The Sainsbury’s loyalty programme Nectar, set up over a decade ago, is central to the UK grocer’s push to further develop as a multi-channel business.
That’s the message from Sainsbury’s group development director Luke Jensen as the UK’s multiples battle for a larger share of the country’s growing online sales. Sainsbury’s is benefiting from the existing data at its disposal via Nectar – and making the loyalty scheme a key part of a series of multichannel initiatives.
For example, the data from Nectar has been commercialised to become a direct revenue generator for Sainsbury’s in the same way it is for Tesco and its Clubcard. Jensen says the grocer has formed a joint venture, Insight 2 Communication (I2C) with Aimia, owner of the Nectar programme, to offer its large FMCG suppliers multi-channel marketing solutions in and around Sainsbury’s stores and its online operation.
“Through this suppliers have access to customer insights, enabling them to develop the most targeted and effective communications mix for reaching their customers.” However, with a nod to concerns over privacy, Jensen adds: “At no point do we sell customer specific data to third parties as we run all campaigns on their behalf.”
Sainsbury’s, meanwhile, is looking to tie its Nectar programme to individual customers amid signs consumers are increasingly making their shopping journeys down multiple channels.
“One challenge we face is that we’re more complex – with things like financial services and e-books – so we need to set up Nectar so that we create an incentive for customers to check-in to the scheme so we can bring them into the equation [across the channels]. We need an easy mechanism to get the details from them and not have them sign-in as we do not want to create any barriers,” he explains.
Part of Sainsbury’s work on this front involves mobile. It is trialling an initiative called Mobile Scan and Go in three stores – one superstore and two convenience outlets – with a specific group of customers. “They download an app to their smart phone, check-in to store [via a QR code], scan products in to their trolley/basket then proceed to checkout. They then just scan their Nectar card and the trolley contents transfers to the till for payment in the normal way,” Jensen explains.
Feedback has so far been positive, he says, with customers enjoying the convenience of packing products directly into their own bags without the need to remove them at the till. “Customers have also found that being able to see a running total of what they have purchased so far means they can easily stick to their budget, something really important in the current climate,” Jensen says.
Such digital devices are not just the domain of younger early-adopters, according to Jensen. He cites the example of an elderly couple using an iPad in-store who “loved using it as they had big text on it and it added up the value of their basket”. He adds: “The design [of technologies] is often done by twenty-somethings but in grocery it is 40-year-old mums or older customers who will be using it.”
This is one example of how mobile devices are impacting on the grocery sector, with Jensen suggesting mobile will continue to be a very important factor across Sainsbury’s multi-channel business. “We know that customers are increasingly using mobiles in store to learn more about products, check recipes, and compare prices,” he says.
In fact, such is the impact and future potential of the use of mobile that he believes they are usurping other in-store technologies with which retailers have been experimenting. “We are always looking at new technology and assessing how it can meet the needs of our customers. With over 50% of the population already using a smartphone – that can potentially deliver personalised interaction within stores – kiosks and screens are likely to be less critical to the future of retail than was anticipated a few years ago,” he argues.
The retailer’s “personalised interaction” also involves connecting to shoppers via social media networks like Facebook and Twitter. Jensen says Sainsbury’s is “directly connected to over 800,000 people through our Facebook and Twitter profiles”.
“This direct link provides us with the opportunity to listen and respond to our customers in real-time, helping them with customer service enquiries,” he adds. Sainsbury’s, meanwhile, is also working with Facebook ‘fans’ and Twitter ‘followers’ on new product development.
All these activities are vital for Sainsbury’s as there has been a clear shift to multi-channel shopping. Last month, it reported a near-20% increase in online grocery sales in the fourth quarter of its financial year.
Online is still a relatively small part of Sainsbury’s overall turnover but Jensen points to market reports that indicate online grocery sales will double in the next five years. IGD predicts sales will increase from GBP5.6bn today to GBP11.1bn by 2017. He suggests the future is very much multi-channel: “Most of our customers will be supplementing their in-store shop with online (cross channel shopping).”
Amid the continued development of new digital technologies and use of social media platforms, Jensen insists he does not see any diminishing role for the Nectar programme within Sainsbury’s. “Twenty-two million customers visit our stores and websites every week and over 70% of those transactions are through Nectar. This is and will remain the most powerful point of interaction with our customers.”