As we know grocery retailing loyalty is fiercely competitive and long-standing in the loyalty industry.
This podcast unpeels the many layers to building a customer-centric organisation by Shoprite, Africa’s largest retailer, which prides itself on “feeding Africa for less”.z
We talked to Meredith Allan, who is Head of Rewards and Personalisation of Shoprite X, a division of The Shoprite Group. Its loyalty programme is Xtra Savings and has achieved an 80% sales coverage in a short period of time since launch approximately 4 years ago. The Xtra Savings programme is the first initiative in its multi-year digital transformation strategy building a customer-first organisation.
2) Shoprite X
Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m Paula Thomas, the founder of Let’s Talk Loyalty. Today’s show is hosted by my colleague Amanda Cromhout, the Founder of Truth, an international loyalty consultancy firm based in Cape Town, South Africa. If you work in loyalty marketing, make sure to join Let’s Talk Loyalty every Tuesday, every Wednesday and every Thursday to learn the latest ideas from loyalty experts around the world.
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Amanda: Hi, I am Amanda Cromhout from Truth. Grocery retailing the most fiercely contested loyalty industry, and second to airlines probably has the longest history in the loyalty world. Today we hear about the customer strategy of Africa’s largest retailer, which prides itself on feeding Africa for less. We talk to Meredith Leigh Allan, Head of Rewards and Personalisation of ShopRiteX from the ShopRite Group.
In loyalty terms, they operate the Xtra Savings program in two of their banners. ShopRite and Checkers with an over 80% sales coverage through Xtra Savings. It was the first initiative in ShopRite’s multi-year digital transformation to build a customer first organization through its loyalty program through digital commerce, and to drive customer insight leading to monetizing its data capability.
Enjoy Meredith’s open discussion about how loyalty is just one part of a broader digital transformation strategy starting with the customer. So today I have the absolute extra special privilege of welcoming Meredith Leigh Allan. Welcome to Let’s Talk Loyalty.
Meredith: Thank you so much. Thank you for the time.
Amanda: So to everyone who may not know Meredith, she’s Head of Rewards and Personalization at ShopRiteX and I think one of the most exciting things we’re gonna hear about today is how the ShopRiteX initiative within ShopRite is more than just the loyalty program. So Meredith will talk us through all of that.
But Meredith, before we go any further, ’cause I’m dying just to get straight into our questions, tell us what is your favorite loyalty program?
Meredith: Cool. Well thank you. Thanks again. It’s great to be here. I think this question is, is a very, very tricky one for me to answer and having kind of gone through my little rolodex of global and local examples of rewards programs and loyalty programs and personalization cause it’s such a, a vast field. I think to keep it local, I will say that my favorite rewards program is the Discovery Vitality Program. And I think what makes it super unique is that, and bearing in mind it was launched in 1997, so the stuff that they’re doing now is very exciting. But to have that kind of foresight in 1997 to understand that rewards programs aren’t just around kind of incentivizing customers or both their offers or even, you know, the way that they use a points-based program, but really around how they change consumer behavior and how they integrate technology and data in order to build products that better customers.
Like it’s fascinating to me that they’ve used the rewards program to actually build kind of a behavioral science industry that actually starts lowering people’s health risks or increasing people’s movement or activity. Like I think the spirit of what they’re trying to do, I really buy into, and the fact that it kind of links to a greater purpose as well.
I find very inspiring and, and way ahead of its time. So I think from a local perspective, Discovery Vitality, and they’ve actually taken it abroad as well. So I think now I’m 37 countries, which is a, a great kind of testament to South African innovation and definitely a company that we still aspire to, even here at ShopRite.
Amanda: Yeah, absolutely great choice. I mean, we actually had Celeste Williams on the show a few months ago and it was a fascinating listen, like she gave away some really amazing stats. Backing up what you’ve just said about real behavioral change on the back of an incentive through the Vitality program, so it really is a case study.
Meredith: And good for customers.
Amanda: Yeah, exactly. It’s not just a one way street, it was. It’s an amazing case study for the world to follow, and I think the world is following it. So, so thanks for sharing that. So I think what’s most important is we actually explain to the listeners of Let’s Talk Loyalty, the magnitude of ShopRite. So it’s the largest retailer in Africa. But before we get, get into your customer and loyalty discussions, let’s actually, if you don’t mind, please share with the audience a little bit about ShopRite.
Meredith: Definitely I am a very proud employee of the ShopRite Group. So I’ve been at ShopRite almost 10 years now, but ShopRite itself is over 40 years old. It is, like you said, it’s the largest retailer on the African continent. We are also the largest private employer in South Africa, so we have over 152,000 employees. And we like to say that we’re kind of part of the South African everyday life. Eight out of 10 South Africans are likely gonna interact with one of the ShopRite group. Stores or products or suppliers or services on their day-to-day life.
From a size perspective, we have about 3000 stores. We’re in nine different countries. And our market cap at the moment’s about 150 billion rand, which translates to about an 8 billion dollars market cap, which isn’t huge in the kind of global landscape.
But when you start looking at our scale, we sell over 7 billion products a year through 1 billion transactions. So from a business scale, we actually are kind of competing with our global peers, but from a market cap perspective, we are a little bit smaller. Our sales are around 200 billion rand a year, so that’s around 10 billion dollars a year.
