2024
9
Germany Customer Loyalty in Retailing Market Report 2024
2024-06-26T11:01:33+01:00
REP54648857_7D2B_44AD_A520_EFEB5A96B793
2195
174086
[{"name":"Retail","url":"https:\/\/store.mintel.com\/industries\/retail"}]
Report
en_GB
German Gen Zs seek more organic brand engagement over traditional points and discounts when it comes to loyalty. Whilst membership of loyalty schemes is lowest among Gen Z (…

Germany Customer Loyalty in Retailing Market Report 2024

£ 2,195 (Excl.Tax)

Report Summary

German Gen Zs seek more organic brand engagement over traditional points and discounts when it comes to loyalty. Whilst membership of loyalty schemes is lowest among Gen Z (51%, vs 66% for all consumers), this is the most-engaged generation when it comes to fashion loyalty schemes.

The cost-of-living crisis has driven shoppers to prioritise price and value, impacting customer loyalty. However, as confidence rises, shoppers are shifting their focus to experiential loyalty approaches, emphasising quality, transparency and sustainable practices.

As confidence improves, consumer interest in more ethical and conscious shopping will challenge traditional rewards, which encourage overconsumption. Shoppers will prioritise ethical brands, pushing retailers to align with consumer values with incentives like charitable donations and sustainable rewards, thereby enhancing emotional engagement and the value proposition.

Given recent crises, loyalty programs are still most sought for their points and discount benefits, with over 60% of members prioritising these offerings. Retailers will be challenged to enhance engagement with personalisation and gamification in order to appeal to the 23% of Gen Z and 20% of Millennial members interested in interactive elements like games and competitions.

This report looks at the following areas:

  • The impact of inflation and the cost-of-living crisis on customer loyalty
  • Key drivers affecting customer loyalty and how loyalty/reward schemes are evolving
  • Consumer membership, engagement and use of loyalty/reward schemes
  • Most common strategies used by leading retailers’ loyalty/reward schemes in Germany
  • Essential elements that loyalty and reward schemes must offer to better retain shoppers
  • How consumers exercise their loyalty towards retailers, and how to foster this loyalty

Customer loyalty is evolving, creating opportunities to go beyond traditional points and discounts to connect with consumers through personalised rewards and engaging experiences.

Armando Falcao, Associate Director – Retail Reports

Table of Contents

  1. EXECUTIVE SUMMARY

    • Overview
    • Key issues covered in this Report
    • The five-year outlook for Customer Loyalty in Retailing
    • Market context
    • Retail sales grew 3% in 2023, largely due to inflation
    • Graph 1: retail sales excluding fuel (excl VAT), 2014-24
    • Retailers will enhance their loyalty programs by tapping into the developments in AI-driven personalisation
    • Inflation’s hold on consumer confidence is finally subsiding in Germany
    • Graph 2: harmonised consumer price index, by category, 2022-24
    • Consumer interest in more conscious shopping will challenge rewards that encourage overconsumption
    • Opportunities
    • Entice Gen Zs with higher brand engagement, and immediate rewards and benefits
    • Target Millennials with personalised rewards
    • Retailers can benefit from consumers’ need for personalised loyalty schemes
    • Leverage loyalty by improving the online shopping experience with AI-based personalisation
    • The competitive landscape
    • Popular loyalty schemes attract older and less affluent shoppers, whilst more discretionary categories entice the young and wealthy
    • Graph 3: loyalty/reward schemes’ positioning by their members’ average age and income, 2024
    • Supermarket schemes are widely used, but loyalty programs in other categories have considerable room to grow
    • Graph 4: recent consumer usage of loyalty/reward schemes, by category, 2024
  2. MARKET DRIVERS

    • The German economy
    • Improved consumer confidence will challenge loyalty schemes to go beyond traditional points and discounts
    • Graph 5: retail sales excluding fuel (excl VAT), 2016-24
    • AI-based personalisation
    • Demand for greater personalisation will shape the future of loyalty rewards in Germany
    • Retailers will increasingly tap into AI to enhance the customer journey and the shopping experience
    • AI and digital engagement will significantly influence consumers’ relationship to loyalty
    • eCommerce
    • Online retail declined in 2023, but should grow again from 2024
    • Graph 6: online retail sales, 2016-23
    • eCommerce’s share of retail sales dropped to 11% in 2023
    • Graph 7: online retail sales as percentage of total retail sales, 2016-23
    • Provide added value to build loyalty and regain online shoppers lost due to higher price sensitivity
    • Ethical consumption
    • German consumers are gradually shifting towards more ethical and conscious shopping
    • Concerns around ethical shopping may even prompt consumers to shun a retailer
  3. WHAT CONSUMERS WANT AND WHY

