How to design a digital service, the Foody’s online shopping and loyalty app, for a food retail chain in a digital sprint

1. Introduction

This article describes the design of a digital service to improve customer loyalty for a food retail chain in a digital sprint. The digital service is a online shopping and loyalty app, Foody app. The food retail company is the company Foody.

In the following I will outline the design of the digital service app. I will first visualise the digital service app by providing the user interface, value proposition, customer profile, customer problem and solution, and ecosystem map. Second, I will define the front-end by presenting the customer journey through the Wardley Map and customer journey map. Third, I will lay out the digital capabilities needed, specifically the Foody app’s back-end digital capabilities. Fourth, I will describe how Foody can increase customer loyalty with data analytics using the example of the data analytics framework.

2. Visualisation

The Foody app is designed as a digital service to improve customer loyalty for the Foody food retail chain.

2.1 The following value proposition describes how the Foody app will engage customers differently

For Gen Z customers who want to be rewarded for healthy and sustainable food by a community, the loyalty scheme Club app offers rewards, belongingness, health, and sustainability. Unlike Tesco and Sainsbury’s, loyalty scheme Club app differentiates itself by ‘disenfranchised rewards’¹, sense of community, health and wellness experience, and sustainable products.

Online shopping

The Foody app offers a fully integrated shopping experience across in-store and mobile-browsing. Because of the COVID-19 lockdown the growth in the online grocery market accelerated.² The switch to internet shopping has permanently changed the retail landscape and requires a tight integration of online to offline offers.³ Therefore, the Foody app provides an integrated online-to-offline relationship. Online, the Foody app allows the customer to virtually test product features and add products to shopping cart for online delivery or in-store pickups. Offline, the app offers the possibility to find out-of-stock items while being in-store or look for special discounts. The offer is completed by social shopping. Visual search and shoppable posts on social media platforms like Instagram or Pinterest offer an exceptionally smooth shopping experience to customers.

Loyalty scheme

Foody offers a ‘disenfranchised’ loyalty scheme through a digital service app — not a loyalty card. Research showed that days of loyalty cards are numbered but digital loyalty schemes stay relevant. ‘Disenfranchised’ means that the app is providing what customers really want: to turn rewards in family days out, entry to attractions (e.g., too) or restaurant meals (e.g., Pizza Express meals). The Foody’s prime membership similar to Amazon Prime functions as an “all-encompassing loyalty scheme” that offers access to next-day delivery.

Community

Foody will offer on its app the Foody Club to create a sense of community and participation. For Millennials and Gen Z value the sense of belongingness in online communities to connect and mobilize around causes and interests. For example, the Foody Club members can participate in community-building activities such as health and sustainability teams in competitions. As a result of the sense of belongingness to the Foody community Foody can set its brand apart and build closer customer relationships. Consequently, it increases sales and loyalty.

Health

The Foody app offers additional value to its customers’ life through health and wellness products and services. The app offers a health experience through online weight loss treatments (dietary profile), dietary therapy, and online fitness classes. The app educates the customers about the ingredients, sourcing, benefits, etc. of its products and services.

Sustainability

Foody offers sustainable products and digital services to its customer (Food share), helps customers to minimise food waste, participates in events that promote sustainability, and educates his customers which products are sustainable manufactured. It is appealing to Millennials, Gen Z that their money is used sustainably and social responsibly.

2.2 The customer profiles which the Foody app is addressing are…

Millennials, Gen Z, and sustainable-conscious Silver Surfers. Millennials and Gen Z are digital native, community-based, individual, health-conscious sustainable and social responsible. The sustainable Silver Surfers — the 50 plus generation — have often the best health and a strong purchasing power, are consumer-friendly and active, digital literal, and sustainable-conscious.

Digital native Millennials and Gen Z value online communities to connect and mobilize around causes and interests. They do not want to own products and services, they just want to have access them. Gen Z and Millennials are eager to more personalized products and are willing to pay a premium for products highlighting their individuality. They are part of the Fridays for Future movement. They value ethics of sustainability and social responsibility. The “Greta Effect” means for retailer that Gen Z and Millennials demand brands to act sustainable and socially responsible.

