Increasing Customer Loyalty by Addressing Food Insecurity

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Increasing Customer Loyalty by Addressing Food Insecurity

Key Takeaways

  • Corporate Social Responsibility (CSR) practices and addressing food insecurity were not found to be key drivers for brand loyalty within grocery retail. Consumers tending to chose price, convenience and customer experience as the main reasons for brand loyalty.
  • The most prominent example of addressing food insecurity and leveraging this for increased brand loyalty is Stampify. Stampify have designed a loyalty card system to donate school meals for the purchase of certain products from companies from which they are in partnership with.

Introduction

  • Significant research of this subject has revealed that significant data does not exist in the public domain. There is very little available information and no significant research has been performed into the subject of addressing food insecurity, or foot shortages or world hunger, and how this affects customer loyalty. Also, any information that was found was not related directly to Canada, but covered many regions globally
  • Below the research looks at all available information which was most relevant. This consists of information on the key drivers for grocery retail loyalty, some information on food insecurity initiatives, and Corporate Social Responsibility (CSR) practices,
  • There are many available studies which look at how increased corporate social responsibility practices create customer loyalty. General conclusions drawn from these numerous studies are that brands who demonstrate strong corporate social responsibility focus and policies are better able to form a connection with consumers, which they can leverage for increased customer loyalty and both long and short-term value.

Key Drivers of Customer Loyalty in Grocery

  • A study entitled Characteristics of Retail Loyalty in 2019 found that the top factors that influence grocery consumer loyalty were Value for Money, Convenience, Easy Purchases, Lowest Prices and Positive Shopping Experiences. The retailer being socially responsible ranked as one of the lowest factors considered.
  • Similarly, a 2017 study on the drivers influencing where consumers shop for groceries found that shoppers generally preferred retails with the best price, quality, availability and convenience. Corporate responsibility was not mentioned in the survey results.

Food Insecurity Initiatives

  • Stampify is a charity which has created a loyalty system whereby customers can swap loyalty stamps for meal donations, turning regular consumer shopping behaviors into meals for hungry children. The company provides consumers loyalty cards or consumers, and whenever they buy products from a company partnered with Stampify, they receive a stamp on their loyalty card. Collecting these stamps means meal donations are made to feed children in schools. Stampify specifically targets children who cannot afford their school meals, and actively encourages food companies to partner with the project, offering them the benefit of increased loyalty from consumers and a high awareness of their anti-hunger policies.
  • The no-kid hungry campaign is a U.S. national initiative to end corporate hunger. The company behind the campaign encourages business to form corporate, fully customizable partnerships, for which brands benefit from association with the campaign, resulting in increased ability to engage target audiences, drive brand awareness, and increase sales and loyalty.

Corporate Social Responsibility

i) Overview
  • A 2018 entitled The effects of corporate social responsibility on consumer loyalty through consumer perceived value, analyzed how consumers perceive the corporate social responsibility (CSR) actions carried out by retailing firms, aiming to measure whether investment in CSR policies increases consumer value, satisfaction and loyalty. A sample of 408 Spanish supermarket and hypermarket consumers were considered and the results show that CSR policies increase consumers’ perceived value towards the company as well as trust, commitment, satisfaction and loyalty.
  • While much research has been done globally on CSR and the link to company performance, there remains a significant unexplored research gap in measuring the association between corporate social responsibility and customer loyalty in the developing countries. Recent research from 2019 looked at the underlying factors whereby corporate social responsibility influences the customer loyalty by simultaneously including corporate reputation, customer satisfaction, and customer trust. Data was collected from telecom users, and the findings demonstrate that corporate social responsibility initiatives are significantly and positively associated with corporate reputation, customer satisfaction, and customer trust. The study concluded that high corporate abilities with well-executed corporate social responsibility initiatives lead to high loyalty.
  • CSR initiatives help consumers create an emotional connection with brands. Humanizing brands through CSR initiatives enable companies to offer a unique customer experience and builds the kind of business-customer relationships they can not be achieved through more traditional marketing practices, such as generic advertising and flash sales. This in turn is seen as a significant driver in brand loyalty.
ii) CSR in Canada
  • A study entitled Sustainability-Related Corporate Social Responsibility (CSR) Communications in the Canadian Grocery Industry provided exploratory content analysis of sustainability-related CSR social media communications from Loblaw, Metro, and Sobeys, three of Canada's largest grocery retailers. The purpose of this study was to determine the extent at which sustainable business practices were being discussed in these companies social media posts and updates. The study found that the retailers include more content related to sustainable business practices on Instagram, compared to other platforms such as Facebook and LinkedIn, possibly indicating that this channel may prove more effective in helping brands establish relationships and make impressions on their target audiences.
  • A January 2020 publication of the Best CSR practices in Canada detail the CSR performance of 6 Canadian companies, Chandos Construction, Libro Credit Union, Maple Leaf Foods, MEC, Mills Office Productivity, and Vancity Credit Union. A series of case studies were performed, noting each companies social purpose, community partnerships, and social innovation, amongst other information. Some notable community partnerships included initiatives such as direct investment in non-profit organizations, charity work, addressing homelessness and reducing barriers to outdoor activity. In all cases, these brands invited consumers to form a connection with the brands core values and social purpose, which could then be leveraged for increased brand recognition and customer loyalty.

Summary of Key Insights

  • Stampify have one of the most innovative practices, directly combining address hunger issues with promoting brand loyalty. The loyalty card system allows brands to take advantage of the association with Stampify, and heightened visibility of their social responsibilities while promoting a loyalty system which can lead to increased customer value.
  • Brands can also form community partnerships with local charities and good causes helping to solve local social issues. Several Canadian companies have been involved in such practices tackling an array of issues such as homelessness, hunger, inequality, poverty and more. Increased exposure for the brand enables companies to benefit in the form of added customer and brand loyalty.
  • A strong social purpose helps companies create an emotional connection and attachment to, and with their core consumer base. Many of Canada's most internationally recognized brands, such as Maple Leaf Foods and Vancity have been recognized for their focus on CSR, and initiatives like Maple Leaf Foods long-term commitment to advancing sustainable food security have brought added visibility to the cause. Companies benefit from increased consumer loyalty from customers who identify with their core social values.
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