    • Penetration of loyalty schemes and paid subscriptions
    • Millennials show the highest engagement in both reward schemes and paid subscriptions
    • Graph 8: membership of loyalty/reward schemes and paid subscriptions/delivery passes, 2024
    • Align with younger shoppers’ wish for ethical and engaging loyalty rewards
    • Target families with rewards that appeal to their need for flexibility and value
    • Graph 9: membership of loyalty/reward schemes and paid subscriptions, by household type, 2024
    • Wealthier shoppers want the convenience of paid subscriptions and delivery passes
    • Leverage more affluent shoppers’ higher engagement in rewards schemes and paid subscriptions
    • Membership and usage of individual loyalty/reward programs
    • Points-based loyalty reward schemes show the highest popularity among Germans
    • Graph 10: current membership and recent use of loyalty/reward schemes, 2024
    • Retain younger shoppers with rewards that go beyond points and discounts
    • Supermarket loyalty schemes are the most widely used, followed by those for more discretionary categories
    • Graph 11: membership in loyalty/reward schemes, by household type, 2024
    • Points-based schemes are particularly popular among older and less affluent consumers in Germany
    • Graph 12: loyalty/reward schemes’ positioning by their members’ average age and income, 2024
    • Leverage higher-earners’ stronger engagement with loyalty rewards by making them feel unique and exclusive
    • Graph 13: membership of loyalty/reward schemes, by monthly household income, 2024
    • Capitalise on older shoppers’ familiarity with points-based rewards
    • Graph 14: loyalty/reward schemes consumers use most frequently, by generation, 2024
    • Target older consumers with loyalty programs that blend innovation with the familiarity of points
    • Germans join more loyalty programs than they actually engage with
    • Graph 15: repertoire of usage** of loyalty/reward schemes, 2024
    • Graph 16: repertoire of membership* in loyalty/reward schemes, 2024
    • Leverage Millennials’ higher engagement in loyalty schemes with personalised rewards and experiences
    • Graph 17: repertoire of membership in loyalty/reward schemes, by generation, 2024
    • Behaviours towards loyalty/reward schemes
    • Combine rewards from different retailers to cater to the desires of savvy shoppers
    • Graph 18: consumer behaviours towards loyalty and reward schemes, 2024
    • Explore collaborations to attract nearly nine in 10 loyalty scheme members
    • Excite higher-income shoppers with a smooth digital experience that rewards them for sustainable practices
    • Graph 19: consumer behaviours towards loyalty schemes, by net monthly household income, 2024
    • Each retail category offers different opportunities to increase loyalty engagement
    • Target families with easy-to-redeem, personalised rewards that support the household budget
    • Target Millennials with personalised loyalty rewards
    • Captivate younger consumers with free delivery and tailored rewards
    • Graph 20: behaviours towards loyalty schemes, by generation, 2024
    • Important loyalty/reward scheme elements
    • Despite opportunities to make loyalty rewards more personalised, consumers still seek the familiarity of points and discounts
    • Graph 21: elements of loyalty/reward schemes that consumers find important, 2024
    • Retain shoppers with a loyalty experience that is comforting in its familiarity and exciting in its personalisation
    • Seduce wealthier shoppers with loyalty rewards that give them access to exclusive products and services
    • Graph 22: important elements of loyalty/reward schemes, by net monthly household income, 2024
    • Target older shoppers with easier and more exciting ways to collect and redeem their loyalty points
    • Boost engagement with a smoother and more personalised loyalty experience
    • Increase young shoppers’ engagement by offering a wider range of rewards
    • Graph 23: loyalty scheme members who find a wide range of rewards important (any rank), by age group, 2024
    • Consumer perception of loyalty towards retailers
    • In addition to regularly buying their products and services, consumers express their loyalty in various ways
    • Graph 24: how consumers express their loyalty to brands, by generation, 2024
    • Foster authentic brand communities to increase loyalty penetration among Gen Z shoppers
    • Target younger men with stronger social media engagement and endorsement from respected influencers
    • Graph 25: how consumers express their loyalty towards brands, by gender and age group, 2024
    • Strengthen younger men’s loyalty with digital content and real-life meets with popular influencers
    • Leverage older shoppers’ willingness to spend on the brands to which they are loyal
    • Capitalise on engaging families to act as brand ambassadors
    • Graph 26: how consumers express their loyalty towards retailers, by household type, 2024
    • Reasons to stop purchasing from a retailer
    • Bad experiences with products, services and customer support are the key reasons for shoppers to shun a retailer
    • Graph 27: reasons why consumers would stop shopping with a retailer, 2024
    • Foster loyalty by offering exceptional customer support with use, maintenance and repairs
    • Capture buyers who would shop elsewhere with enticing loyalty rewards
    • Graph 28: why consumers would stop shopping at a retailer, by generation, 2024
    • Tailor communication to the frequency consumers expect, and to align with the social media platforms they use
    • Graph 29: consumers who would stop shopping with a retailer as a result of too many ads/newsletters/notifications, by generation, 2024
    • Align with consumer values to improve retention
    • Use introductory discounts and offers most effectively among older shoppers
    • Graph 30: reasons why consumers would stop shopping with a retailer, by generation, 2024
    • Choose the ideal loyalty strategy based on which shoppers are targeted
  4. Retailer ACTIVITY

    • Customer loyalty strategies
    • Points-based systems are still the most popular, but must innovate to captivate younger shoppers
    • Tiered rewards create a sense of exclusivity, but are harder to manage and may not appeal to all buyers
    • Cashback programs can be particularly appealing during hard economic times
    • Gamified loyalty schemes are particularly appealing when targeting younger consumers
    • Personalised rewards will be key to attract and retain younger shoppers in the coming years
    • Elevate customer value perception to secure paid subscription loyalty
    • Leverage customer loyalty strategies beyond traditional rewards
    • Innovative loyalty and reward schemes
    • Farfetch Access targets luxury shoppers seeking exclusivity and high-value personalised experiences
    • Leading cycling sportswear brand Rapha fosters loyalty by creating communities and offering members lifestyle experiences
    • Starbucks Rewards aligns with brand values to offer simplicity and convenience beyond a free coffee
    • The Lidl Plus app aims to offer members an omnichannel loyalty experience when shopping for groceries
    • Adidas’ AdiClub captivates members with exclusive perks for fashion and sport enthusiasts
  5. APPENDIX

    • Appendix – products covered, abbreviations, consumer research methodology and language usage
    • Products covered in this Report
    • Abbreviations
    • Consumer research methodology
    • Generations
    • A note on language
    • Appendix – repertoire analysis methodology
    • Repertoire analysis methodology

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