adding the option to “hundreds more stores,” explaining the technology is even better suited to Aldi than its rivals.
“We do have a smaller basket size than some of the larger competitors, so there is a large portion of our customers that just have three, four items, and they just want to check themselves out.”
Research from the PYMNTS study “Today’s Self-Service Shopping Journey: The New Retail Expectation,” which was created in collaboration with Toshiba Global Commerce Solutions and drew from a survey of more than 2,000 U.S. adults, found that one in three consumers had used self-checkout options for their most recent in-store grocery purchase.
Plus, the data revealed that the top reason consumers choose self-checkout is that they want a quicker purchasing experience, and the second most popular reason is that they do not want to wait in line.
In addition to self-checkout, the company is also looking to update its payment terminals, roll out “several gift card initiatives,” and integrate the latter into its website, Turner said.
“Digital transformation has been huge at Aldi the past five years or so,” she said. “We historically had been somewhat disconnected in that space, but we’ve made great progress.”
How Consumers Pay Online With Stored Credentials
Convenience drives some consumers to store their payment credentials with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze consumers’ dilemma and reveal how merchants can win over holdouts.
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