Supermarket wars: How Coles and Woolworths will use customer data to beat ALDI
Woolworths and Coles are looking to use customer data to get an edge over competitors like ALDI, according to a Credit Suisse report.
Although the supermarket giants have accumulated details on customers through their loyalty programs – Rewards and flybuys respectively – analysts from the financial services company said it was only the beginning stage for their use of artificial intelligence to boost their marketing and promotional efforts.
Credit Suisse retail analyst Grant Saligari said Coles and Woolies’ use of data and analytics technology would give them an advantage against smaller competitors such as ALDI and IGA. “The respective Rewards and Fly Buys programmes of Woolworths and Coles provide an unmatched capability to engage with customers on a unique basis.”
Supermarkets can already use the data to target members with emails informing the item they have bought in the past are on sale.
However, Saligari said the promos will become more sophisticated in the future, with the ability to offer different discounts to different shoppers depending on their sensitivity to price.
“Allocating expenditure to intermittent shoppers that are likely to switch a purchase from a competitor would likely be a better use of promotional expenditure than a similar promotion to a loyal customer,” said Saligari.
Credit Suisse said 20 per cent of the cost of a grocery item in supermarkets goes towards promotions.
Last year, ALDI launched a campaign that poked fun at its competitors for their “pointless points” and loyalty cards.
“ALDI has a different point of view on loyalty,” said Mark Richardson, marketing director at ALDI.
“In the 17 years we’ve been operating in Australia, we’ve created a loyal following of customers by offering consistently low prices and great quality goods. Customers continually tell us that this is what matters most to them.”
Woolworths and Coles are currently the two biggest supermarkets in Australia with a joint market share of 61.6 per cent. ALDI follows on the third spot with an 11.4 per cent share.
A recent survey by CHOICE found that Woolworths and Coles were the lowest-rated grocers in terms of shopper satisfaction. Some of the most common complaints among Coles customers included slow and difficult checkout system, lack of local produce options, limited product availability and unhelpful staff.