And our kind of core purpose, we were born out of a very strong ethos of low cost retailing, kind of feeding Africa for less, was always kind of the core of our business. And our latest CEO has kind of re-energized that purpose to be around uplifting lives every day. And we really see ourselves as kind of what can we do to help customers with their everyday needs, which is largely grocery household furniture and things like that.
And in the last couple of years we’ve gone into online, which I’m excited to talk a bit more later. But that kind of sets the scene for what the ShopRite coop is. In the old days, they used to say like, we’re the Walmart of Africa. But now we quite like just to say we’re the ShopRite of Africa. That’s who we wanna be. That’s what we used to aspire to but no longer anymore. Now we are in fact the ShopRite of Africa. And, and hopefully we’ll be for, for many years to come.
Amanda: Those figures are outstanding. I absolutely love it. The fact that 152,000 employees and the fact, I mean, the fact that you talk about your turnover or your market cap not maybe being as impressive as some global numbers, I think the world has started to understand we work in a very weak ran economy.
Meredith: Yes. Yeah. There we are. The rand is a bit tricky.
Amanda: So we have kind of excuse tricky sometimes. Yeah, exactly. But those numbers should keep the, the scale, the scale’s magnificent.
Meredith: The rand is a bit tricky. Yeah but the scales.
Amanda: And I love that Feeding Africa for less and uplifting lives every day. That’s absolutely amazing. So I do want to just give an introduction as well to the launch of your loyalty proposition.
It’s Xtra Savings. I’ll ask you to just give an overview of how it works. But from my point of view, and as an observer in the South Africa marketplace, you have arrived on the marketplace with a massive big bang. I mean, as soon as you arrived. If I look at the awards that’s we run as the South African Loyalty Awards.
The last two years, you’ve picked up the Best Retail Program with the Checkers brand. Last year you picked up the Best Newcomer Program with ShopRite and immediately you’ve come into the Most Used Programs with ShopRite being the most used in the mass market. 67% of mass market customers are using the ShopRite loyalty program.
And Checkers, third, which I’m sure we may see that change year on year, but it is brand new into the market is already in third place with 66% of the whole of South Africans using your loyalty program. These numbers are enormous.
So with that introduction, just tell the audience a little bit about what does Xtra Savings give to the consumer? How does it work? What are the mechanics around the program?
Meredith: Great. And, and thank you for those stats. It’s always I see them, but hearing you say them as well is always encouraging to kind of see that customers have responded. Yeah, so like I was saying, the ShopRite group historically was a low cost retailer.
We were very oriented around kind of everyday low prices. We have massive promotions and we were, we were centered around giving customers incredible savings and incredible service every day without what, at the time was perceived as kind of an extra or unnecessary cost that was associated with loyalty or reward programs.
So for a long time we were a stock outlier in, I think the only retailer in South Africa from a grocery point of view, definitely, that didn’t really have an active rewards program. Our biggest competitors had very thriving, super successful programs and we just weren’t in the space at all. And then in around 20, the conversations kind of started in, I would probably say like, 2016, the conversation started coming as Neil Schreuder, who’s our Head of Strategy, started talking about, you know, guys, it’s this long-term. We need to start thinking long-term. We can’t always be obsessed about last week’s sales or the sales of products or the sales of stores. We really need to understand our customers. And if we are going to survive another 40 years we need to kind of make some very serious changes.
And what ended up being a very massive kind of investment, which started in 2018, and we launched our first program in October, 2019 in the Checkers business. For those of you who don’t know, Checkers is our more kind of upmarket premium banner. At the moment we have around 7 million Xtra Savings members 80% sales coverage, and that was launched in 2019, then it was launched.
I think for me, the, the most miraculous thing about the launch was that the ShopRite Group actually wanted to launch it because there was, you know, at ShopRite at the time, it was very much oriented around, just give every customer the same thing. We don’t wanna create this kind of exclusivity with customers. We don’t wanna create tiers, we don’t wanna create slow earning points that they can’t use. We actually just wanna do what we do best. So it’s an instant savings program. We were already kind of number one for best value and low prices. So we took that thing that made us great and we just supercharged it with a bright orange.
And we have about 5,000 different deals every week and customers sign up and get instant cash savings as long as some other products and perks, which I’ll talk about. But the Checkers launch the, I think the thing that makes it most exciting from our perspective is that as a rewards program goes, it’s not the most innovative in terms of what it is.
It’s an instant cash program. It’s based on deals. It’s got additional perks and benefits. That’s not novel. We know that. But because we had the advantage of being the last in the market to do it, we were kind of able to take the best of everybody’s programs and really supercharge it on that instant cash savings benefit.
At a time, where I think you know in South Africa, the increasing costs of living pressures are very real and getting increasingly bad. And at a time, customers were actually just like, this is great. I get this card, I swipe it, and I get a deal. And that innovation of how you do something versus what you do also kind of led to a lot of the other spirit of innovation that ended up being ShopRite X, which is that you don’t always have to invent something that’s brand new, but you do need to invent a brand new way of customers experiencing it.
So some of the examples of that, we launched a hundred percent paperless signup. We had six different ways to sign up, which is quite unusual at the time as well. So you could have a, you could sign up at the till point if you had a, it’s not a dumb phone, but a, a kind of like non-internet.
