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Customer Loyalty and Reward Schemes - UK - December 2015

“With their everyday low pricing structure the discounters have shown consumers that they don’t need to build up points or jump through hoops to get the lowest prices. Instead, loyalty schemes have become more about adding additional value to a purchase or enhancing a shopping experience than about cost cutting. To maintain their appeal, rewards need to be smaller, with greater regularity and more personalised in order to build a more frequent and engaging shopping experience.”
– Thomas Slide, Retail Analyst

This report covers the following issues:

  • What loyalty schemes are people using?
  • How are digital innovations changing loyalty schemes and what do consumers think of it?
  • How do consumers perceive the value of loyalty schemes and what can be done to encourage uptake and engagement?

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Table of contents

  1. Overview

    • What you need to know
      • Areas covered in this report
      • Executive Summary

          • The market
            • Rising consumer confidence good for loyalty
              • Smartphone ownership grows but concerns persist
                • Price and convenience drive choice for food retailing
                  • Discounter growth leads to changing perceptions
                    • Companies, brands and innovations
                      • Pick your own offers
                        • Digital receipt storing
                          • M&S launches ‘Sparks’ loyalty scheme
                            • Digital loyalty
                              • The consumer
                                • 84% have used a loyalty scheme in the past six months
                                  • Figure 1: Active members (used in the past six months) of retail loyalty schemes, August 2015
                                • Affluence leads to greater use of loyalty schemes
                                  • Figure 2: Loyalty scheme repertoire use, by average age and affluence on a six-point scale, August 2015
                                • Consumers show a lack of commitment to loyalty schemes
                                  • Figure 3: Use of customer loyalty schemes, August 2015
                                • More choice in redemption
                                  • Getting it faster
                                      • Figure 4: Attitudes towards loyalty schemes, August 2015
                                    • Perceived lack of value is holding back membership
                                      • Figure 5: Reasons for not joining loyalty schemes, August 2015
                                    • Consumers want choice and surprises
                                      • Figure 6: Encouraging greater use of loyalty schemes, August 2015
                                    • What we think
                                    • Issues and Insights

                                      • Digital loyalty
                                        • The facts
                                          • The implications
                                            • Reducing the gap between spend and reward
                                              • The facts
                                                • The implications
                                                  • Appealing to the more affluent shopper
                                                    • The facts
                                                      • The implications
                                                      • The Market – What You Need to Know

                                                        • Rising consumer confidence good for loyalty
                                                          • Smartphone ownership grows but concerns persist
                                                            • Price and convenience drive choice for food retailing
                                                              • Discounter growth leads to changing perceptions
                                                              • Market Drivers

                                                                • Consumer confidence
                                                                  • Figure 7: Financial well-being index, February 2012-October 2015
                                                                • Smartphone ownership
                                                                  • Figure 8: Ownership of mobile phones, April 2012-June 2015
                                                                  • Figure 9: Agreement with the statement “I’d like to be able to use a smartphone to pay for purchases in shops, restaurants and other high street stores”, by age, July 2015
                                                                • Factors affecting choice of supermarket
                                                                  • Figure 10: Factors in choosing where to shop, August 2015
                                                                  • Figure 11: Profile of people valuing key factors, August 2015
                                                                  • Figure 12: Regional profile of factor preferences, August 2015
                                                                • Discounter growth is changing perceptions
                                                                  • Figure 13: Leading grocery retailers’ share of sector sales, 2010-15
                                                              • Key Players – What You Need to Know

                                                                • Leading schemes
                                                                  • Innovations
                                                                    • Advertising
                                                                      • Brand loyalty
                                                                      • Customer Loyalty Schemes

                                                                        • Tesco Clubcard dominates
                                                                          • Nectar cuts points
                                                                            • Boots Advantage Card trials PYO
                                                                              • myWaitrose specialises in instant rewards
                                                                                • Morrisons’ Match & More shifts focus
                                                                                  • My John Lewis focuses on making shopping easier
                                                                                    • House of Fraser introduces digital Recognition card
                                                                                      • B&Q Club offers tailored benefits
                                                                                        • Love Your Body card offers generous returns
                                                                                          • Superdrug Health & Beautycard
                                                                                            • IKEA Family card enhances the shopping experience
                                                                                              • Debenhams Beauty Club
                                                                                                • GAME rewards
                                                                                                • Launch Activity and Innovation

                                                                                                  • Pick your own offers
                                                                                                    • Figure 14: Waitrose, pick your own offers scheme, 2015
                                                                                                  • Digital receipt storing
                                                                                                    • M&S launches ‘Sparks’ loyalty scheme
                                                                                                      • Figure 15: The new Sparks card by M&S, October 2015
                                                                                                    • Digital loyalty
                                                                                                      • Walgreens Balance Rewards
                                                                                                        • Lotte’s digital department store
                                                                                                        • Advertising and Marketing Activity

