Supermarket loyalty schemes will be key for customer retention in the UK during cost-of-living crisis, says GlobalData

The soaring inflation rate is squeezing consumers’ budgets in the UK, and many are choosing to shop at supermarkets that are perceived as the best value for money as a result, says GlobalData. The leading data and analytics company notes that discounts are the most appealing reward to people when shopping at retailers, with nearly a fifth (19.7%*) of UK people agreeing that such promotions are important to them as rewards when they consider collecting loyalty card points.

As the cost-of-living crisis worsens, loyalty schemes will become integral for customer retention and engagement. However, grocers must also raise awareness of price match schemes through offline marketing such as in-store signages, as well as promotions on their websites.

Nidhi Chauhan, Senior Food & Drink Analyst at GlobalData, comments: “There is an opportunity for retailers to complement their traditional price-cut investments and use digital tools to enhance consumer’s in-store experience to achieve next-level personalisation. Proactive strategies like this can reinforce long-term brand loyalty, particularly when times are hard, and people may be more conscious of where they choose to shop.”

Most shoppers in the UK are signed up to a loyalty scheme of some kind. Tesco’s Clubcard scheme is the most popular (67.1%), owing to the instant rewards it offers that could prove a distinct advantage. Sainsbury’s Nectar loyalty card follows closely behind, offering regular one-off, limited time offers, based on what consumers buy most frequently.

Conversely, Iceland Bonus, which launched its first digital app version of the bonus card in April 2021, is the least popular, in part owing to a lack of personalized offerings for members. The scheme was also only available to in-store customers until February this year, limiting its reach at a time when online shopping was booming.

Chauhan continues: “To stand out in the sea of competitors, grocers must bring something new to the table that customers can’t find elsewhere. This could be the ability to exchange points for discounts or money off activities like the Lidl Plus card, that make people want to return to cash in on their efforts.”

Some supermarkets have also introduced gamification and coupons to be exchanged for specific products, while others have also incorporated charitable programmes to help people in their communities. These rewards could appeal to those who spend on leisure and whose budgets are being squeezed due to the cost-of-living crisis.

Chauhan concludes: “The benefits and offers provided need to be compelling and unique enough to ensure shoppers choose a particular retailer or promotion, as even with growing consumer choice, personalised marketing communications and diverse offerings, brand loyalty is as important for consumers as it is for brands.”

* Data from GlobalData’s 2022 UK Monthly Survey of 2,000 Respondents

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