For the past several years the Australian and New Zealand grocery marketplace has faced its fair share of ups and downs, challenges and opportunities. Each time some new issue seems to raise its head, poised to disrupt customer trust and spending, another innovation or application also arises that promises to win engagement.
In this region we’ve seen supply chain interruptions, shortages, increasing costs, consumer price sensitivities and regulatory scrutiny against the backdrop of global market uncertainty and rapid advancements in digital technologies, particularly concerning AI and automation.
The ANZ grocery sector’s tight competition and changing conditions require retailers to constantly adapt their approach. What worked last year may not succeed today. Companies must take learnings from recent challenges in supply chains, stock management, pricing structures, customer price sensitivity and regulatory oversight to navigate 2025 effectively.
What ‘Great’ Looks Like
As discussed in Eagle Eye’s latest grocers’ ebook, Loyalty Lessons That Will Shape 2025, none of the underlying concepts like personalisation, gamification, and omnichannel engagement are new, but the best grocery programs refine and apply them in ways that consistently deliver exceptional results. So, what can we learn from them?
The best grocery loyalty programs today understand that personalisation is now an engine of bottom-line results. They know that gamification as an end to itself has diminishing returns, but when executed with a purpose, it can be an incredibly valuable and ROI-delivering tool.
The top players also recognise that the impact of any omnichannel loyalty initiative is directly proportionate to the volume of customers that participate in its digital channels. More eyeballs equals more engagement, bigger baskets and bigger media opportunity.
Personalisation Initiatives: Lessons From Global Leaders
Personalisation has been an enduring goal for grocers, and for good reason. It’s a path to delighting customers, encouraging engagement, and driving financial performance. It’s no wonder that Boston Consulting Group (BCG) estimates personalisation leaders will experience US$570 billion in global growth by 2030.
Personalisation also allows grocers to allocate their marketing and promotional spending more efficiently, only presenting discounts on certain items to those customers most likely to be motivated by that discount. This kind of targeting represents a level of precision that mass marketing can’t achieve.
Grocery retailers have a unique advantage here, given the vast amount of data generated by the extensive volume of SKUs in their inventory and the frequency of customer visits. And if they have a loyalty program, they have all the data they need to tailor offers to customers at the individual level.
UK supermarket chain Tesco delivers personalised customer experiences through its massively popular Clubcard program. Tesco’s latest trading statement reports that there are more than 23 million Clubcard households in the UK and that Clubcard sales penetration was 82% in the UK and 87% in Central Europe. There are also 16.3 million Tesco app users, with visits to the app increasing year-over-year.
This volume of digitally connected customers allowed Tesco to launch a high performing, high-engagement personalisation initiative driven by gamification: Clubcard Challenges. This program offers customer personalised, goal-oriented challenges over six week campaigns, with points rewards offered for completing challenges like spending £20 on certain line or range of products over the period.
Clubcard Challenges uses AI to create bespoke thresholds for each participant, drawn from insights into that customer’s past purchase history and preferences, which are then analysed and processed by predictive AI algorithms.
The campaign’s performance results are striking. During the final, Christmas-themed Challenges campaign of 2024, 10 million customers received their own personalised set of Clubcard Challenges. Of all customers who visited the Clubcard Challenges site or pages, 76% converted into players. Sixty-two percent of all players reached the first reward threshold, becoming winners. Those winners collected over half a billion extra Clubcard points over the campaign period.
During 2024, Tesco’s H1 24/25 overall adjusted operating profit increased 15.6% over 2023 to £1.649 billion.
Getting Amongst the Gamification
In a 2023 Euromonitor International survey, almost 70% of respondents identified gamification as a top loyalty tactic, citing its ability to add challenging and competitive elements that significantly boost customer engagement and retention. Gamification also taps into consumers’ appetite for interactive and goal-driven experiences.
However, gamification needs to make sense and add something to the customer experience. It shouldn’t be implemented without clear strategic purpose or immediate tangible value, and it should not copy another gamification idea like a DuoLingo style app-sign in streak at the expense of a more relevant, customer oriented or even individual use case.
When done right, gamification can add a sense of novelty to the shopping experience, keeping customers engaged and driving incremental sales. The keys to effective gamification strategies are getting (and keeping) customers behaviorally invested and rewarding them with real value.
The Tesco Clubcard Challenges initiative discussed earlier, and a similar program from French grocery retailer Carrefour are excellent examples of this.
These gamified challenges ask customers to modify their behavior to earn their reward by exploring a different product category or achieving buying targets rather than simply waiting for their loyalty points to accrue for their anticipated discounts. This active participation deepens engagement, not just with the loyalty program but with the grocery brand itself.
For customers to engage with a gamified initiative, they must be digitally connected to the grocery brand, most often through the loyalty program’s mobile app. You can see this with the likes of Woolworths’ Rewards app.
“Phone-out” shopping has become integral to the grocery experience, and loyalty apps now serve as essential tools. Apps can offer personalised offers and advanced features like store navigation and proximity notifications, solidifying their role as invaluable assets for shoppers and retailers alike.
The goal, of course, is omnichannel engagement; connecting the in-store and online experience. Grocers’ biggest single roadblock to this is converting a significant portion of their overall customer base into digital users.
In ANZ, non-app-using grocery store customers will make up a huge portion of the shopper base, so the opportunity to convert them over to digital users, both for them and the brand, is huge if there are personalised offers to benefit from.
Jumping on the Opportunity
While modern, AI-driven personalisation, gamification and omnichannel engagement are transforming grocery loyalty globally, these approaches represent somewhat untapped opportunities in the Australian and New Zealand markets. While the true-personalisation sector is still young, ANZ retailers that implement such strategies could create a compelling advantage. Read more insights in Eagle Eye’s latest grocers’ ebook, Loyalty Lessons That Will Shape 2025.
Jonathan Reeve is vice president of APAC at Eagle Eye.