When you think of grocery loyalty, you probably think of that plastic, scannable tag on your keys, punching in your phone number at the self-checkout, and making small talk with the cashier.
While those are still ways to maintain loyalty now, their efficacy is waning.
A staggering 81% of Gen Z and Millennial consumers switched brands in the past year.
They’re willing to go (1) where prices are more affordable, (2) where they can buy “cool,” tasty new products, and (3) they can buy how they want (credit, debit, BNPL, offline, or online).
As the food publication Mashed put it:
“Grocery is entering a new era defined by aggressive expansion, tech-driven convenience, and changing expectations around value.”
So, how can you reach this younger generation? Below, we run through 8 strategies to help you make the most of your marketing budget.
1. Segment Your Shoppers
Good grocery marketing starts with knowing who walked in and why.
Segmentation is the practice of grouping shoppers by behavior so the right kind of offer reaches the right kind of person at the right moment (sending everyone the same piece of snail mail only goes so far).
Most advice tells you to slice by demographics. That can certainly help, but it can be challenging to get that data — usually you have to buy it from a third party.
An easier way is to use first party data:
- People who regularly shop at your store who you want to retain.
- People who’ve never shopped at one of your brand’s stores before.
- People who have shopped at a store before, but haven’t come back in a while.
If you don’t have the infrastructure to support pulling that kind of data, you might find it helpful to work with a vendor who can pull that data, based on real transactions. Kard, for example, can target all three of these groups and show you:
- Where else your ICP shops
- How much they spend
- What categories they care about
- How those patterns shift over time
This data can inform the kinds of discounts you give (how much, amount vs. percent, on certain items), and can reveal potential partnerships — perhaps with individual brands or other kinds of stores outside of the grocery vertical.
2. Give Them a Reason to Buy
When everyone needs groceries, it’s hard to make everyone need your groceries. Coupons and rewards can be your “in.”
Offer Digital Coupons
Digital coupons are the most-used value tool in grocery, and shoppers expect them by default. A digital coupon is a discount a grocer or brand delivers through its own app or loyalty account, redeemed with a clip, a code, or a scan at checkout.
A third of US grocery shoppers upped their coupon use last year, so now’s the time to think strategically about how to make yours stand out.
Consider sending push notifications for flash sales, app-exclusive coupons that give people a reason to download, mobile wallet integration so nobody fumbles at checkout, and seasonal bundles that make it hard for shoppers not to add “just one more thing” to their carts.
There is a downside to coupons, though, and that’s friction. People have to remember to clip or activate them, and then remember to scan or input a code at checkout.
While they might still buy their groceries anyway, it doesn’t feel like they got the discounts they were coming for. And that sour taste in their mouth doesn’t do much in the way of winning their loyalty.
Reward Them With Cash Back Offers
Card-linked offers are merchant-funded rewards that appear in a shopper's banking or rewards app. Unlike a coupon they have to activate or scan, all shoppers have to do is pay with their linked card to get their reward.
Then, a platform like Kard will match up the transaction to the cardholder’s available offers and automatically deposit cash back into their account.
Shoppers appreciate that kind of convenience. Two-thirds of new and loyal shoppers say they would take a personalized card-linked offer from a grocery store, the highest interest of any retail category.
Plus, groceries typically get paid for with cards, especially if we’re talking younger consumers.
Debit leads the way for the youngest shoppers, with 69% of Gen Z reporting they use one daily or weekly (EY). And 45% of online shoppers used payment credentials already stored with a merchant for their last purchase.
The best way to earn their loyalty is to offer them a reward every time they buy with their preferred card.
3. Time Your Offers With When Shoppers Spend
Most people assume grocery spend peaks on the weekend, but our data (based on $61B-worth of transactions) says otherwise.
Last year, average daily spending was 27% higher on weekdays than on weekends. This year, there was an even bigger difference — 46%.
Day-specific promotions and rewards-based offers can encourage consumers to buy online or in-store. You may also want to optimize when these ads are shown, perhaps on Sunday or Monday, to drive purchases during the week. And don’t forget to create urgency with:
- “Flash” offers that can only be redeemed during a certain period of time.
- “While supplies last” offers that can only be redeemed when items are still available.
4. Carry Trendy Items
Grocery spend made up 7% of total spend across all categories we examined, beat out only by big box retailers (23%), gas, quick serve restaurants (both at 8%).
Why? Because grocery is starting to signal taste, even social status for younger shoppers.
According to McKinsey: “Grocery stores have become destinations where they seek out culinary ‘status symbols’: trending brands, unique products, and fresh ingredients that feed their social lives as much as their dinner tables.”
They:
- See niche, buzzworthy products on social media — and then hunt for them in stores.
- Post their take on unique food or drinks, like specialty hot sauces or non-alcoholic spirits
- They care about sustainable, ethically sourced ingredients
Offering cash back or discounts to customers on specific “trendy” items is a fantastic way to capitalize on this behavior. You could encourage that experimental behavior even more with:
- Progressive offers, where a user receives a higher reward for each additional purchase (2% cash back on the first purchase, 4% cash back on the second purchase, 6% cash back on the third purchase).
- Purchase count offers, where a user receives a reward after a specific number of purchases from a brand within a given timeframe.
5. Make Pick-Up and Delivery Seamless
Younger shoppers might start loading up their digital shopping cart on a laptop, add to it from their phone at lunch, then pick it up their order on the way home — or schedule a delivery.
