By David Ringer, Regional Director for the UK & Ireland at tcc global
Loyalty has always been central to retail, but we are in a stage of market evolution where the traditional understanding of shopper loyalty has been compromised. But far from being a thing of the past: it’s more important than ever.
Looking back across retailing in the past few years, it hasn’t been short of disruption. Amazon launched a one-hour delivery service in 2015, high street stalwart BHS fell in 2016, Amazon bought Wholefoods and launched its own fashion range in 2017, ASOS’s market value grew above M&S’ and both Argos and Habitat were bought by Sainsbury’s in the same year. Already this year there have been additional retail victims of disruption.
These changes have been driven by shopper behaviour. In the world of grocery consumers are not afraid to spread their spend across a variety of retailers and channels, shunning what used to be the ‘big shop’ and taking smaller shopping trips at smaller retailers such as Aldi, Lidl, Waitrose or even Amazon. According to the ONS, in December one in every five pounds shoppers spent on retail was online. People are even buying their cars online—Summit recently worked with Peugeot on their Order Online ecommerce platform.
Despite this challenging climate, effective loyalty campaigns are proven methods for growing and sustaining market share. But many retailers are struggling to deliver and are failing to generate much in the way of loyalty. With a number of key players making changes to their offerings in the last few months, there is a palpable sense that shoppers and retailers are becoming disenchanted by traditional loyalty schemes. Consumers are mindful that some traditional schemes are little more than a retail CRM tool which offers points that in most cases amount to a minute cash reward that resembles a tip for the most loyal shopper.
But what next?
There is much discussion of bitcoin and cryptocurrency in the media at the moment. Burger King Russia first announced a cryptocurrency loyalty scheme back in 2017, rewarding customers with “Whoppercoins”, which could be exchanged for burgers, or traded online, the value of which can be tracked here. Singapore Airlines launched “miles cryptocurrency” in February this year.
Technology like augmented reality (AR) and virtual reality (VR) is helping to drive loyalty too. The Goodness Gang range of characters have proven a phenomenal success across the world, and in the Netherlands a large reason for this is thanks to the use of the Goodness Gang Go app. Through the AR app, Lidl stores are transformed into playgrounds in which young shoppers can find and collect their favourite characters; who are magically brought to life via their phone screen.
TM Lewin now arms its associates with iPads that can be used to pull up people’s order history and preferences. This enables them to recognise customers and tailor their approach accordingly, as well as further personalising their online experience through targeted offers and promotions, following in-store enquiries, improving the customer journey.
And as devices like Alexa, Google Home and Smart Fridges begin to infiltrate our homes, and machine learning becomes standard, the shape of loyalty will change. With every word spoken to Alexa mined, or every movement of milk in your fridge tracked, loyalty schemes will become better optimised and personalised.
But what loyalty boils down to is emotion and relationship building. We know that the bulk of human decision-making is powered by emotional rather than rational thought processes and those retailers that learn to address the hearts of their shoppers, as well as their minds, will be the businesses that will thrive.
We will be bringing together our expert team who can offer advice on how to generate loyalty in this increasingly cut-throat retail environment at Retail Week Live.