Amanda: Feature phone.
Meredith: Yeah feature as do many of our, yeah, a feature phone there it is. As do many of our, our customers still do. You could sign up on USC for free. You could sign up on WhatsApp. You could sign up on the website. So we had this a hundred percent paperless sign up. We had a million people sign up in the first seven days. We give away instant cash savings every day.
And to date that simplicity of the, of the product and the full transparency of what you actually save. Cause you can see it on your tool slip on our apps and things like that really has kind of set us apart. And then subsequent to that, we had lockdown, which was global lockdown. I mean globally, everybody experienced that midway through planning our rollout to ShopRite, which is our mass market banner, and you know, when many retailers were dialing back on investments and many retailers, and I’m sure this was impacting global retailers as well, COVID was a time for people. You know, we were dialing back on costs. Dialing back on innovation, trying to suss out what was gonna happen at ShopRite.
The inverse happened and our CEO and Neil was like, guys, we’ve got to, we’ve gotta bring this forward. We have to accelerate the launch of ShopRite Xtra Savings because if this is what’s happening, customers are gonna need these deals even more than they have already. And so we actually launched the ShopRite program a hundred percent virtually.
Amanda: That’s amazing.
Meredith: And to give you some context, for Checkers, we had to train about 16,000 store staff. For ShopRite, we had to train about 40,000. So we had to train 40,000 people a hundred percent virtually through lots of different training interventions while the business was going through a pandemic and launched that in October 2020.
Which is probably the proudest we’ve been as a team to just really pull together. Which meant that, you know, while other companies were kind of coming out of Covid being like, okay, what’s next? We had just ridden Covid through and popped out a much stronger and smarter ShopRite.
And then lastly, we our programs also integrated with our online on demand platform called Sixty60, which is the greatest innovation in its own right. And we launched that in October 2021. Now, so that’s your full experience is integrated, whether you’re a ShopRite customer, a Checkers customer, where you’re shopping in store and online. You can benefit from Xtra Savings deals and see your deals and your savings add up across all of those different channels. So I think I’ve missed quite a bit, but that’s the general, that’s a quick high level view of Xtra Savings.
Amanda: I think the words you use, which I loved was supercharged and it’s bright orange. We often use your launch sort of impact as a best case sort of approach to launching. Like if you gonna go, you know, do it, do it and do it boldly, but, and carry on like you walk into your stores and you can’t avoid, which is one of the things I do love about how you’ve continued it post-launch. Meaning it’s not just a launch impact, it’s this is real and this really is here to stay for our business, is that you can’t miss it. And that’s how it should be. There’s no missing it and it’s bright and orange and in your face.
Meredith: I must say he’s probably not gonna enjoy me telling the story, but we had initially planned for a super sleek black premium matt black card with, you know, beautiful Xtra Savings written on it. But really like trying to emulate the kind of upmarket premium retailers that you can imagine locally and even globally, like really like upmarket feeling.
I mean Neil, who’s our director went on a trip to London and picked up a Monzo card, which is a fantastic business. Their financial services brand, super innovative in their own right and their cards are lunar, lunar orange, a little bit more of a pinky color. And he sent me a, I’m like, you know, I was the business owner running this massive project. It’s my first big project. I’ve run at the size. We are like signed off the cards. We’re trying to get them from, you know, China, get them to South Africa, this whole deal. And then he just sends me this like blurry photo on WhatsApp saying.
Amanda: And says, change everything, please.
Meredith: Yes. Not like, also not like what color he wants. Just like this color. And then a lot of the project team for the first like. Then you have to sell the job in to all the executives as well to be like, yeah guys, I know that you like black, but listen, actually, the only thing that matters is standout. We want and unavoidable value. Unavoidable value, unavoidable savings. Even down to the PI level, which if anybody’s listening, who works in a retail environment, like a grocery retail environment, the operations and store people, their feelings about things like PI labels, which are those little price indicators on the shelf. Shelf talkers is like, It’s next level to them.
So me having to go to these very established retail operations minded people and say, guys, I’m really sorry, I have to change your PI levels to orange. And then having to go to ShopRite and saying they, they’re changing to pink, which in itself was a whole. That was a whole story about why are we using pink and purple in ShopRites.
Just to get that standout was probably also another one of my like proudest achievements is convincing a bunch of shop rights executives that yes, we are putting orange and pink into the stores.
Amanda: And I think there’s a million, that’s what’s for customer. There’s a hundred loyalty minds listening to this going, I’ve been there, but maybe not had to do something quite as radical as that. But it’s a lovely story, so thank you for sharing it.
I think what I really I, I can tell from our discussions before the interview and what I’m most excited about, what we want you to share today is obviously the Xtra Savings program has had this enormous impact on the loyalty landscape in South Africa, and it’s helping the consumer save money on their everyday spend.
But I think it’s time to unpack unpeel, the, the onion and the layers and say, okay, so it comes out of a division within ShopRite called ShopRiteX and within that, what is ShopRiteX? Share that please. And what, how does it link to your Xtra Savings program?
Meredith: Cool. Yes. Great. Yeah, absolutely. I think like what the customer sees as Xtra Savings is, you know, we talk about an iceberg. It’s the tip of the iceberg of what we really saw as part of a multi-year digital transformation investment that the ShopRite Group went on. That was really guided by the number one objective, which is you can see in our results presentation as well of being truly customer first. And having that as a, a cultural arm of our business because to win in the long term, you really, that is kind of the new mandate to be extremely customer obsessed and to understand our customers and their changing needs.