In fact, 44% of Gen Z and 42% of Millennials order their groceries online every week, and over half of them have increased how often they shop for groceries online in the past year.
Perhaps even more importantly, they tend to spend more when they shop online. 76% of younger shoppers spend between $51 and $200 per grocery order.
Grocers who can make that process seamless are the ones who nab those higher AOVs every week. Our dataset made it clear that delivery partners drive basket lift: Instacart ranks 18th in total merchant spend, and its average order value beats every other category, including big box, by 60%.
6. Go Full Omnichannel
Younger buyers bounce between online grocery shopping and going into physical stores. They order from grocery stores on Doordash, Instacart, and UberEats. They find out about new brands to try, pop-ups, campaigns, and other fun promotions on Instagram and TikTok.
Grocery brands need a unified presence on all those channels.
Even if you think you’re doing that already, you may want to take another look at your strategy. McKinsey found that only 25% of consumers are satisfied with the omnichannel experience that retailers provide. That’s a shame, because McKinsey also found that omnichannel consumers are at least 1.25 times more valuable than their single-channel counterparts.
The good news is that cash back rewards and discounts can work across those channels to keep consumers engaged wherever they buy.
If you already get significant online traffic, but your stores are underperforming, design cash back offers that only reward in-store purchases. If you’re not getting the social commerce results you want, offer cash back to sweeten the deal.
7. Revamp the In-Store Experience
Layout is a marketing tool, and the best operators treat every square foot as a place to sell.
Produce up front, bright and full, primes people to spend. Cross-merchandising helps one choice influence the next (think salsa next to chips). And, of course, the candy bars, gum and chapstick at the end get you those extra add-ons that boost AOV.
You have another opportunity, too. Marketing at self-checkout. Reminding people of the coupons they have or adding some of those premium, Instagrammable snacks at the end can be revenue drivers, too.
In fact, 63% of Gen Z shoppers prefer self-checkout and scan-and-go at grocery stores. If you have the tech to support it, use heat maps to see where shoppers linger so you can amplify your messaging there.
8. Pursue Community Partnerships
Value-driven shoppers (which most Gen Z and Millennials are) choose stores that share their values. Showing up in the community is how a grocer earns that preference, and it pays back in trips and goodwill.
- Spotlight local suppliers
- Sponsor the school team and the food drive
- Send staff to volunteer on the clock
Then tell those stories through your app, your email, and your in-store signage, so the effort reaches the shoppers who care. That word of mouth reaches people no paid campaign will, at a fraction of the cost.
Don’t Forget to Prove ROI
If you’re presenting these strategies to your boss, their next question is going to be ‘So, how are you going to measure this?’
Get ahead of that by tracking the metrics that connect directly to revenue, like:
- Foot traffic and sales lift
- Conversion rate, online and in-store
- Average basket size and lifetime value
- Loyalty enrollment and active usage
- ROAS and redemption rate
You should also be thinking through:
Closed-loop attribution. You should be able to connect every marketing dollar to a transaction it produced, online or in-store.
Incrementality. An incrementality test holds a random group out from seeing an offer, then compares their spend to the group that saw it. The difference is the lift you caused, separate from sales that would have happened anyway.
Bringing These Strategies Together
It might be tempting to fire all eight on all cylinders. But we recommend starting with the two or three that map to where you could use the most help right now.
Strong online numbers but quiet stores? Run cash back that only pays out in person.
Struggling to get younger shoppers through the door? Lead with the trendy products and a card-linked offer that reaches them in their banking app.
Whatever you pick, build the measurement in from the beginning. That way, you can be really smart about where and how you use your budget (and can get more for next year).
If you want a deeper dive into Millennial and Gen Z behavior in the grocery sector, check out our data-packed guide to consumer trends in grocery.
Or, if you’re curious about how cash back rewards can help you attract new shoppers (and engage existing ones), book a call with the Kard team.
FAQs
What is the marketing strategy of a grocery store?
A grocery store marketing strategy uses data from POS, loyalty programs, and online behavior to send the right offer to the right shopper, drive repeat trips, and run promotions across channels. The goal is more trips, bigger baskets, and higher lifetime value, all measured against real sales.
What are the most effective grocery store marketing strategies?
The highest-ROI strategies are data-driven segmentation, digital coupons, card-linked cash back, omnichannel convenience, smart pricing and loss leaders, in-store layout, community partnerships, and closed-loop measurement. The strongest programs combine several rather than leaning on one.
How are digital coupons different from card-linked cash back?
A digital coupon is a discount the shopper has to clip, code, or scan, funded as a price cut at the register, and it lives in the grocer's app. Card-linked cash back is merchant-funded money credited automatically after the shopper pays with a linked card, and it lives in the shopper's banking app. You need both to reach shoppers where they shop and where they bank.
How do I market a grocery store on a tight budget?
Start with the data you already own. Segment your loyalty base, send app-exclusive coupons to the right segments, and lean on free community partnerships. Then add card-linked cash back, which is merchant-funded, so brands cover the reward and you pay only for performance.
How do I measure the ROI of grocery marketing campaigns?
Use closed-loop attribution to tie spend to in-store and online transactions, and run incrementality tests to isolate the lift you caused. Track foot traffic, sales lift, redemption rate, ROAS, and average basket size rather than impressions or clicks.
