2020
9
UK Customer Loyalty Market Report 2020
2020-08-27T15:37:16+01:00
OX989466
2195
122912
[{"name":"Retail","url":"https:\/\/store.mintel.com\/industries\/retail"}]
Report
en_GB
“As a result of the COVID-19 pandemic, retailers are facing unprecedented challenges and customer loyalty has become more important than ever before. Retailers’ responses to such challenges will be remembered…

UK Customer Loyalty Market Report 2020

£ 2,195 (Excl.Tax)

Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Customer Loyalty : Incl Impact of COVID-19 – UK market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Customer loyalty schemes have continued to gain relevance and are an essential tool to collect and analyse consumer data for marketing purposes. Mintel’s research shows that 82% of consumers now belong to at least one reward scheme, and 39% have signed up to a paid delivery or subscription pass such as Amazon Prime. The impact of the COVID-19 pandemic on the sector has been quite mixed, benefitting supermarket customer loyalty schemes, while Amazon Prime’s combination of delivery services and streaming entertainment was perfectly suited to the lockdown period. Loyalty schemes from non-essential sectors such as department stores and fashion, however, have suffered from shoppers being unable to transact in-store between 23 March and 15 June.

Expert analysis from a specialist in the field

Written by Armando Falcao, a leading analyst in the Retail sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

As a result of the COVID-19 pandemic, retailers are facing unprecedented challenges and customer loyalty has become more important than ever before. Retailers’ responses to such challenges will be remembered for years to come, and there are opportunities to use loyalty and subscription schemes to strengthen brand image and increase loyalty for those that support their customers and staff during the crisis, while quickly adapting to the new circumstances Armando Falcao
European Retail Analyst

Table of Contents

  1. Overview

    • What you need to know
      • The issues covered in this Report:
        • Products covered in this Report
        • Executive Summary

            • The Market
              • 82% have memberships to loyalty schemes
                • Figure 1: Membership of customer loyalty schemes and paid subscription passes, May 2020
              • Consumer confidence collapses with COVID-19
                • Figure 2: Consumer confidence tracker, January 2018-May 2020
              • Impact of COVID-19 on Customer loyalty
                • Emerging challenges can be turned into opportunities
                  • The emotional power of support and cooperation in times of need
                    • Rethinking the way to engage with consumers
                      • Figure 3: Expected impact of COVID-19 on Customer Loyalty, short, medium and long-term, June 2020
                    • Companies and Brands
                      • Tesco dominates supermarket sector with Clubcard
                        • Figure 4: Membership of customer loyalty/reward schemes, May 2020
                      • Free breakages insurance with IKEA Family Card
                        • Amazon Prime benefits go way beyond just fast delivery
                          • The Consumer
                            • Dissatisfaction with rewards personalised offers
                              • Figure 5: Satisfaction with customer loyalty schemes, May 2020
                              • Figure 6: Factors that most attract consumers to consumer loyalty/reward schemes, May 2020
                            • Amazon Prime continues to lead among subscription schemes
                              • Figure 7: Membership of paid subscription/delivery passes, May 2020
                            • Delivery and free returns are key to paid subscription members
                              • Figure 8: Factors that most attract consumers to paid subscription/delivery passes, May 2020
                            • Support with utility bills is a potential opportunitiy during COVID-19 times
                              • Figure 9: Attitudes to customer loyalty/reward schemes, May 2020
                            • What we think
                            • The Impact of COVID-19 and Customer Loyalty

                              • Short, medium and long-term impact on the industry
                                • Short-term
                                  • Medium-term
                                    • Long-term
                                      • Opportunities and Threats
                                        • Emerging challenges can be turned into opportunities
                                          • Figure 10: M&S Sparks’ donations to selected charities during the COVID-19 pandemic, July 2020
                                        • The emotional power of support and cooperation in times of need
                                          • Rethinking the way to engage with consumers
                                            • Figure 11: Example of Vodafone VeryMe experiential rewards, June 2020
                                            • Figure 12: Sainsbury’s Nectar rewards supporting charities, June 2020
                                          • Changing the rules to better benefit their members
                                            • Figure 13: British Airways Executive Club, examples of how to collect ‘Avios’, June 2020
                                          • Finding and engaging with brand ambassadors
                                            • Figure 14: DSW Friends & Benefits email campaign, May 2019
                                          • Shifts in consumer behaviour
                                            • A fundamental change in shopping behaviours
                                              • UK shoppers remain pessimistic about the future
                                                • Figure 15: Those claiming to have an extremely negative outlook on the following factors, 16 April-11 June 2020
                                              • At least four in 10 are still cutting back on discretionary spending
                                                • Spending will increase differently across sectors
                                                  • Figure 16: Those expecting to spend more on the following sectors next month, May-July 2020
                                                • How a COVID-19 recession will reshape the market
                                                  • Competing with discounters
                                                    • But budgeting behaviours will gradually soften
                                                      • COVID-19: Market context
                                                        • Economic and other assumptions
                                                        • Issues and Insights