And so the rewards program was kind of the first big investment of that multi-year transformation, and it was really orientated around. It was a customer identification program, or a program that allowed us to understand our customers, be able to contact them on new digital channels. Because that was also new to us.
The ShopRite Group, you couldn’t search. We were the largest retailer in Africa and we had zero digital footprint. So you could be in a five K rate. I think 80% of the South African population. Is within a five K radius of one of our stores. But if you went on Google, you wouldn’t find us. We were invisible to the online world, and so this program, Xtra Savings was the first start of that to be like, okay, first we have to understand who our customers are, which we launched a program that allowed us to track these customers over time and better understand customer trends.
Then we needed to take all of that customer data and create a customer insights platform that can be used by the business. To optimize our internal decision making. So things like how do we arrange a store correctly? How do we price correctly? How do we track customers over time to make sure that we’re not overly investing in cherry pickers?
All of those customer insights were unlocked using the customer data that we collect from Xtra Savings, and then the level that we’re now looking forward to, which is how to monetize this in new ways and all of those different aspects around customer building a customer strategy, building digital commerce on top of those customers, the ability to generate insights and how to monetize that through media and through data ecosystems that all sits within this digital and innovation hub called ShopRiteX.
We are a hundred percent ShopRite. So I think sometimes the, the misnomer is that like, oh, we are the innovation department, or we were innovation sets. And that’s categorically not true. And I also don’t even think there is such a thing as an innovation department, like innovations around how you do things.
And it’s a mindset of trying to solve problems for customers in the most kind of effective way. And so ShopRite is filled with innovation. ShopRiteX though is just oriented around where the intersection of customer, a digital channel and data. So that’s where we live and breathe.
We also are relatively new, so we officially launched, we assembled three years ago and we just celebrated our second official birthday kind of to the public. And it really is a illustration of two things.
One, that mass retailers such as ourselves have to disrupt our own way of thinking if we’re gonna survive. And even from a, like, you know, globally, I think we’re a bit behind the curve when it comes to things like digital commerce and even retail media to some extent. But in South Africa as well, these emerging economies, we still need to change with our customers. So the first instance was, if we are not gonna disrupt ourselves, someone’s gonna disrupt us. And Neil was like, that’s not gonna happen. You know, we’ve often talk about ShopRite, we’re a number one in many things, but we like to have a number two attitude. And so ShopRiteX is kind of that in nature. It’s like we’re a number one with the number two attitude. How can we make sure that ShopRite remains number one for the next 40 years?
And then the second thing was more around how to create a connected customer platform. So if we don’t have alignment internally, and I think many people can resonate with, if you’re working in a large company that’s got silos or you’ve got your rewards team that has a different opinion to your marketing team, that has a different opinion to your digital commerce team or to your in-store team, you know, customers feel that incoherence or they feel that when people aren’t aligned. So ShopRiteX was born out of making sure that all of these customer facing technologies are kind of forced together.
So we’re forced together in one place, and that means that we fight a lot internally and there’s a lot of conflict with digital commerce and our media organization and our insights division, which is trying to create new customer insights. But the goal is that from a customer point of view, That they see something super coherent.
And that, as Neil puts it so eloquently, that we are here to just make the everyday effortless. We are just trying to take out any angst or any niggles or anything in the day-to-day grocery experience. Our job is to make that either quicker or to, to make it cheaper and, and that’s kind of our purpose at chocolate eggs.
Amanda: So you referred to the iceberg like comparison. I often talk about the iceberg effect in the sense that, as you say, the Xtra Savings program is just the tip of the iceberg that the consumer sees and feels and experiences. And obviously behind that is the strategy to A, serve the customer better, but B, gather the known customer data and the intelligence from the insights, which is the below the, you know, below the waterline, the covert operation, which is obviously feeding this incredible strategy of ShopRiteX to better serve your customers.
And I, you know, in Peter’s presentation, the investor presentations this week he was very open around how important this is as a strategy. I think it’s incredible that as a business leadership, there’s is so much transparency around this strategy, which is clearly the right thing to do. I remember Neil saying a couple of years ago, just after you launched Xtra Savings around, if we don’t become a customer centric business, we won’t be around in the future.
And that’s such an enormous statement for an organization. As you started off saying, you’re 40 years old, you’re the largest retailer on the continent, and to come out and say that, and now we’re seeing you follow it through, it’s great. And that’s what we are here to talk about today. So I think you’ve expressed how well supported ShopRiteX and the rewards and loyalty program is in the business, but is there anything else just on that you want to touch on about how this customer strategy is, is supported within ShopRite?
Meredith: Yeah, I think it’s definitely if someone had to say to me, you know, what was the hardest thing about launching a rewards program or launching ShopRiteX, the internal change management that it took and the internal kind of empathetic resilience. Cause you, you are, you do have to be empathetic about, you know, the people who are showing skepticism or resistance in your own organization for what you’re trying to do.