The customer problem the Foody app is solving is that…

Millennials, Gen Z, and Silver Surfers do not cook at home. They only go out in fancy healthy and green restaurants for eating. They do not have time for cooking and shopping groceries because they are busy and active professionally. They think the effort for shopping groceries in store, deliver it themselves home, and cook it at home is too much. Since the COVID-19 lockdown they turned around. They got used to the convenience of online shopping and delivery of groceries and now love cooking at home. Their most pressing problem is the inconvenient and unsmooth shopping experience in retail.

Foody’s online shopping and delivery solves customers’ time and effort problems…

by enabling them to do what they now love — cooking at home. The app-based loyalty scheme enhances their loyal feeling to their local retailers and a sense belongingness to their local community. The online Foody’s Club and the health and sustainable products and services satisfy their ethical needs for a healthy, sustainable and social responsible world.

2.3 Ecosystem map

Foody needs to partner with others to deliver value to target customer –

that is an imperative for Foody. The Foody’s app has several partnerships and collaborations: shopping experience providers, communities and clubs, health providers, sustainability service providers. Partnering and collaborating with other organisations allows it to expand its message, reach new audiences, and break into the new health and green niche. Foody’s partnerships have the aim to expand its target customer reach and increase sales.

For example, Foody provides its health and wellness products and services through a partnership Weight Watchers, the leader in weight loss programs. Through the collaboration, Foody integrated the Weight Watchers mobile app with the Foody loyalty scheme app. When customers were in the store, they could use either app to find out what healthy recipes they can cook from the sustainable products in the store and share the cooked meals in either community.

The outcome for Foody was that the collaboration incited customers to download the app and join its loyalty scheme. The advantage for Weight Watchers is that its customers who subscribe to its paid memberships get extra points for Foody’s loyalty scheme app. The collaboration is a Win-Win and allows to reach the other company’s audience while maintaining its brand.

Online subscriptions based on food retail partnerships add additional revenue streams and create consumer loyalty. For example, Foody’s cooperation with local farmers is based on a subscription model. The goal is to grow its active customers and therefore increase revenue. Foody not only provides online shopping that sends free shipped groceries to its customer’s door. It formed a cooperation with local famers to add several extras to make its food delivery more appealing to existing customers — digital grandma’s recipes from the farm and meal boxes that allows bi-weekly online delivery for an annual membership fee.

Shopping experience providers

Foody partners with online shopping providers to deliver the value of a convenient and smooth online experience: Foody cooperates with VR and AR companies to provide online and in-store search and selection experience, with social media platforms for social selling, and local farmers for online meal box subscriptions. Foody formed collaborations with food delivery providers to provide house door-services to its customers.

Communities and clubs

Foody also attracts other partners who may want to join their ecosystem. Foody initiates community-building activities with health and sustainable communities and clubs. For example, it collaborates with health clubs such as local healthy food, nutrition, and diet clubs. To create the sustainability experience, Foody cooperates with meal-sharing and food waste reduction communities.

Health care providers

Foody’s broader ecosystem consists also of health and wellness providers. It delivers value to its customer through partners such as Weight Watchers, Nutrition Consultants, and gyms.

Sustainability service providers

Foody’s partnerships with sustainability service providers comprise local food systems and green supply chain apps providers.

3. Customer journey

3.1. To decide which digital capabilities to leverage…

Foody has used the Wardley Map (see Fig. 4) to map out the value chain.⁶ The main question is what capabilities to ‘focus’ and what to ‘leverage’ based on the match of capabilities to user needs.

Foody’s digital service is based on its customers’ needs to mitigate time and effort in grocery shopping. By analysing the value chain Foody identified what components are required to meet these needs: Mobile App, Website, etc. By mapping the value chain components to that extent in which they are evolved, Foody determined that most of its Backoffice components will be leveraged across its ecosystem of partners and suppliers.

3.2. Foody defines the front-end of its digital service…

along the customer journey map. From the customer needs analysis Foody has defined six steps of the customer journey. The customer searches, selects, purchases, interacts with communities, acts sustainable, and stays loyal.

