Customer Loyalty and Discounting in Retailing - UK - August 2009
The recession provides the ultimate test of customer loyalty to those stores where shoppers spend the bulk of their money. But are shoppers altering their spending behaviour in favour of cheaper goods and cheaper retailers, or are people simply saving money by buying differently from the retailers they always use?
This report quantifies how shopper behaviour is changing in response to rising unemployment and worsening economic conditions. It identifies aspects of marketing strategy and proposition development that need to be addressed to ensure that companies are doing enough to retain and develop business throughout the recession.
The influence of loyalty card schemes on shopper behaviour is also researched. Participation in loyalty card schemes is at an all time high, so does this mean that people are more loyal to the stores that have schemes? The report considers the role and influence of loyalty cards on customer retention and assesses whether retailers are extracting enough value from the transactional data generated.
The recession is beginning to affect more and more people, but who is feeling the pinch enough to trade down to cheaper goods such as budget brands or switch to cheaper retailers such as grocery discounters and value clothing retailers?
People can save money by altering what they buy. To what extent have people cut back on treats and luxuries?
Loyalty schemes are popular, but why do people participate in loyalty card schemes? Do schemes really influence where people shop and how much they spend? Would people spend less at a store if it closed its scheme?
Loyalty card schemes aid customer retention but also drive incremental sales. How receptive are customers to upselling and cross-selling activity contained in regular mailings?
Are retailers fully utilising the relationship marketing opportunities that card schemes give them? How might the transactional data generated be better interrogated to improve engagement with customers?
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