Even though you know your intention is right. You know, we came with the intention of we wanting to grow a beautiful product for ShopRite. We want to, you know, build something that customers are gonna love. We are very invested in the long-term thinking of shop rights. Unfortunately in companies such as ours, and I think other people can relate to this as well, when you have large companies, particularly ones that are, you know, very multifaceted, everybody has their own perception of what success looks like.
Everybody, we were also lucky enough that we were, and are, but at the time as well a very successful business. And so that internal change management of trying to tackle different people’s perceptions of what they think a rewards program’s gonna be, or the same can be said for digital commerce. Is digital commerce gonna steal our instore customers?
Is a rewards program just gonna impact our margin and it’s gonna wreck our price perception and we’re gonna throw all this extra money away. Like, these are all the conversations like right up to the day. You know, the day we launched, we still had the CFO being like, who’s gonna pay for this? You know, the merchandising buying team saying, the suppliers aren’t gonna invest in this.
They’re not gonna even gonna disrupt all our volumes. Nobody’s gonna sign it to a card that gives them the deals they would’ve got anyway. Nobody’s gonna shop online because they could just come to the store. Like all of this fear based kind of, it is built on experience and that’s why you do have to have empathy. You have to have empathy for your colleagues and peers. It, it was a very, it was an uphill battle for sure.
Amanda: But just listening to you, I, I can, I am sure there are hundreds of retailers listening to this going, that’s what I’m going through, or that’s what I went through, or that’s what I’m about to go through.
So, I mean, I’ve, I had a similar experience back in my days before I was at Truth. Where it’s, I, I swear that 90% of my role was change management, so it’s absolutely refreshing to hear you talk about that. But in the tone in which you’re talking about it, this, the empathetic ear, even though it might have been incredibly frustrating, the empathy is because all of that resistance is based on fascinating exper, you know, years and years of deep retail retail experience that you can’t overturn overnight just ’cause there’s this new sexy strategy that we’re trying to implement. So thank you for sharing that. Cause it’s not always that obvious. That’s that’s the stuff a lot of people don’t talk about, but that’s the stuff that makes or breaks the success of these programs.
Meredith: What got us through, and I think this is, again, I do think it’s a very ShopRite mentality thing. But we as a, a company, everybody, it’s a very hardworking organization and you know, there’s a strong mantra of like, impossible is nothing. It’s everything for the customer. And, and the way that Peter talks about it is, you know, no customer leaves the store unhappy.
So even that kind of just, that if, if you can find the thing that you agree with as a company, and it’s not about customer data and it’s not about a rewards program and it’s not about longitudinal tracking, it’s not about points and you just try and get to that single kind of shared value, which for us was around customers are gonna love this thing.
They are, they need it and they’re gonna love it. But that’s ultimately kind of what got everybody on board and then just launching something to your internal teams with the same level, actually a greater level of excellence, greater level of attention to detail than we did to our own customers. That was also something that really kind of, I think was a big driver of our success, which is sometimes you launch a product internally and your internal team or like they get the worst of that project.
And for us, we spent a lot of our time making sure that. The internal teams almost got the best of it. So by the time we launched the customers, that was like a slam dunk. Everybody knew what was going on and they were really excited about it. But just the, just, you have to really focus on your own company first and get everybody on side.
They don’t all have to agree, but you have to find something that like connects people so that it does come across as coherent and you can come with that big bang. Otherwise, customers see it, they can see it’s a department on its own doing their own mission. You can just see it when you see the product land in the market.
So, it was a huge learning and a huge privilege as well, like being able to deal with, from a cashier to a CEO and everyone having the same understanding of Xtra Savings. That’s like a super powerful thing to be a part of.
Amanda: I think you’re giving an amazing insight into the culture of the ShopRite company, which I wasn’t expecting today, so thank you. What I, what I really want to ask you now is a little bit more technical around the insights that are being derived off your millions of customers and 80% of revenue said just now is covered through Xtra Savings. So can you talk us through how your company manages insights from a, like insights capability point of view.
Meredith: Cool. Yeah, so like I said, we have about an 80% sales coverage. So for our South African business that’s around 155 billion rand in sales that are associated with the rewards card. I.e. we know this person. We also collect ID numbers and passport numbers so we can identify them on quite a reliable basis and we can track them over time.
And that creates a very rich source of raw data that we store. And then obviously like raw data means nothing. We need to translate that into insights. If you’re in a retail company like myself, you know, if you can’t do it, like action and insight in ShopRite is a doing word. It’s not an adjective. Everything here has to come with like a verb of if you’re coming to anybody in our organization with kind of an insight, it has, what’s the doing word? Like what are we doing? We can’t just know about it.
And I think what’s changed in the last year we used to use kind of ad hoc analytics, so we had our data in a SAP analytics product and we had analysts who were mining that data and using it for different things. So we could use it for understanding how to range a certain store. We could use it to understand how to range a certain category. How to price better some fantastic products that we have built in the past couple of years is even things around promotional effectiveness, which again is kind of ShopRite superpower is understanding. Okay, cool.
If we do a massive three day only Black Friday deal, which ShopRite happened to also kind of bring into South Africa, the South Africa retail first. What is that actually doing? It’s all good and well to say, hey, we had a hundred percent sales growth on the day we sold X amount of products, millions of whatevers. But what did it actually do? Are we just cannibalizing future share? Did we just buy a whole bunch of unprofitable market share? Do we have a whole bunch of customers just coming in cherry picking?