The customer has several touchpoints with Foody’s digital service: Consults social media, finds products in app, shops online, involves in communities, consumptions sustainable products, and claims rewards. Customer emotions are prevalent in each journey step. The app specifically satisfies the customer in the online shopping steps — from search, through selection to purchase. Despite that the digital services created engagement via community and satisfaction by sustainable actions. By using the loyalty scheme the customer feels rewarded and loyal.

4. Digital capabilities

4.1 The digital capabilities that are needed to deliver Foody’s customer experience…

can be assessed across the customer experience journey (see Fig. 6).¹⁰ The key questions are how to deliver the digital service on backstage and what specific capabilities are needed to carry out service? Capabilities that can be developed both in-house and sourced externally. Foody’s maintains its large ecosystem and uses customizable, modular technology and system. Therefore, only core capabilities that form the Foody’s brand are developed in-house: Provide advice, Claim reward, Mobile app, Website, Exposed APIs, Service Management, and Platform.

Others such as payments engine or 5G should be sourced externally. A white-label payments solution will define the check-out experience. Millennials and Gen Z customer demand for multiple app-based payment methods. Because a retailer is not a “Jack of all traits” a flexible white-label payments solution still improves the lines in stores and offers a more personalised purchase experience. The new network standard 5G provides the capability that Foody’s network can handle the amount of data analysed. 5G is therefore necessary to be sourced externally because it enables quick access to data and creates a streamlined customer experience: personalised, seamless, interactive, and fast.

5. Data analytics framework

5.1 To apply data analytics and AI to keep users engaged and loyal to the Foody’s app…

Foody has to satisfy the demand of the digital native Millennials and Gen Z for a real-time personalised grocery shopping experiences across multiple channels. They expect the food retailer to know their nutrition, dietary, etc. needs. They want to be offered relevant products according to their needs. In general, Foody’s target customers value quicky wait times, fast order fulfilment, personalized product recommendations and a seamless purchase experience.

5.2 With data analytics and AI Foody will be addressing the specific problems …

around the inconvenient and unsmooth shopping experience in food retail. Data analytics helps to solve the customers’ problems of large time spent and high effort invested. AI helps Foody to provide a convenient way for them to prepare cooking at home.

5.3 Data analytics creates value for Foody’s customers and capture value by…

improving search and discovery for healthy and sustainable products, offering a personalized product curation based on customer dietary profile, and increasing customer loyalty through personalised, ‘disenfranchised’ rewards.

5.3.1. Data collection

Search and discovery

Frist, to improve search and discovery for healthy and sustainable products, Foody harnesses the detailed healthy and sustainable product information to power better search and discovery. The digital service collects customer affinities like brand, price, ingredient and other dietary attributes (gluten-free, keto-friendly, low fat, allergen-free, etc).

Personalized curation

Second, the relevant data and AI to currant Foody customer’s automatically cart curation is transactional data that retailers collect across their partners and the customer’s shopping baskets (including discount’s form, time and placement). The data collected and combined with rich product data powers meaningful recommendations.

Customer loyalty

Third, to improve grocery store loyalty the data from Foody’s loyalty scheme is combined with offline and online customer data from partners and the ecosystem.

5.3.2. Data classification

What are relevant categories to structure the data into? (e.g. sentiments, topics…)

Search and discovery

First, to better search and discovery the relevant categories to structure data into are affinities like brand, price, ingredient and other attributes and the customer dietary profile with nutrition and non-nutrition preferences.

Personalized curation

Second, personalized curation is achieved by classifying data into shopping baskets, market structures, shopping behaviour, and stimuli reactions such as discounts and promotions.

Customer loyalty

Third, to better the customer loyalty the data is structured to create a complete and cohesive picture of Foody’s customer and its buying habits preferences.

5.3.3. Data analysis

Search and discovery

Frist, to enable better product search, the following patterns must be analysed. Foody uses AI-powered data extraction and catalogue management tools to build product graphs based on its customer’s affinities. The Foody’s app makes recommendations based on latent attributes (dietary preferences like ‘keto’ and ‘gluten-free’). The healthy product search is based on attributes rather than just the product name.

