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Retailer Loyalty Programs - US - July 2015

"While loyalty memberships for retail are likely to increase through 2018, many consumers are beginning to feel fatigue from the sheer number of loyalty accounts they have. For market segments experiencing growth, digital and multichannel engagement has become key to ensuring that loyalty promotions remain relevant. Struggling segments need to evaluate their programs more closely and ensure that the value offered matches consumer demand."
- Bryant Harland, Technology Analyst

This report discusses the following key issues:

  • Total loyalty memberships are set to grow
  • Average number of loyalty memberships increasing 
  • Loyalty programs dramatically impact shopping behavior

Loyalty memberships will continue growing at comparable rates to historical trends through 2018. The majority of segments are poised for increases, including loyalty memberships for specialty retailers, department stores, mass merchandisers, and drug stores. Fuel and grocery loyalty memberships are expected to stagnate or decline through the forecast period. The former is hampered by competition from financial services loyalty programs, while grocery stores have had to closely monitor the cost and value their loyalty programs provide – in cases like Safeway, these programs have been discontinued.

Loyalty programs clearly have the potential to drive changes in consumers’ shopping behavior. However, it is becoming increasingly difficult to differentiate one program from another. Loyalty participants are highly receptive to personalized offers and promotions, suggesting that the future success of these initiatives will be depend on retailers’ ability to build hyper-relevant incentives into their loyalty initiatives. 

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Total loyalty memberships are set to grow
            • Figure 1: Total retail loyalty memberships and fan chart forecast of market, 2010-20
          • Average number of loyalty memberships increasing
            • Figure 2: Loyalty program participation (mean), by age, April 2015
          • Loyalty programs dramatically impact shopping behavior
            • Figure 3: Loyalty programs’ impact on shopping, by household size, April 2015
          • The opportunities
            • Increasing customer value key for struggling segments
              • Figure 4: Loyalty programs’ impact on shopping, April 2015
            • Consumer demand for multichannel engagement
              • Figure 5: Preferred communication devices, 2013-15
            • Personalization is important for overcoming irrelevance
              • Figure 6: Loyalty program attitudes, by repertoire of types of loyalty programs, April 2015
            • What it means
            • The Market – What You Need to Know

              • 2018: The peak of retail loyalty memberships
                • Most market segments slated for growth
                  • Grocery, fuel loyalty programs struggle to maintain traction
                  • Market Size and Forecast

                    • Total retail loyalty memberships to peak in 2018
                      • Figure 7: Total retail loyalty memberships and fan chart forecast of market, 2010-20
                      • Figure 8: Total retail loyalty memberships forecast of market, 2008-20
                  • Market Breakdown

                    • Specialty retail loyalty memberships to increase to 564 million in 2020
                      • Figure 9: Total specialty retail loyalty memberships and fan chart forecast of market, 2010-20
                    • Department store loyalty memberships to increase to 419 million in 2020
                      • Figure 10: Total department store loyalty memberships and fan chart forecast of market, 2010-20
                    • Drug store loyalty memberships to grow to 504 million in 2020
                      • Figure 11: Total drug store loyalty memberships and fan chart forecast of market, 2010-20
                    • Grocery store loyalty memberships to decline to 158 million in 2020
                      • Figure 12: Total grocery store loyalty memberships and fan chart forecast of market, 2010-20
                    • Mass merchandiser loyalty memberships to reach 241 million in 2020
                      • Figure 13: Total mass merchandiser loyalty memberships and fan chart forecast of market, 2010-20
                    • Fuel loyalty memberships to decline to 22 million by 2020
                      • Figure 14: Total fuel loyalty memberships and fan chart forecast of market, 2010-20
                  • Market Factors

                    • Mobile devices to raise engagement and relevance in the market
                    • Key Players – What You Need to Know

                      • How multichannel engagement drives success
                        • Loyalty analytics: Addressing the omnichannel tracking challenge
                          • The future of loyalty means emphasis on digital
                          • What’s Working?

                            • Multichannel engagement drives successful loyalty initiatives
                              • Loyalty analytics: How brands are addressing omnichannel retail
                              • What’s Struggling?

                                • Grocery and fuel/convenience loyalty programs struggle to maintain engagement
                                • What’s Next?