And you know, before our rewards program, it was kind of like all we had was sales from last week and everybody was giving each other high fives saying, sure, sales last week up a hundred percent. Everybody doing a great job. Now what the guys have done is because this data is accessible to everybody, our category management team and our pricing team got together and they built a tool that on every promotion we do now can actually track customer longitudinal spin for promotions and calculate based on that promotion.
Okay. What was the discount on the product? What was the associated spend that customer actually bought in because if they came in to buy the deal, what other products were in their basket and what’s the contribution to our sales of those products? And then tracking that customer into the future being like, well, if this customer ordinarily bought two, two kg washing powders a month and they’ve now just stacked up full, how much of that is just cannibalization for the future?
Which is not a bad thing, but you know, you can’t high five too much about cannibalization and how much is it actually kind of growing there capacity, for example, are they’re buying it and sharing with others. So those are the type of data products we’ve built off the back of our customer data and all orientated around what we would call a use case or some kind of like actionable decision that someone in our business can use.
And then what’s happened in the past is that these were kind of built in isolation by different teams. And then in October last year, we announced our own insights platform. We partnered with what was known as IRI. They are infrastructure partners. We’ve put all of our customer data into a new tool called Rex.
Rex, is it kind of a play on the ShopRiteX word, which is around ShopRiteX stands for kind of taking ShopRite, which is the core of what we do but using data to grow exponentially into the future. So with that in mind, we introduce Rex and which is about retail, ex retail insights, and it’s it allows all of our internal users and our suppliers to now access the insights tool in real time. That does a whole bunch of standard things like who are my customers? What are they buying? Promo participation out of stocks. There are tons of stuff in there, which we launched last year, which again is a very unusual thing.
One for ShopRite if anybody knows our business. Very unusual for ShopRite to share data openly and so transparently and even globally to as an indicator to say, you know what, if we are serious of our customer, the only way to be serious about customer is to make everybody in your organization and connect the, to your organization, like your suppliers, also serious about customer. And that’s kind of how we’re starting to build this customer momentum in the organization based on data for sure.
But in a way that’s actually supported by technology and supported by again, this kind of infrastructure of customer insight, not just, hey guys, we should be customer centric. You know, there’s a customer seat at every table. It’s like, no, guys, what’s the report that you’re using to justify that decision? Why are you defanging that item? Why? What’s that promotion of success? Like those types of things.
Amanda: I mean, I’m listening to you thinking of all the companies, the loyalty industry works with, whether they’re technical organ, technical platforms, or data analytical firms thinking they would yearn to have a tool like Rex in their portfolio.
I mean, the number of times I see inadequate dashboarding capability based off maybe inadequate insights, who knows? But I think it’s remarkable. And I think the way you’ve explained it in the sense that it’s used internally for your ShopRite personnel to be able to drive this strategy with you, rather than you trying to push it all the time, you’ve now got the pull from the business.
But then to work so closely with your suppliers, which I know is a grocery strategy that’s been done before, way back in the years of the first grocery retailing customer centricity, but to do it in this way. So you know, getting this win-win for you and your suppliers. So I think it’s, it’s great to hear, and it sounds like you’ve actually, you know, formally launched this platform, Rex, that actually puts a stake in the ground and is, is very, very impactful.
What I wanted to ask you if, whilst you’re talking about insights and so forth, I mean, you’ve shared a little bit with us around 80% of revenue is through, through through Xtra Savings, swiped known customer. What are, what are any other really your favorite insights that have come through, through the program that you’ve acquired within the business?
Meredith: I have a few minutes to think about that. I think I must just say on this, on the insight side, I just wanted to be very clear that we as a rewards team within ShopRiteX don’t do everything that I’ve just described. So I think a good kind of note to people who are listening or people who are trying to set up these types of teams is that like internal collaboration and setting up teams for success who are good at different things is also absolutely vital.
Like you can’t. Well, I mean, you can try, if you’re a rewards team or you’re looking after a rewards program and you’re trying to also be an insights business and you’re trying to also be a media business. And you’re trying to also be a, a category management team, I think that’s not me, I’ve, I don’t, yeah, that’s not what I’ve just, that’s not me.
I’m very lucky that I work with incredibly smart people around me, and we’ve created an environment that this connected customer platform everybody can use. But by no means is it just me or my team doing all of what I’ve just described. It’s, it’s more around setting yourself up with partners.
Amanda: And I think that’s what’s so incredible ’cause you’re not, what you’re saying is you’re cementing the fact that this is around an entire organizational shift. It’s not just bred outta one department. This is the way ShopRite is doing business. That is different now that started with this, you called it a multi-year digital transformation, starting with Xtra Savings to garnish, you know, to get to know your customers and so forth, and get to know that insight.
Meredith: Yeah, absolutely.
Amanda: So thanks for sharing that. And I’m sure, I’m sure everybody’s sitting here thinking, goodness me, this lady must be exhausted.
Meredith: No, that’s, yeah, it’s not me. It’s absolutely not me. And I think, again, like when you’re launching something always like how can you solve the problems of your own organization? Sometimes we, you know, how can you solve for customer in buying? How can you solve a customer in the call center? How can you solve a customer in private label? There’s a lot of opportunity in your own organization that you can put the customer at the heart of that decision. Without always just going to customer first, but on insights, I think I have a couple that spring to mind the ones that are more recent.
