Branded Cards

Next-Generation Rewards Programs for Grocery Stores

A happy customer is the bread and butter of a successful grocery store. But in the digital era, the task of keeping shoppers happy has never been more challenging. Grocery stores are not only battling soaring inflation rates and supply chain issues that affect their bottom lines, but they’re also grappling with another issue: catering to a customer-first culture that demands convenience and personalized experiences.

To satisfy customer expectations, many grocery store chains have relied on traditional in-house rewards and loyalty programs to keep shoppers engaged. And while the perks have been enticing – discounts on gas or $5 savings for every $100 spent – the advent of new ways to shop has shed light on what many of the offers truly are: generic.




Today’s shoppers expect their favorite stores to deliver custom experiences that can speak to both their online preferences and in-store needs. For instance, virtual shoppers are looking for stores to deliver relevant offerings and discounts, such as coupons for products based on historical purchases. While in-store customers are spending their time with stores that send product-specific ads to their smartphones when they enter a brick-and-mortar location. A great example of this is Sephora, which uses a customer’s smartphone location data to recognize when a shopper has entered the store and serves up a floor map and deals on beauty products and services that are relevant to their customers. With Sephora’s revenue up 22% this year and its profits from recurring operations up 181%, we can see the connection between delivering meaningful user experiences and the consumer’s hunger to engage with the brands they shop.

In the battleground of grocery pricing and promotions, analyzing and targeting your customers through segmentation and personalization are fundamental business priorities for profitability.

— Gartner, Personalized Promotions Will Win, but Grocery Retailers Are Not Ready


The New Way to Reward

The race to implement new and improved customer loyalty programs is currently underway for grocery stores. While some brands are choosing to completely reinvent their reward programs from scratch, others are turning to technologies that unlock new opportunities.  

Embedded finance is a technology that enables your brand to offer its customers the financial tools they need directly from a brand they already know, love, and trust. From branded accounts and digital wallets to Buy Now Pay Later programs and branded cards such as debit, credit, and prepaid, embedded finance loads the best tools of the banking world directly into a brand.

When a grocery store works with an embedded finance partner, it gains access to powerful tools and technologies that can be used to take an existing rewards program to a new level of personalization. 


How It Works

A next-generation rewards program begins with a grocery store offering an open-loop branded debit card program to its customers. Branded debit cards enable shoppers to load money into an account offered exclusively by a grocery store, allowing customers to take advantage of unique benefits – like saving for their next big pantry item stock-up, accessing additional coupons for items they typically purchase, or cash-back rewards to lower their bill – when they use that account.

Because the card is open-loop, shoppers have the ability to use it at a variety of merchants and locations, which provides both the foundation and fuel for building next-generation rewards programs. It does this by allowing brands to finally gain access to a never-before-seen level of first-party customer spend data, giving stores an inside look at the preferences and buying habits of their consumers. And second, it creates a new revenue stream from interchange fees that are collected every time your branded card is used. This new revenue generated from your branded cards, paired with data about where your customers are shopping and what they’re buying, is a powerful combination that paves the way for a more personalized rewards program. And with more personalized and desirable rewards (i.e., more monetary value directly to your customer) than your competitors, who wouldn’t say, “Sign me up!”?

As grocery retailers acquire more knowledge of their customers and their behavior, they can also create personalized promotions that are customer-targeted to increase sales of that individual customer or segment of customers.

— Gartner, Personalized Promotions Will Win, but Grocery Retailers Are Not Ready


How Your Store Benefits

Collect new revenue: Interchange fees are fees charged by banks to merchants who process cards. These fees typically range from 1% to 3% but can add up to big amounts. In 2019, interchange fees from prepaid and debit card transactions brought in $24.31 billion in revenue for businesses in the U.S.

When your grocery store embeds financial services into its offerings, it’s able to capture the interchange because your business issued the card. So whenever a customer makes a purchase using your branded debit card, your store gets a portion of the transaction revenue. This new revenue can then be allocated to fund your stellar rewards program or it can be funneled straight into your bottom line.