                                  • Retail loyalty coalitions to become more popular
                                    • Figure 15: American Express email ad, May 2015
                                  • Loyalty programs to place heavier emphasis on digital
                                  • The Consumer – What You Need to Know

                                    • Little change in overall participation for many categories
                                      • Mobile’s influence on loyalty is growing
                                        • Irrelevant loyalty promotions top consumers’ frustrations
                                        • Retailer Loyalty Program Participation

                                          • Little change in overall participation since 2014
                                            • Figure 16: Loyalty program participation, 2013-15
                                          • 25-34s average 14 loyalty memberships
                                            • Figure 17: Loyalty program participation (mean), by age, April 2015
                                        • Number of Types of Loyalty Programs

                                          • Many active loyalty customers have trouble seeing the difference between loyalty programs
                                            • Figure 18: Number of types of loyalty programs, April 2015
                                          • Consumers with many loyalty memberships feeling loyalty fatigue
                                            • Figure 19: Loyalty program frustrations, by number of types of loyalty programs, April 2015
                                        • Type of Loyalty Program Participants

                                            • Figure 20: Types of loyalty program participants, January 2015
                                          • Highly Active Participants
                                            • Moderately Interested
                                              • Convenience-oriented Participants
                                                • Discount and Deal Hunters
                                                • Preferred Methods of Loyalty Account Access

                                                  • Mobile devices become more important for loyalty
                                                    • Figure 21: Preferred communication devices, 2013-15
                                                  • Preferred channels for access and management of loyalty programs
                                                    • Figure 22: Preferred communication methods, 2013-15
                                                  • Traditional engagement channels important for Black consumers
                                                    • Figure 23: Preferred communication methods, by race, April 2015
                                                • Impact on Consumers’ Shopping Habits and Behavior

                                                  • Loyalty programs influence shopping behavior for 60% of participants
                                                      • Figure 24: Loyalty programs’ impact on shopping, by age, April 2015
                                                    • Drug store, supermarket loyalty programs back-of-mind during shopping
                                                        • Figure 25: Loyalty programs’ impact on shopping, by loyalty program participation, April 2015
                                                      • Opportunity: Improve the in-store loyalty experience to engage 18-34s
                                                          • Figure 26: Loyalty programs’ impact on shopping, by gender and age, April 2015
                                                      • Attitudes Regarding Retailer Loyalty Programs

                                                        • Higher income households see loyalty programs as a reflection of the retailer
                                                          • Figure 27: Loyalty program attitudes, by household income, April 2015
                                                        • Personalization important for highly active loyalty participants
                                                            • Figure 28: Loyalty program attitudes, by participation in loyalty programs, April 2015
                                                        • Desired Loyalty Program Improvements

                                                          • Large reward selections and sign-up bonuses top desired improvements
                                                            • Figure 29: Desired loyalty program improvements, April 2015
                                                          • Engagement higher among those who express interest in loyalty improvements
                                                            • Figure 30: Loyalty programs’ impact on shopping, by desired loyalty program improvements, April 2015
                                                          • Young men interested in spending reward points on charity
                                                            • Figure 31: Desired loyalty program improvements, by gender and age, April 2015
                                                        • Consumers’ Frustrations with Loyalty Programs

                                                          • Consumers frustrated by a lack of relevance
                                                              • Figure 32: Loyalty program frustrations, by age, April 2015
                                                            • Many young men don’t see differentiation in loyalty programs
                                                                • Figure 33: Loyalty program frustrations, by gender and age, April 2015
                                                            • Appendix – Data Sources and Abbreviations

                                                              • Data sources
                                                                • The market
                                                                  • Fan chart forecast
                                                                    • Consumer survey data
                                                                      • Consumer qualitative research
                                                                        • Cluster methodology
                                                                          • Direct marketing creative
                                                                            • Abbreviations and terms
                                                                              • Abbreviations
                                                                                • Terms
                                                                                • Appendix – Market

                                                                                    • Figure 34: Total US specialty retail loyalty program memberships, 2006-20
                                                                                    • Figure 35: Total US department store loyalty program memberships, 2006-20
                                                                                    • Figure 36: Total US drugstore loyalty program memberships, 2006-20
                                                                                    • Figure 37: Total US grocery store loyalty program memberships, 2006-20
                                                                                    • Figure 38: Total US mass merchant loyalty program memberships, 2008-20
                                                                                    • Figure 39: Total US fuel/convenience loyalty program memberships, 2006-20

                                                                                Companies Covered

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                                                                                Retailer Loyalty Programs - US - July 2015

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