Industry

What price loyalty? Studies consider the retailer and the consumer perspective

Loyalty is under the spotlight in two new studies published this week, one looking at the issue from the retailer’s point of view – and the other from that of the consumer.

An EY study finds that only 5% of retailers currently believe their customers are loyal, while research from ICLP finds that most consumers think many retailers aren’t doing enough to earn that loyalty, with department stores outperforming sellers in other categories.

Researchers questioned 130 C-suite retail executives in North America, Europe and Asia for the EY study. Some 87% of those who took part said that a loyalty strategy was crucial to business success, while 27% believe their current initiatives have a positive effect. But only 5% think they can rely on their customers’ loyalty.

EY says the study findings suggest that a data-driven approach is called for.

Helen Merriott, UK&I EY retail and consumer products market leader, said: “The relationship with the consumer has become increasingly transactional. With consumer expectations changing at a rapid pace, retailers need to create loyalty that sticks.

“Few retailers are fully embedding loyalty across core operations and customer touch points. Companies need to meet customer expectations at every turn to see increased business success as a result of increased customer loyalty.”

Executives believe there is much work to be done, especially since few have confidence in their own capabilities to embrace new technologies that might unlock loyal customers. The survey found that 19% of retailers could use their data and systems to understand individual customer needs while 35% could capture real-time insights frequently. Three in 10 (30%) have the ability to use technology to personalise the offer and experience for a customer every time.

Patrick Moriarty, EY executive director, retail customer experience and loyalty, said: “Legacy methods of creating and maintaining brand loyalty are failing. Many retailers are capturing data, but struggling to generate and activate insights in ways that help them stay relevant. Driving personalised offers, capturing real-time insights, understanding individualised customer needs and maintaining their trust are all key for success.”

Meanwhile, research from loyalty marketing agency ICLP concluded that UK department stores are outperforming all other retail sectors, in particular supermarkets and fashion retailers, when it comes to their loyalty programmes and building relationships with their customers.

The research drew on a survey of 1,000 consumers to find that 57% of department store shoppers said that they felt they were treated with respect, compared to just 41% at supermarkets.

Half (49%) of department store shoppers felt they were treated like individuals, falling to 33% for supermarkets and 39% for fashion retailers.

More than half (53%) of those surveyed said they felt that department stores used their personal information for their benefit and to improve their shopping experiences. Those improvements included bespoke offers or rewards. This compares to 44% with general and fashion retailers, and 37% with supermarkets. At the same time, 57% of department stores shoppers said they were always treated with respect, compared to 46% for general retailers, 44% of fashion retailers and 41% of supermarkets.

Jason De Winne, general manager at ICLP, said: “Retailers need to recognise the huge potential of the vast quantities of data that they already have, and ensure they are using it to deliver true relevant personalisation. Even a small amount of personalisation can give retailers the edge against their competitors.

“Everyone now has the potential to offer more personalisation. From supermarkets to fashion, retailers need to segment their customers and deliver them the news, offers, and rewards that they want and listen to them through all relevant channels.”

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