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Keeping consumers loyal

Nov 23rd 2011, 08:15

November 2011
Keeping consumers loyal
The festive season is soon upon on us, which means consumers will be stocking up on their favourite liquor beverages for the holidays. This is an important time for liquor retailers and they need to ensure that they capture their share of the spike in consumers spending.

Traditional supermarket retailers such as Spar, Pick n Pay and Shoprite have aggressively opened smaller format convenience type outlets and that must be having an impact on the shopping patterns and will also enable consumers to access national promotions without the inconvenience of having to travel to a large format store or a wholesaler.

Promotional based marketing strategies work well in the liquor sector and largely determine where consumers shop for their preferred brands. However, these strategies do little to promote customer loyalty and often result in reduced basket sizes and decreased margins for the retailer.

To keep consumers buying from their stores only, instead of at the competition, retailers need to focus more on the shopper rather than the products. Short term loyalty programmes can be a very effective tool to protect margins and increase customer spend in a period where promotional activity is frenetic.

The idea of getting four free high quality wine glasses after spending your allocated liquor budget certainly holds more appeal than tearing off to another liquor retailer to save R15 on a case of beers.

Although this concept may be new to retailers in South Africa, short term loyalty marketing programmes have been used successfully by a number of retailers overseas. They work by offering consumers a free reward that has a perceived high value, as a result of purchasing at a particular retail outlet within a fixed period of time.

A typical programme would use a stamp collection method where consumers collect a certain number of stamps to build a set. They remain loyal to that store because they can only complete the set by making purchases (and collecting stamps) from that store.

As South African retail becomes more difficult to operate in as a result of new competition, liquor retailers, in particular independent liquor stores, will need to think out the box to remain profitable. A short-term loyal marketing strategy may just be what’s needed to achieve this in its ability to keep consumers loyal.

Wendy Smith and Craig Ballantyne

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DGB(Pty)Ltd was formally established in 1990, although our true roots extend over 300 years when winemaking began at the Boschendal and Bellingham farms in the Cape Winelands. In fact, we were doing things a little differently in the 1940’s already, when Douglas Green pioneered the wholesale sales model for wine in Paarl.
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