ALEXANDRIA, Va.—Kroger is expanding its Boost membership program nationwide, according to Grocery Dive. The program was launched last November and offers members unlimited no-fee deliveries on orders over $35 and double the number of fuel points members earn for every dollar they spend on groceries. The resulting savings are good for up to $1 off per gallon.
The news emerged during the grocer’s first-quarter earnings call, and Kroger CEO Rodney McMullen said the program promoted higher delivery sales and customer retention in the four pilot markets of Atlanta, Cincinnati and Columbus, Ohio, and Indianapolis.
Kroger Boost is a part of the Kroger Plus loyalty program and offers two membership tiers. For $59 a year, users receive unlimited no-fee delivery within 24 hours on orders over $35. Members who pay $99 annually receive unlimited no-fee delivery within two hours with the same minimum order amount.
McMullen said that Boost increased customer retention rates by 600 basis points across its test markets.
“This next generation loyalty program is deepening our relationships with customers as they continue to look for value and convenience,” McMullen said on the call.
Last week, Instacart announced Instacart+, which offers subscribers free delivery, credit back, reduced service fees and the ability to share their subscription, according to a news release.
Instacart+ costs $9.99 per month or $99 a year, and if customers spend over $35 on an order, they are eligible for free delivery, and if they pick up, they receive 5% credit back. Subscribers also receive mileage bonus from Delta on every dollar spent, and certain Chase cardmembers are eligible for a free membership up to one year depending on the card they have. The new program also allows for family sharing.
Subscription-based services skyrocketed during the pandemic. Nearly two-thirds of U.S. households subscribe to a retail membership, with over 62% of households holding at least one retail membership, according to recent Numerator data.
Kroger and Instacart are competing with Amazon Prime, Walmart+ and Target’s Shipt Everyday subscription programs, among many others, with Amazon Prime being the most popular. Over half of U.S. households subscribe to Amazon Prime, which is six times more than Walmart+.
According to Leroy Kelsey, NACS research director, convenience retailers are testing subscription models to skirt shopper resistance to premiums. Subscriptions make upselling, cross-selling and basket-building easier. They also reduce the cost to acquire customers and streamlines sales forecasting, plus they build loyalty and make revenue predictable.
“Prior to the pandemic c-store shopper e-commerce membership was 32% and growing by about 5% each year,” said Kelsey at the 2022 NACS State of the Industry Summit. “The lockdown and busy lifestyles have doubled that type of engagement.”
The majority of consumers subscribe to just one retail membership program—80% of households that Numerator surveyed subscribe to one program, 13.8% subscribe to two programs, 3.7% subscribe to three and 2.5% subscribe to four or more. Multiprogram subscribers are more likely to be affluent, ethnically diverse and values driven. They are more likely to be Black or Hispanic/Latino, from larger households, buy on impulse, and are more aware of the corporate values behind the products they buy.
NACS Magazine dove into loyalty programs and how they can provide convenience retailers with critical consumer insights and a competitive edge in “Just Rewards.”