                                                          • Customer loyalty in the context of COVID-19
                                                            • The facts
                                                              • The implications
                                                                  • Figure 17: John Lewis donates to local charities, May 2020
                                                                • Younger shoppers want experiences and to engage in social media
                                                                  • The facts
                                                                    • The implications
                                                                    • The Market – What You Need to Know

                                                                      • Consumer confidence collapses with COVID-19
                                                                        • UK shoppers remain pessimistic about the future
                                                                          • Loyalty schemes can support consumers during the crisis
                                                                            • Discounters continue to gain relevance
                                                                            • Market Drivers

                                                                              • Consumer confidence collapses with COVID-19
                                                                                • Figure 18: Consumer confidence tracker, January 2018-May 2020
                                                                              • Smartphone ownership remains stable above 80%
                                                                                • Figure 19: Ownership of mobile phones, January 2013-December 2019
                                                                              • UK shoppers remain pessimistic about the future
                                                                                • Figure 20: Those claiming to have an extremely negative outlook on the following factors, 28 May-3 June 2020
                                                                              • Supermarket loyalty schemes benefit from COVID-19
                                                                                • Figure 21: Membership of customer loyalty/reward schemes, by sector, May 2020
                                                                              • Loyalty schemes can support consumers during the crisis
                                                                                • Figure 22: Attitudes to customer loyalty/rewards schemes, May 2020
                                                                              • Discounters continue to gain relevance
                                                                                • Figure 23: Leading grocery retailers’ share of sector sales, 2013-19
                                                                            • Companies and Brands – What You Need to Know

                                                                              • Tesco dominates supermarket sector with Clubcard
                                                                                • Free breakages insurance with IKEA Family Card
                                                                                  • Amazon Prime benefits go way beyond just fast delivery
                                                                                    • The UK’s first grocery loyalty subscription service
                                                                                      • Sainsbury’s rolls out a digital revamped version of its Nectar loyalty scheme
                                                                                        • Asda introduce Priority Pass for the most vulnerable during COVID-19 lockdown
                                                                                          • Innovative start-up scheme – For Good Causes
                                                                                            • Aggregate advertising spend on loyalty/reward cards up 38% year-on-year in 2019
                                                                                            • Company Loyalty Schemes

                                                                                              • Supermarkets
                                                                                                • 19 million UK households with Tesco Clubcard
                                                                                                  • Sainsbury’s revamp Nectar
                                                                                                    • No points to collect with myWaitrose, just instant rewards
                                                                                                      • Co-op Membership’s charitable differentiator
                                                                                                        • Morrisons More £5 voucher for every 5,000 points earned
                                                                                                          • For every £20 saved onto a Bonus Card, Iceland adds £1
                                                                                                            • Health and beauty retailers
                                                                                                              • Boots make its Advantage Card loyalty scheme digital
                                                                                                                • Superdrug loyalty scheme less generous than Boots, but more flexible
                                                                                                                  • The Perfume Shop Rewards Club members £10 ‘Off’ referral incentive
                                                                                                                    • Department stores
                                                                                                                      • Free delivery and beauty tips with Debenhams Beauty Club membership
                                                                                                                        • Clothing retailers
                                                                                                                          • Shop now and pay later with H&M Club
                                                                                                                            • M&S Sparks relaunch in July 2020
                                                                                                                              • Free Oops-assurance if something breaks with IKEA Family loyalty scheme
                                                                                                                                • Van rental discount with B&Q Club membership
                                                                                                                                  • Dobbies Club money-back vouchers
                                                                                                                                  • Paid Subscription Models