Capture customer data: First-party data is the information a company collects from its audience through its owned digital channels. From purchase history and interests to demographics and website activity, first-party data sheds insight on customer behaviors, actions, and interests and is crucial for companies that are looking to leverage their personalized rewards. 

When your grocery store utilizes embedded finance to power its rewards program, it gains full access to the first-party customer spending data that reveals where, when, and how customers use your card. Once you see these spending habits, your store can optimize its marketing outreach accordingly. For example, let’s say you noticed a trend that 15% of your early morning customers were in the habit of visiting the donut shop next door after they completed their grocery trip. Thanks to this first-party customer spending data, your store could send all of those customers a coupon for donuts and coffee from your store in order to incentivize them to satisfy their donut cravings with you as opposed to your competitor. 

The more you understand your customers and their spending habits, the more you know how to make them happy.


Increase customer loyalty: When a store offers a unique rewards program, it provides an incentive for customers to come back again and again. It also helps a store stand out from its competition. 

A great example of a company that knows how to use a rewards program to drive customer loyalty is Amazon. Its strategy has always been focused on delivering seamless experiences and providing valuable services that its competitors don’t offer. Amazon’s Prime membership offers a variety of perks and benefits that keep customers engaged, such as free shipping, same-day delivery options, streaming movies, and exclusive personalized offers based on browsing history. Recently, Amazon announced its latest perk for members: Buy with Prime. The new program lets U.S.-based Prime members shop directly from participating online stores to gain Prime shopping benefits such as seamless checkout, free shipping, and free returns. 

Amazon has also driven customer loyalty by offering Prime membership perks that can be used beyond its platform. For example, when Amazon acquired Whole Foods in 2017, it launched a rewards program that offered exclusive benefits at Whole Foods for Prime members. Prior to the program’s launch, Amazon knew that 75% of Whole Foods shoppers were already Prime members, but less than 20% of Prime members were Whole Foods shoppers. So, to encourage existing Prime customers to shop at Whole Foods – which Amazon now owned –  it launched a rewards program for Prime members that offered savings on groceries, free deliveries, and cash-back on purchases made using the Amazon Prime Rewards Visa Card. 

When your grocery store uses embedded finance to fuel its branded debit card rewards program, it lays the digital foundation needed to build lasting connections with customers.

By 2030, 73% of global consumer payments will be processed by non-financial institutions. 

— International Data Corporation (IDC)



How Your Customers Benefit

More meaningful rewards: Instead of receiving generic coupons and ads from your grocery store, your customers get personalized, dynamic rewards that enhance their entire shopping experience. And because your store knows each customer’s spending habits (thanks to the first-party data), it can now deliver tailored rewards at the right moment. For instance, if you know that Customer A purchases laundry detergent every six weeks, send them a 15% off coupon around week five. Or, if you see that Customer B likes to order Dominoes on Friday nights, send them a flash promotion over her lunch hour for a take-n-bake pizza from your store.

Put the Power of Embedded Finance In The Hands of Your Brand Get The Handbook


New financial tools: With embedded finance, a rewards program centered around a branded debit card is only the beginning. When your grocery store works with a partner like Alviere, it has the ability to give customers access to powerful financial tools and services such as:

  • Global payment products that enable customers to send and receive money around the world at lower costs.
  • Payment processing options that make moving money easier, such as mobile check deposit and cash-loading opportunities at ATMs.  
  • Branded accounts that offer more rewards than traditional banks, and have FDIC insurance on a pass-through basis. 
  • Additional branded card products like credit and prepaid cards that can be loaded with cash-back rewards.

Embedding a range of financial products into your store’s core infrastructure is a great way to diversify your offerings and get people into your store. 


The Right Partner Is Standing By

Revamping your store’s traditional rewards program to meet the demands of a customer-first, digital-centric era might seem daunting, but with the right embedded finance partner, it’s never been easier. At Alviere, we build, manage, and ensure the success of the entire? program so you can focus on doing what you do best.

To see how embedded finance can transform your rewards program, reach out to us today. 

Written by Alviere