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Russia: discounter's use gamification to grow sales by 200%

Discount Retail Chain Dixy (owned by Dixy Group) has been piloting its own loyalty program Dixie Friends' Club in the Russian Volga Region. During 2020, the retailer facelifted 700 stores across the country. The economic situation spurred the development of private label brands, and the gamified loyalty campaign cracked showed record results. Vadim Makarenko, Marketing Director of Dixy, explains more on it.

How many Dixy discount retail stores are there now, what divisions do consist of, where and in what formats do your stores operate?

Our geography is quite wide: 2,800 Dixy Group stores are represented in 25 regions. The main business is concentrated in the Central Federal District, as well as in northwest Russia and the Urals. We are a multi-format chain, we have discounters, supermarkets, hypermarkets and even one cash & carry store. This year, we have about a hundred new stores, mainly in the discounter format. But in general, the company is now focusing on the reconstruction of existing stores, we are not planning any large-scale expansion yet.

What is the impact of the COVID-19 pandemic.

I would not divide the problems of buyers by geography. The pandemic has impacted various consumer and economic sectors. It cannot be said that, for example, pensioners suffered the most. On the contrary, their income has been preserved, and the economically active population has suffered. Historically, our stores are located close to where people live, so the pandemic did not negatively affect us. But we must change and adapt to the interests of our buyer both during the crisis period and after it. So, for example, now a 4% drop in income is predicted, and people are switching to private label products.

Last year you presented an updated store format. How many stores have already been updated?

Just a few days ago we celebrated the remodeling of the 700th store. This is a large figure, considering that we did all the work in six months. We opened the very first Dixy store in a new format more than a year ago in Moscow, but it did not go into circulation. We were looking for a more suitable option. And again, we did not divide outlets by geography, we chose them according to their importance for the client. As a result, renovated stores appeared from Kaliningrad to Murmansk and the Urals.

How do demand and average basket sales change?

I cannot give an exact figure, but the average basket sales both with us and in the discounter market as a whole has increased significantly.

What is the portrait of a network buyer?

We have two audiences: main and strategic. The main one is people aged 45+ with average and below average income. They usually have grown-up children. They are looking for value-for-money and have a clear budget. This audience is loyal to us, many of the company's processes and our assortment range are focused on meeting these needs. Also, for the last 4-5 years, we have been growing our strategic shopper audience, which at the moment has already reached the level of the main one in terms of turnover. According to a recent study that Gfk conducted for us, these are young women between 25 and 40 years old, working, with families and children, with an average and upper middle income. They are not only interested in looking for the best price, they are also ready for good and clear communication and gamification.

What are the key trends in buying behavior that can be identified?

I believe in convenience and speed of service: people do not want to spend a lot of time in the store, they want to make a purchase quickly, which means you need to provide a clear shopping path.

There is an e-commerce trend. We see that people order large-sized goods on the Internet, and they come to us for small ones.

I believe in private label products: this year this trend has grown by more than 20% in the market, and we have launched more than 50 new SKUs.

As for the healthy lifestyle trend, I believe in it as a global trend, but I have no faith in its applied use here and now in our stores. Yes, according to research, 55% of shoppers say they care about the topic. But, nevertheless, for the majority it remains just a statement. In reality, only 15% adhere to such a diet. At the same time, they put forward serious requirements for the product: only natural ingredients are not enough, many are also interested in their origin. Unfortunately, in the current macroeconomic environment, this is very expensive. The reality is that a quality product should be provided at the lowest price.

You have already mentioned that this year you have 50 new SKUs in your private label. What is the overall situation with the development of the chain's private labels?

Private label for us is a key direction. It has always been that way at Dixy. Now 40% of our shoppers that regularly visit Dixy buy private label goods. These are at least 2 products in the basket: private labels SKUs account for about 12% of our turnover. We have over 55 categories and over 500 private label SKUs. But this is not the limit, and our goal is to increase the share. There are no restrictions. We have a great example of Baby Boom diapers: they are in the top position, even though sales of this product usually depend on the brand. We also have private labels the best seller categories in beer and grocery.

How do you emphasize that these products belong to your private label or do not stand out in any way on the shelf?