Personalized curation

Second, to offer personalised food curation, a large amount of shopping baskets must be analysed and complex market structures, consumers’ shopping behaviour, and common reactions to external stimuli must be recognized. In addition, Foody conducts numerous micro-experiments and evaluates their effectiveness real-time. The digital service predicts when Millennials will need product and how much customer is willing to pay.

Customer loyalty

Third, Foody uses AI-based customer intelligence and personalization tools to increase customer loyalty. The data analysis helps to understand, segment, and reward customers. The digital service looks for patterns to make personalized recommendations based on customer’s dietary preferences, allergy information, etc.

5.3.4. Actionable insights

Search and discovery

Frist, the data insights support the improvement in the following search and discovery actions. The new Foody app offers a better personalised product search and discovery across the in real-time personalised customer journey. The app shows personalised (dietary and recipe) recommendations to Millennials, Gen Z, and Silver Surfers based on latent attributes. It allows customers to search health and sustainable products based on attributes. The digital service also allows the customers to discover new needs-based sustainable products and therefore increase conversions. In addition, it offers a smooth browsing experience through personalised content that encourages health-conscious customers to return.

Personalized curation

Second, to make lives of Foody’s customers easier it curates its customer’s cart automatically. Consequently, the need to go through manual process of adding regularly purchased products is erased. The app also saves time by personalized recommendations and discounts in comparison with shopping communities. It helps Gen Z and Silver Surfers to decide where to go shopping and what to buy, making healthy and sustainable shopping quicker and more efficient. The app creates a rich customer experience, the customer choses Foody over competition, and therefore it increases sales. In addition, the AI-based service convinces digital native Silver Surfers to try new relevant healthy products, which consequently generates additional revenue. In general, data analytics help to offer the Foody customer the right offers at the right price and right time via digital channels such as email, app, website etc.

Customer loyalty

Third, the data insights support the improvement of the grocery store loyalty by first the loyalty scheme and second the personalized ‘disenfranchised’ rewards and recommendations like family days out or restaurant meals. For instance, the app issues coupons for infrequently Silver Surfers buyers and discounts for loyal Gen Z customers.

6. Conclusion

In conclusion, the design of the digital service Foody app exhibits how to improve customer loyalty for a food retail chain. The user interface and front-end customer journey were designed customer-centric with online shopping and the loyalty scheme as the core value proposition. The additional services such as community-building activities and health and sustainable products and services fit the customer needs of the target customers Millennials, Gen Z, and Silver Surfers. By providing the digital service with partners, Foody’s app leveraged a platform strategy. The ecosystem map which comprises partners such as shopping experience providers, communities, and clubs, etc. displays how Foody scaled value through its ecosystem. Foody uses an AI strategy with the deployments of AI and data analytics to create value for the customer across the dimensions online shopping cart curation, and customer loyalty.

7. References

[1] Westbrook, I. (2018) Tesco Clubcard changes anger customers. Retrieved from https://www.bbc.co.uk/news/business-42700758

[2] Read, S. (2020) Ocado says switch to online shopping is permanent. Retrieved from https://www.bbc.co.uk/news/business-53402767

[3] Vend (2020) Vend’s Retail Trends and Predictions 2020. Retrieved from https://www.vendhq.com/au/retail-trends-and-predictions

[4] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[5] Sayegh, K. (2021) Seminar Digital Business 2/4. Cambridge: University of Cambridge, 2/4

[6] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[7] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[8] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[9] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[10] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[11] Thompson, M. (2021) Seminar Digital Business 1/4. Cambridge: University of Cambridge, 1/4

[12] Pachidi, S. (2021) Seminar Digital Business 3/4. Cambridge: University of Cambridge, 3/4

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Victoria Riess, MBA

Victoria Riess, MBA

Engagement Manager @McKinsey | WomenTech Global Award | TechWomen100 | Ex-Corporate Strategy | Speaker | Cloud DevOps Engineer | Data Scientist