We recently likened fascias to the loyalty card of wholesale, but we should also consider loyalty in terms of the end consumer and what tactics retailers (including convenience store retailers and indeed hospitality operators) can employ to encourage their customers to spend more at their particular outlet.

In the current climate of rising prices and costs there is no doubt that we can expect ‘savvy shopping’ behaviour, as shoppers hunt around for the best prices and deals to manage their grocery budgets. Our recent TWC Trends Savvy Shopper research confirmed that over a third of shoppers are hunting around for the best deals on everyday food and grocery items, whilst 45% claim to be choosing cheaper food stores. Indeed, in a recent article in The Grocer, George Nott cites the nine habits shoppers will change as inflation and the rising cost of living transform the landscape of those “chasing perceived value”.

Interestingly, our research found that deal hunting and shopping at cheaper stores was not defined by affluence, with almost as many ABC1’s hunting around for the best deals as their C2DE counterparts. However, we found older shoppers (55+) were less likely to be conducting either activity. This aligns to lower financial concerns for this age cohort, who were the least likely to agree with the statement ‘I am struggling to make ends meet financially’.

Our research also revealed that older generations were more likely to have a retailer loyalty card, giving them access to more deals – and increasingly the only way to unlock promotional prices, for example at Tesco where deals are only available to Clubcard members. Whilst a third of those aged 55+ claimed to be a member of a grocery loyalty scheme, just 7% of those aged 18-34 did. Surely this is at odds, with those most in need of cheaper prices, least likely to be able to access them – and a strong rationale for creating a loyalty scheme that resonates with these younger shoppers.

One often over-looked fact is that wholesalers generally collect customer purchase data against every transaction because a wholesale customer must sign in with their account number each time they shop, whereas in a retail or hospitality environment, all transactions are anonymous unless they are appended to a loyalty card of some kind.  So, one of the main benefits of loyalty schemes for the retailer is the data that they can collect. Given the prevalence of loyalty cards, it won’t be a surprise to learn that TWC Trends research showed that 53% of UK adults are happy for businesses to collect data about their spending and purchasing habits in exchange for better personalisation of offers. This is even higher for younger shoppers, with two-thirds of 18–34-year-olds agreeing to this statement.

So, there is a clear disconnect – two thirds of 18-34 year-olds are happy for their personal data to be collected yet just 7% have signed up for a loyalty card.  So, what is the barrier to take up?

One potential angle is sustainability and environmental concerns. Interestingly, while this is seen as a younger persons’ priority (the ‘Greta’ generation), concern about the environment is almost universal now, with 71% agreement with the statement “I am concerned about environmental and sustainability issues”. But where younger shoppers do stand out is in terms of the impact this is having on where they shop. Overall, 42% of UK consumers agree that environmental and sustainability issues are influencing where they shop for groceries, increasing to just under half of those aged 18-34.

Could retailers learn from Brewdog’s loyalty scheme ‘Planet Brewdog’, which taps into sustainability and environmental impact? Participants earn rewards such as free beers, free delivery and exclusive deals but the scheme also tracks members’ personal contribution to offsetting carbon. This idea of something for the individual but also an element of giving back is seen in several grocery retailer loyalty schemes, most notably the the Co-op’s membership scheme which gives back to local communities. Others, including M&S, Morrisons and Nectar, offer an option to donate to charities.

Or is it that younger consumers prefer their loyalty to come in the form of subscriptions?

Certainly, Pret’s subscription service was aimed squarely at the 18-34 year olds who are a core cohort for this business and it has proved incredibly popular, although its success led to issues regarding availability of some of the beverages included, which in turn led to complaints. Interestingly, when subsequently launched in the USA, Pret offered a classic and premium plan with different drinks included. Meanwhile, online operators, such as Cult Beauty, offer free gifts at checkout if a customer hits a spend threshold so, maybe, younger consumers prefer something tangible instead of intangible points for their custom?

Maybe this conundrum does not matter to the retail multiples, since previous TWC Trends research highlighted that “more Millennials and Gen Z had shopped with Amazon than visited a supermarket over the last month”. But surely, working out how to incentivise the younger consumer is key to staying relevant?

TWC has recently partnered with Loyalize, an open banking app that facilitates bank to bank payments at a fraction of the cost of debit or credit card fees but also includes a loyalty function so that retailers and wholesalers can reward customers for switching to open banking as well as incentivise them to spend more. All of this is cardless – once the customer has signed up and then uses the payment function on their phone, points are automatically awarded. We can see massive wins for the merchant, the operator and the customer.  The merchant and operator will have hugely reduced card fees, they can drive loyalty and stretch spend from their customer and the consumer has a cardless, hassle free reward.

More details coming soon! In the meantime, to find out more about Loyalize contact Tanya@twgroup.net