Let's put it this way: we do not hide the fact that these are our brands, but we do not focus our attention on this either. We believe that the product should be of high quality and cost less than the brand. Our products go through all stages of tasting and quality control. We show the advantage of the product on the packaging and we spend money on its promotion. The story that private labels are simply laid out on the shelf and not advertised in any way is a thing of the past.

How does Dixy work with customer loyalty now? Do you have your own program?

On September 1, we launched a pilot project “Dixy Friends Club”. Now it already covers one of the regions of the Volga District with more than 200 stores. This is a loyalty program in a mobile application with quick registration, just a couple of clicks. Only an electronic card with statuses: "guest", "acquaintance", "friend" and "best friend", which are assigned depending on the number of visits to the store per month. We have introduced double pricing, we are releasing a special catalog for which card discounts are available. You can also choose your favorite SKU: depending on the level, up to three favorite products with a discount of up to 20%. The analytics system generates personalized offers that may be of interest to the buyer. We had a test in the Pastfor Victoria supermarkets, where the loyalty program was introduced in 2016 and switched from a direct small discount of 3-5% to double pricing and personalized offers. Then this case won five of the six Loyalty Awards Russia. We have adopted this system. At the start, it showed more than 50% penetration, the number of active users of the application has tripled. Next year we will launch it across the entire chain.

In its loyalty promotions, the Dixy network pays a lot of attention to gamification. At first everyone played sticky, then jump-scokers, your next project is Cracked. Tell us more about this case.

“We launched the Cracked project at Dixy in early November. To date, we have issued more than 17 million toys, of which 7.3 million are for sponsored goods. The mechanics of the action are as follows: for a purchase of 600 rubles (US$8) in Dixy stores, the buyer received a toy. If you buy a sponsored product, you receive another additional one. This is a plastic egg with a funny face, inside which is a useful device: a pencil, eraser or sharpener. The result is stunning: sales of sponsored goods increased by 200%! In the previous campaign, the result was 86%, so we have something to be proud of. I associate this with emotional tension: in difficult times, people are happy with a positive thing that can please children.

Apparently, the company invested a lot in the promotion of the project? At least everyone has seen billboards and TV ads.

Speaking in the language of marketing, we pumped up the promotions very strongly. During the campaign, we planned to receive 60,000 visits to our website. There were more than 168,000 of them! How did we achieve this? We have released the game in the Dixy mobile application. More than 6,000 users played the puzzle, where an additional move could be obtained by downloading a check from the store. We attracted the top YouTube blogger Vlad A4 Paper, who provided us with 23 million views of the video, 10,000 visits to the campaign website and 320,000 comments. In social networks, in a short time, we achieved a very large coverage with more than 9 million views. This indicates a high interest in the stock. Another two million views were given by integrations with children's bloggers on YouTube. 15,000 clicks were made by Yandex.Maps users: instead of the Dixy store logo, we placed an image of an egg there. Everyone was wondering what it was. An advertising campaign for WiFi in the metro provided 3 million more impressions and 45,000 transitions to the site. Integration with the ivi online cinema gave 2 million impressions of the announced formats, where we also released a special series, which has already received 150,000 views. More than 350 participants sent their works to the creative competition. We also advertised the action on screens installed in 686 stores of the chain. And we launched a challenge on TikTok. For retail, this is basically a new channel, where our profile has already gained 16,000 subscribers, and 7,300 works were sent to the challenge, which gained almost 19 million views. Our main prize, the golden egg, is still waiting for the winner. It can be obtained by anyone who collects the complete collection of Cracked.

You've been in marketing for quite some time. If we talk about the profession as a whole, what skills do you need to improve in order to do projects that “take off”?

We must remember that marketing is not just funny pictures. This is, first of all, an in-depth analysis of the market and a data-based understanding of how the shoppers behaviour. I realized for myself that this is a unique area. On the one hand, I try to make money for shareholders, partners, managers and employees. On the other hand, I can only do this if our products and services are in demand by the shoppers. If we talk about personal qualities, then, probably, you need to be curious, be interested in new technologies, read a lot. Follow market research, watch numbers, but pay attention to the world around you. Because research cannot always accurately describe the person we are working for.

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