Loyalty pricing appears to be paying off for shoppers and retailers. In a recent review of 50,000 loyalty-priced products, the Competition & Markets Authority showed 92% offered genuine savings against the usual price. Retailers appear to be gaining custom as a result – especially the likes of Tesco and Sainsbury’s, for whom market share is growing. So, a well-deserved pat on the back for them.
But not so fast! The report also highlighted that 55% of people think ‘usual’ prices are upped to make loyalty deals more appealing. This isworrying, as it demonstrates a lack of trust in retailers and their suppliers – 76% of shoppers say loyalty pricing has not changed where they shop.
Loyalty cards, in their current form, are not designed just to reward and retain loyal customers. They exist as a vehicle for elevated competitiveness and market share, to attract new customers and encourage them to spend more.
So, more work needs to be done to win the hearts, minds and loyalty of shoppers. Supermarkets must get under the skin of what motivates shoppers by creating meaningful connections, particularly in a less-than-stable post-budget environment. The role of loyalty cards must go beyond price – they need to have long-term ambitions to attract and lock in customers. This will require an in-depth understanding of what truly makes them tick.
One good example is Morrisons, which is prioritising availability of products on shelves. It’s committed budget to improving the customer experience, getting more people back on tills, making sure those shelves are restocked in a timely fashion and, yes, expanding its loyalty programme. It has also just announced a significant change to its loyalty scheme that allows shoppers to earn more points towards their purchases. So, seeing loyalty in the context of overall shopper requirements and the overall shopper experience is essential.
From a macro perspective, back in 2020, the All-Party Parliamentary Group on a Fit and Healthy Childhood recommended supermarkets rebalance promotions away from products that are high in fat, sugar or salt. Instead, more price discounts and promotions should be offered on healthy foods. Promotions on healthier, culturally appropriate products should also be offered to engage people from ethnic minority groups. These issues all play into the holistic role that loyalty programmes have.
And that means it’s not just about price. In the development of a range of category strategies over the course of this year by The Category Management Company, price rarely rears its head in terms of what really matters for shoppers’ long-term prosperity and happiness. It’s about the importance of family, mental wellness, the environment, health and security.
We will always need to acknowledge the importance of price for short-term gain. But we should also look beyond it to build true loyalty and trust. Perhaps only then can meaningful loyalty be achieved.
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