                                                                                                          • Nectar card the biggest advertiser
                                                                                                            • Figure 16: Recorded above-the-line, online display and direct mail total advertising expenditure by the leading loyalty schemes, 2011-14
                                                                                                          • Tesco Clubcard uses seasonal adverts
                                                                                                            • Morrisons Match & More advert ban
                                                                                                              • Figure 17: Recorded above-the-line, online display and direct mail total advertising expenditure by the leading loyalty schemes, 2011-14
                                                                                                            • A note on adspend
                                                                                                            • Brand Research

                                                                                                                • What you need to know
                                                                                                                  • Asda and Tesco are favourite brands
                                                                                                                    • Figure 18: Preferred or favourite food retailers, August 2015
                                                                                                                  • Key brand metrics
                                                                                                                      • Figure 19: Key metrics for selected supermarket brands, August 2015
                                                                                                                    • Brand attitudes
                                                                                                                      • Figure 20: Attitudes, by supermarket brand, August 2015
                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                    • 84% have used a loyalty scheme in the past six months
                                                                                                                      • Affluence leads to greater use of loyalty schemes
                                                                                                                        • A lack of loyalty
                                                                                                                          • Consumers want quicker rewards
                                                                                                                            • Appeal of digital innovation varies by age
                                                                                                                              • Almost half want more choice
                                                                                                                              • Membership of Loyalty Schemes

                                                                                                                                • Loyalty scheme membership at 84%
                                                                                                                                  • Figure 21: Members of loyalty schemes that they have used in the past six months, August 2015
                                                                                                                                • Loyalty scheme membership rises in 2015
                                                                                                                                  • Figure 22: Membership of loyalty schemes, August 2014 and August 2015
                                                                                                                                • Boots has the highest number of lapsed members
                                                                                                                                  • Figure 23: Membership of loyalty schemes, August 2015
                                                                                                                                • Biggest loyalty schemes need to attract younger members
                                                                                                                                  • Figure 24: Active members of retailer loyalty schemes by age and socio-economic group, August 2015
                                                                                                                                • Women are significantly more likely to be active loyalty scheme members
                                                                                                                                  • Figure 25: Membership of retailer loyalty schemes netted by category, by gender, August 2015
                                                                                                                                • Affluence leads to greater use of loyalty schemes
                                                                                                                                  • Figure 26: Loyalty scheme repertoire use, by average age and affluence on a six-point scale, August 2015
                                                                                                                              • Usage of Loyalty Schemes

                                                                                                                                • Deal hunters
                                                                                                                                    • Figure 27: Use of customer loyalty schemes, August 2015
                                                                                                                                  • Overcoming forgetfulness
                                                                                                                                      • Figure 28: Use of customer loyalty schemes, selected options by scheme type, August 2015
                                                                                                                                    • The gender gap
                                                                                                                                        • Figure 29: Use of customer loyalty schemes, by gender, August 2015
                                                                                                                                    • Attitudes towards Loyalty Schemes

                                                                                                                                      • Loyalty points take too long to accumulate
                                                                                                                                          • Figure 30: Attitudes towards loyalty schemes, August 2015
                                                                                                                                        • Minimise the rewards
                                                                                                                                          • Younger consumers are keen to use smartphones
                                                                                                                                            • Figure 31: Selected attitudes towards loyalty schemes, by age, August 2015
                                                                                                                                        • Reasons For Not Joining Loyalty Schemes

                                                                                                                                          • Perceived value is holding back membership
                                                                                                                                            • Figure 32: Reasons for not joining loyalty schemes, August 2015
                                                                                                                                          • Young Millennials reject loyalty schemes
                                                                                                                                            • Figure 33: Non-members of any loyalty scheme, by generation, August 2015
                                                                                                                                        • Encouraging Greater Use of Loyalty Schemes

                                                                                                                                          • Consumers want more choice
                                                                                                                                            • Figure 34: Encouraging greater use of loyalty schemes, August 2015
                                                                                                                                          • Women want choices and surprises
                                                                                                                                            • Figure 35: Encouraging greater use of loyalty schemes, by gender, August 2015
                                                                                                                                          • Men want simplicity
                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                            • Data sources
                                                                                                                                              • Abbreviations

                                                                                                                                              Companies Covered

                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                              Customer Loyalty and Reward Schemes - UK - December 2015

                                                                                                                                              £2,195.00 (Excl.Tax)