Customer Engagement Is The Competitive Advantage Grocers Have Been Looking For

By Mark Fairhurst, Chief Growth Marketing Officer, Mercatus

Selling more is always the goal. But to achieve this, grocers need to focus on connecting more in 2025.

Throughout 2024, larger retailers leveraged their specific strengths—massive budgets, economies of scale, and aggressive promotions—to claim an increasingly larger share of the eGrocery market.

It’s a smart strategy—like a heavyweight boxer relying on brute strength to overpower opponents. Rather than stepping into the ring for a slugfest, grocers need to play to their own strengths to outmaneuver larger competitors.

In more practical terms, that means creating a higher standard of customer engagement.

Consumer expectations have changed.

Today’s shoppers demand value—but they also want that value to be tied to convenience, personalization, and loyalty programs that meet them where they are.

This shift in consumer expectations not only plays to the strengths of regional grocers —personal service, local expertise, and community connection—but it also creates an experience that larger retailers can’t easily replicate.

By leaning into customer engagement, grocers can redefine their competitive advantage in a way that resonates with today’s shoppers and builds lasting loyalty.

Here’s how to prioritize connection over single transactions and discounts:

Ask a dozen retailers what “personalization” means, and you’re likely to get a dozen different answers.

For grocers, the key to true personalization—and meaningful customer engagement—lies in leveraging the latest technological capabilities to tailor the shopping experience in ways that feel intuitive, relevant, and valuable.

By collecting and consolidating data from purchase histories and browsing behavior, grocers can develop a comprehensive understanding of each shopper’s preferences. This allows for highly targeted offers, product recommendations, and savings that resonate with individual needs.

This data can then be paired with insights into purchase cycles to not only boost customer satisfaction but also encourage repeat engagement. For example, if a customer typically buys a specific brand of coffee every two weeks, a timely promotion for that product creates an experience that feels effortless and thoughtful.

When this level of personalization is integrated with a loyalty program, it takes things one step further, creating a virtuous cycle: A customer redeems an offer, providing even more data about their preferences, which allows the grocer to craft an even better offer the next time around.

This ongoing loop of engagement strengthens customer relationships, turning routine transactions into consistent opportunities to connect, delight, and engage.

If personalization is the foundation of modern customer engagement, then marketing is where it comes to life.

Just presenting a weekly ad online or in print isn’t enough anymore. Grocers need to take the data-driven insights they’ve collected and apply them in meaningful ways to connect with customers.

That means delivering marketing content with context, meeting customers where they are, and making the shopping experience feel intuitive and effortless. Instead of the “fingers-crossed” targeting of past marketing initiatives, grocers can connect with individual customers automatically, every day through:

• Personalized Widgets: Upon sign-in, customers are greeted with widgets showcasing relevant offers and promotions tailored to their preferences.
  
  
• Dynamic Product Collections: Curated product groupings, like end-cap widgets in a store, make it easy for customers to discover new or relevant items.
  
  
• Localized Offers: Store-specific banners highlight regional promotions and community events, reinforcing the grocer’s local connection.
  
  
• Quick Navigation Tools: Shortcuts to frequently visited sections of the shopping experience improve usability and convenience.
  
  
• Shopper Marketing Content: Sponsored products and content drive revenue while presenting customers with engaging, relevant options.

Shoppers are drawn to retailers that truly understand them. By leveraging these tools, grocers turn marketing into a meaningful, value-driven experience for their customers that anticipates their needs and simplifies their shopping journey.

If personalization sets the stage and marketing brings it to life, then a unified shopping experience—delivered through omnichannel strategies—takes customer engagement to the next level.

Modern consumers expect the same convenience, service, and care across every touchpoint. Larger retailers—especially Walmart—have done an excellent job of meeting this expectation.

The idea of implementing an omnichannel approach that matches—or even surpasses—these efforts might seem like an impossible reach for regional grocers, but:

1. This expectation is an opportunity for grocers already known for high-touch, personalized in-store service. Extending that care to digital channels is a natural progression.
   
   
2. Grocers don’t need massive, big-retailer budgets to implement omnichannel strategies.

How do grocers make that happen?

Once again, we come back to the importance of unified customer data. By using data-driven insights, grocers can create meaningful and consistent experiences across every channel—cost-effectively.

Personalized promotions, flexible fulfillment options, and integrated loyalty programs are all essential to an effective omnichannel strategy. But success also requires training associates to integrate digital tools into the exceptional service they already deliver in-store.

When every channel reinforces the grocer’s commitment to service, customers feel valued, understood, and engaged. This focus on connection over transactions builds loyalty, driving repeat visits, larger baskets, and greater lifetime value.

If we’ve learned anything from the grocery market in 2024, it’s this:

• Customer Relationships Matter: Loyalty and retention are more profitable than chasing price-sensitive customers, as engaged shoppers return more often, spend more, and churn less.
  
  
• Big Budgets Are Nice But Not Necessary: The increased technological capabilities behind personalized marketing and omnichannel strategies let grocers compete effectively without matching the massive budgets of larger players.
  
  
• Grocers Have an Advantage: Customers prefer local grocers for their in-store experience. Extending this trust to digital channels reinforces loyalty and market share.

By making grocery spending a matter of customer engagement—not prices or discounts—grocers shift the focus to where they hold the advantage.

Personalization, contextualized marketing, and seamless omnichannel experiences empower grocers to leverage their existing strengths to meet the demands of modern consumers and create experiences big retailers can’t replicate.

In this sense, customer engagement is more than a simple strategy. It’s the competitive advantage grocers have been seeking since mass retailers first began offering grocery items. In 2025, it will be the key to retaining customers, building loyalty, and achieving long-term success.