So like I said Sixty60 is our on demand grocery service. It’s also, I had nothing to do with it, but for me it’s just, One of the most exciting retail innovations just on the planet, just as it stands. For those of you who don’t know, it is a 60 minute grocery delivery service. We are 80% of the markets according to 22-7 in South Africa.
Amanda: I think one customer is Amanda Cromhout.
Meredith: Yes. We have many top customers. Amanda’s one of them. For our delivery is, it’s recorded, faster delivery is like four minutes or something. And we also launched just before Covid. Coincidentally, we had, again, as part of our digital transformation, we were investing in digital commerce and everyone said, you know, again, we were the last in industry.
And everyone said, ah, nobody needs 60 minute delivery. Anil whose other director was like, well, you know, when you get 60 minute delivery, I think people have a different, a different take on it, but we integrated with Xtra Savings in October, 2021, so they had been in business for a year.
Again, it speaks a lot to the ShopRite Group. They had a sensational launch. They were making tons of money. They were growing exponentially. The business was booming and they hadn’t integrated with Xtra Savings because they kind of built off the back of a very startup entrepreneurial vibe. So they were building MVP and scaled rapidly through Covid.
And then came the decision, well, you know, we better integrate with Xtra Savings. Cause you know, customers are asking for the deals. And internally there was a lot of conversation around, well, but like, should we, we are already subsidizing the delivery. We’ve added all these extra costs to get this to you and 60 minutes, these customers aren’t the most price sensitive. Like, do we need to invest all of this extra margin into these customers if they’re already, you know, we are already ahead of the market.
At that point, there was no competition. And again, from a ShopRite perspective it was, well, what’s best for customers? I was like, well, no. What’s best for customers is integrating with Xtra Savings ’cause then we also get omni-channel customer insights. Cause at that point what people were buying online was totally invisible to us from a customer point of view.
And at the time they would, they had started this kind of skepticism coming through around the digital commerce play was stealing from in-store shops. We were cannibalizing our own sales. And some of the store guys were like, well, you know, we’ve got, we pick from store. So we’ve got all these pickers in our stores now and they’re disrupting in-store customers.
And there was starting to be a little bit of noise around like, what is the role of digital commerce in a, in our future? And is it really adding incremental spend? And one of the greatest insights that came out of the integration of Xtra Savings, which means we could actually track these customers in store and online, was that.
Overall, when these customers signed up to Sixty60, they actually increased their total average customer spend. So the insight was that, you know, in store plus online equals three, so one plus one equals three. And it was such an amazing kind of turning point for a lot of the people in our organization to one, realize that in store is so important to the online experience.
So it was one thing to go to the store guys to say, guys, you can’t build an online business if you don’t have exceptional in-store delivery, in-store service, in-store experience. And two for the store guys to say, listen, your online customer, that picker who’s walking along the stores, picking up those deals is adding incrementality and incremental sales to your business. Because we were able to pick up customers kind of infrequent shops. They didn’t stop at their local competitor, insert competitor store. They didn’t shop at a stop, at a grocery store on their way home from work or school or whatever. And that one plus one equals three, which is even how we talk about it.
I think Peter’s even mentioned it in a results presentation as well. If you didn’t mention it this week around growing total customer value. Which is a totally different thing to what the ShopRite Group had been doing, which was growing total sales and then not the same thing. Yeah, absolutely. So I think that was a great insight that it helped us as well.
Amanda: So like just listening to you, you know, who needed groceries within 60 minutes, but now if I can’t get something within 60 minutes or a day off a supplier, I get irritated. And I think your Sixty60 initiative, which is no longer an initiative, your proposition has changed that perception. And I can’t understand companies who can’t get something to me within an hour.
So congratulations on that. And thank you for the integration ’cause from, obviously from a loyalty point of view, not as a customer, obviously as a customer it makes more sense for me. But from a loyalty point of view, it was great to see that integration take place to see the full omnichannel experience.
You’ve also just talking about Xtra Savings innovation, you, you’re in the process of trialing a subscription model, which I think the market’s watching closely. Please share that you’re, I know you are still in, in beta phase, so how’s it going? Share if as much as you can share, coming out of the trial phase.
Meredith: Yeah, very excited. So we launched Xtra Savings Plus in May to, like you say, about a hundred thousand beta users. And again, maybe people are like, why are we launching this subscription? It’s a little bit about it. It’s a monthly subscription product. You pay 99 rand, which is about $5 I guess. Yeah, depending on, yeah, five and a bit dollars. So it’s about five bucks a month and you get unlimited 60, 60 delivery, which is what we just spoke about now, as well as double personalized offers that you can redeem in store, online, and a once a month, 10% or voucher that you can redeem in store for kind of your big, larger shops.
So that’s what the proposition is for now, and we launched it again at a time when externally, if you had to look into our business, we have, you know, if you saw our results as well this week, we have fantastic sales. Customers are up, sales are up, volume’s up. We’re luckily outpacing our competitors. We have industry, industry leading market share. You know, of all the metrics the health of our business is absolutely kind of obvious to everybody.
And so this investment again, to some might come as a surprise to be like, why are you still investing if you already have such a lead? And I think the reason we launched Xtra Savings Plus was because we have a lead, we need to invest. And again, that mindset of being number one with a number two attitude means that you have to keep investing Xtra Savings plus is a huge financial investment for the group.
