The Changing Landscape of Consumer Loyalty in Retail

This article is derived from our report 'Personalisation Pays' in partnership with FreedomPay, which highlights the importance of retailers using personalisation marketing strategies to boost sales and form a relationship with their consumers, it also explores how data-driven strategies are changing the retail industry.

5 minute read

Within today's ever-shifting retail landscape, consumers are seeking more than just transactional interactions. They're after something deeper – a genuine rapport with the brands they endorse, coupled with the desire to be acknowledged for their loyalty.

Our research provides insights into the evolving attitudes towards loyalty schemes, uncovering intriguing revelations about the varied inclinations of consumers based on affluence, age, and shopping channels.

Our research divulges that a significant 70.7% of consumers believe that loyalty programmes tailored to their specific purchasing behaviour hold considerable importance. This focus on bespoke rewards signifies a craving for an immersive and purposeful shopping experience. Nevertheless, as we explore further, it becomes evident that the importance of loyalty programmes differs considerably across diverse demographic groups.

Affluence plays a pivotal role in shaping these outlooks. Amid the most affluent consumers, a remarkable 79.0% regard customised loyalty schemes as pivotal components of their shopping journey. In contrast, this sentiment dips to 57.7% among those who are less affluent. The variance can be attributed to higher-income households, endowed with more disposable income for non-essential purchases, leading to heightened expectations for personalisation and loyalty. Conversely, consumers with limited means tend to give priority to price and value, making them more open to alternative rewards such as discounts and price-match guarantees.

Age is another key factor influencing attitudes towards loyalty programmes. Among the younger generation, often labelled as 'Digital Natives', an astounding 86.2% underline the importance of tailored loyalty programmes. This contrasts markedly with a mere 32.3% among the 'Digital Latecomers', individuals who adopted digital platforms later in life. Similarly, the 'Digital First' shoppers, those who primarily engage through online avenues, consider customised loyalty programmes crucial (80.2%), while the 'Store First' consumers attribute less significance (51.2%) to such initiatives.

The driving force behind this trend lies in the digital engagement of younger consumers. With a more pronounced presence on digital platforms, these individuals have developed expectations for tailored content across various touchpoints, including social media, websites, and email. Moreover, they possess a heightened appetite for brands that align with their core values and personality, fostering a sense of authentic community and connection.

Acknowledging these diverse consumer attitudes, brands are confronted with the challenge of motivating repeat purchases through targeted messaging. This necessitates tapping into customer data and transforming it into meaningful engagement strategies.

A majority of shoppers (69.5%) are willing to share their data in exchange for benefits like personalised promotions and recommendations. However, a discernible divergence emerges when dissected by age.

• Digital Natives - aged less than 45

• Digital Adopters - aged 45 - 64

• Digital Latecomers - aged 65+

'Digital Natives' are twice as likely to share personal information for these benefits compared to 'Digital Latecomers' (82.1% vs. 42.2%, respectively).

Another layer to this data-sharing behaviour is trust. Older and 'Store First' consumers harbour higher levels of scepticism towards sharing personal data with retailers, whereas over half (54.1%) of 'Digital First' shoppers express unwavering trust. This reflects the younger generation's inclination to share personal information as opposed to the older generation's apprehensions over potential data breaches.

For retailers, the challenge lies in nurturing repeat purchases in an era where personalised loyalty rewards have become indispensable for consumers across all age brackets. To achieve this, brands must focus on establishing trust with shoppers by transparently communicating their data handling practices. As the retail landscape continues to evolve, the ability to adapt to shifting consumer preferences and effectively leverage customer data will remain fundamental to successful loyalty programmes and enduring brand-consumer relationships.