Innovating in retail: Loblaw Media’s move to micro-niche marketing

Uwe Stueckmann, Davida Groisman / September 2019

Loblaw has long been a leader in rewarding customers through its loyalty program, PC Optimum. Now Loblaw Media, the new digital arm of the Canadian retail company, is using customer insight data from its proprietary sources to help brands offer measurable media campaigns that cater to individual consumer needs. Senior VP of Marketing for Loblaw, Uwe Stueckmann, talks about how online shopping is changing the marketing game, and his vision for a “zero-waste marketing” approach where all customer data counts.

Tell us about your customer and how their behaviour has changed over the years?

We define our core customer as the primary shopper for the household, which in Canada is 65 to 70 percent female — but that’s changing rapidly. The definition of family is changing and our customer is evolving, too.

People are spending more time online and we’re just starting to see this change the way they shop for food. Food is one of the final frontiers of eCommerce. It is still a relatively small part of our business today, especially when compared with other industries that have been massively disrupted by online consumer behaviour, but it’s growing fast.

The ability to reach consumers with traditional media is constantly under pressure.

How we go-to-market is very different than it would have been just two to three years ago. We probably spend more than half of our budgets on digital marketing today, when in the past it was only a small fraction. This is because we need to meet the consumer where they are. We see “cord cutting” happening rapidly. The ability to reach consumers with traditional media is constantly under pressure, whereas digital penetration and content consumption continues to grow. Online is where we need to be.

Let’s talk about Loblaw Media — When did it start? What is the mission?

We launched Loblaw Media in April 2019 as a full-service digital marketing agency that uses transactions-based insights to help brands plan and deliver more relevant campaigns.

Consumer data allows us to identify and reach micro-niche audiences that are easily overlooked or underserved by traditional marketing campaigns. Vegans are a good example of this — they may be hard to find on the internet when looking at third-party data, but because we know what people are buying in stores, we know if they’re buying vegan products and not buying meat. This level of insight gives us the opportunity to create a specific audience segment based on actual behaviour, then create a relevant ad campaign with measurable results.

This approach has taken our entire traditional marketing model and turned it upside down because it starts with the audience first, instead of the message. The ultimate goal is zero-waste marketing, where all available data is used to make smarter decisions. It connects otherwise anonymous transactions together to create a customer record, and allows us to understand how the customer shops.

Loblaw is already a leader in connecting consumers with rewards through the PC Optimum loyalty program. Can you tell us about its history, and how it has evolved to where it is today?

The PC Optimum rewards program has grown to more than 18 million Canadian PC Optimum members, and this year, we’ll reward Canadians with over $1 billion dollars in free goods. It’s a meaningful value-generator for consumers.

The program helps us to understand how the customer shops across multiple stores over time. This allows us to make better core retail decisions around pricing, assortment, promotion and the loyalty program offerings. It also enables us to make smart digital marketing decisions that drive performance.

How does Loblaw Media build on the success of the PC Optimum rewards program?

Loblaw Media is an innovation that grew out of the PC Optimum program. In much of the digital marketing world, you don’t start with a real person — you start with an IP address or a device ID. We’re able to start with real people in real stores, buying real goods.

Because we can connect with real people, it unlocks an enormous amount of capability for us and for our partners. Brands can precision-market based on what people have bought in stores, then measure the impact of that precision-marketing campaign.

How does the consumer benefit?

The idea of our PC Optimum loyalty program is that the consumer opts-in every time they shop. The consumer decides whether or not there is value in this interaction. When they scan their card, they get points and get to partake in the reward pool. We feel strongly that the consumer has to participate and see the value in how their data is being used, so we are both benefiting from it. With Loblaw Media, our members will see ads that are more relevant to their shopping preferences while they are browsing online, and we will reward them with PC Optimum points for allowing us to use their data.

We felt strongly that the consumer has to also participate in the value that has been created.

What have the results been so far? What’s next for Loblaw Media?

It’s still early days but Loblaw Media is changing the way we market. It’s forcing us to look at our teams and our processes as we move from a guessing game to precision marketing.

It’s also changing the way consumer packaged goods (CPG) companies can market in Canada, by bringing accountability, measurability and predictability at scale. We’re able to introduce them to an audience that is already buying their product or a similar product, and allow them to reach these consumers directly.

What advice do you have for marketers looking to innovate in today’s rapidly-changing world?

We are an attention economy, and the competition for consumer attention is getting greater. The old ways of marketing — the “here is what you need to know about me” — just doesn’t work. We need to create things that are impossible to ignore.

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