Some of the stats you asked for, so like I said, we’ve got about, we’ve, we haven’t launched a full scale yet. It’s 99 rand a month on average, customers are getting back over a hundred percent of their subscription payments back. So for every 99 rand, our members are giving us, we are giving them back on average 115 bucks a month, which in any kind of investment class, this would be like an unheard of investment. You give us a hundred round and we’ll give you back 115 round. In terms of savings, it’s incredible. It’s a little bit more complicated to explain to our CFO, which I have had to do now to be like, what? How are we giving?
Amanda: But surely the incremental change of behavior outstrips that cost.
Meredith: So luckily, yes, to date on our beta users, we see customers shopping a lot more frequently.
Amanda: There we go.
Meredith:And that is driving their overall customer value. And, but I think what’s great about, you know, we’ve had in chats internally as well around on average it’s around like a 25 percentage point difference in terms of Xtra Savings Plus members since they’ve signed up versus beforehand. Versus the rest of the market, like the rest of the sample. People are spending more, but I think what’s great is that even internally, even if they didn’t, I think we still would’ve invested because we’re are trying to shift our mindset into long-term customer retention, which is not as easy to, to do return on investment calls on because we are an organization that still is very oriented around last week’s sales.
But it’s such a crucial point to maintain kind of global, we look globally as well. Subscriptions are not novel. Many, many companies have done them. Amazon Prime being kind of the leading example. But across the globe now, grocery retailers are also doing it, and I think we saw it as another, the next imperative. If customers will do a little bit for us, we will go to the ends of the earth for them to give them the best service, the best savings.
And to date the conversion rates that we’ve seen on, you know, they’re topping 30% of some of the customers are shopping very frequently on Sixty60, which is fantastic and I think speaks a lot also to the South African climates. People, even if you’re shopping online, this idea that like an online shopper is this very exclusive unattainable reality.
Again, at ShopRite we’re like, no, if we can do it even if you are a budget conscious person who is, you know, going out of your way to try to buy deals and really be super mindful about your money, that’s great. You can still use Sixty60. It’s affordable, it’s accessible, it’s not gonna break the bank and it’s not a luxury.
That is kind of only for a few people who can afford it, which I think some of our other competitors. Sometimes you, you fall into that trap of building something that only certain people can afford. Whereas we kind of done the opposite to say, you know what? We’ll make this as affordable as possible. The price point is sensational.
But if it means that more people can experience Sixty60 and more people can save money and more people can save time. Hopefully, like you say, they, with pay off in the, and if not, then we’ll figure out other ways to, to get that money back just from a, a data perspective.
So I think the objective is breakeven. But I’m really excited to see how, how customers kind of respond to it. And it’s almost like insurance. You know, if you pay us nine to nine bucks, I can guarantee you that your monthly shop will be 10% cheaper just by using your voucher. And it’s like, it’s a phenomenal thing to do. It’s a, it’s a great place to be. And I think, you know, we are not in the financial services business at Xtra Savings, but it’s quite nice to kind of be able to significantly impact people’s finances using these tools to say, yeah. Just stick with us. Don’t worry about it, and I can guarantee your will be 10% cheaper.
Amanda: It’s amazing, Meredith, actually, because the number of interviews, whether it’s with South African loyalty professionals or globally that this exact discussion is so critical. It’s what role does loyalty play to help the consumer in these really cash strapped times? And like every time I talk about it, I feel that five years ago we were talking about cash strapp times, but even more so now without questions. So I’m really sorry to say, but we are gonna run out of time.
Meredith: No problem.
Amanda: And I think the listeners of Let’s Talk Loyalty and myself and yourself to just carry on, they would want us to carry on chatting and you would continue to entertain us with these incredible stories. So I think to conclude how, if people want to connect with you, is LinkedIn the easiest place for them to do so?
Meredith: Yes, absolutely. You can find me on LinkedIn for sure, and send me a message, pop me a message and happy to connect and share more of the war stories. And if you need, if you are, anybody needs to start a support group for dealing with anybody in operations or buying. You are incredible. If they do ever watch, listen to this.
I am here for you because it is a tough road, but I think when you, once you get it right and everybody’s singing from the same hymn book, it is a, it’s a really beautiful thing when an organization is kind of all pulling in the same direction. So absolutely, super excited to connect with anybody on any of these topics.
Meredith: And if you’re interested in some of the stuff that’s not really my area, I will absolutely put you in touch with, with the right people.
Amanda: I’m sure you’ll be in on day to do that kind offer. But Meredith, Meredith Allan, from all of us, Let’s Talk Loyalty and the loyalty professionals around the world, thank you for sharing such insights. I knew we were gonna talk about loyalty through Xtra Savings, but I think when we peeled back the onion layers, what came underneath was much more interesting. So you’ve been an absolute star. It’s been incredibly fascinating. Thank you so much.
Meredith: Thank you to you. Thank you for always believing in us. I know we’ve worked together way before we had a rewards program to speak of, so thank you for also believing in us to finally get. You also a huge influence in how we built it and how we launched it, so thank you so much.
Amanda: Absolute pleasure. It’s great to talk about it on air and to share with everyone. Thanks Meredith.
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