                                                                                                                                      • Amazon Prime one of the most popular paid subscription schemes
                                                                                                                                        • Tesco launch the UK’s first grocery loyalty subscription service
                                                                                                                                          • Morrisons unlimited deliveries Delivery Pass
                                                                                                                                            • Sainsbury’s Delivery Pass
                                                                                                                                              • Ocado Smart Pass
                                                                                                                                                • ASOS scrap A-List and push Premier Delivery scheme
                                                                                                                                                  • Selfridges Plus
                                                                                                                                                    • Next Unlimited
                                                                                                                                                      • New Look Delivery Pass
                                                                                                                                                        • Boux Avenue Deluxe VIP Delivery Pass
                                                                                                                                                          • Quiz QVIP delivery pass
                                                                                                                                                            • Arcadia brands Premier and Unlimited delivery pass
                                                                                                                                                              • Dorothy Perkins Unlimited Delivery
                                                                                                                                                                • boohoo Premier
                                                                                                                                                                  • JD Sports JDX Unlimited
                                                                                                                                                                    • PrettyLittleThing give anyone named Meghan free PLT Royalty membership
                                                                                                                                                                      • Free hot drinks in the restaurant every month with Dobbies Club Plus
                                                                                                                                                                      • Launch Activity and Innovation

                                                                                                                                                                        • Digitisation of loyalty schemes
                                                                                                                                                                          • Sainsbury’s overhauls Nectar with shift to digital loyalty scheme
                                                                                                                                                                            • Boots rolls out digital version of Advantage Card loyalty scheme
                                                                                                                                                                              • Co-op digitise its membership scheme
                                                                                                                                                                                • Fee-based loyalty scheme launches
                                                                                                                                                                                  • Tesco launch paid-for subscription version of Clubcard loyalty scheme
                                                                                                                                                                                    • Nike launches kids’ footwear subscription service
                                                                                                                                                                                      • New loyalty schemes and reward cards
                                                                                                                                                                                        • Fruit loyalty scheme
                                                                                                                                                                                          • Asda’s Christmas savings loyalty scheme and Priority Pass for the most vulnerable during COVID-19 lockdown
                                                                                                                                                                                            • Intu rewarding customers for shopping in its centres
                                                                                                                                                                                              • Encouraging loyalty through moral appeal
                                                                                                                                                                                                • Every purchase with Lakeland’s new loyalty card generates money for charity
                                                                                                                                                                                                  • Converting loyalty points and rewards into a digital monetary charity donation
                                                                                                                                                                                                    • Loyalty schemes offering unique and experiential rewards
                                                                                                                                                                                                      • H&M bolsters loyalty programme with exclusive live music events
                                                                                                                                                                                                        • Vans member-only contests and experiences
                                                                                                                                                                                                          • adidas Creators Club rewards customers with exclusive drops and invitations to special events
                                                                                                                                                                                                            • Access to unique experiences and exclusive meet and greets with influencers and celebrities
                                                                                                                                                                                                              • John Lewis and Waitrose launch virtual wellbeing workshops for members during COVID-19 lockdown
                                                                                                                                                                                                              • Advertising and Marketing Activity

                                                                                                                                                                                                                • Advertising spend on loyalty/reward cards up 38% year-on-year in 2019
                                                                                                                                                                                                                  • Figure 24: Total above-the-line online display and direct mail advertising expenditure on loyalty/reward cards by leading UK retailers, 2016-19
                                                                                                                                                                                                                • Leading retailers advertising spend on loyalty/reward cards
                                                                                                                                                                                                                  • Figure 25: Leading UK retailers total above-the-line online display and direct mail advertising expenditure on loyalty/reward cards, 2016-19
                                                                                                                                                                                                                • Brand campaign highlights
                                                                                                                                                                                                                  • Tesco Clubcard Plus multi-channel launch campaign
                                                                                                                                                                                                                    • Advertising spend behind Amazon Prime Membership up nearly 198% year-on-year in 2019
                                                                                                                                                                                                                      • Sainsbury’s pushes new Nectar app
                                                                                                                                                                                                                        • Boots Advantage Card points for goals promotion
                                                                                                                                                                                                                          • Figure 26: Leading UK retailers total above-the-line online display and direct mail advertising expenditure on loyalty/reward cards, by brand, 2016-19
                                                                                                                                                                                                                        • Nielsen Ad Intel coverage
                                                                                                                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                                                                                                                          • Loyalty schemes still reach 82% of consumers
                                                                                                                                                                                                                            • Tesco Clubcard and Nectar lead in popularity
                                                                                                                                                                                                                              • Dissatisfaction is highest for personalised offers and rewards
                                                                                                                                                                                                                                • Loyalty scheme members want points to spend in-store
                                                                                                                                                                                                                                  • Amazon Prime remains the leader among subscription schemes
                                                                                                                                                                                                                                    • Delivery remains the most important factor
                                                                                                                                                                                                                                      • Support with utility bills is key during COVID-19 times
                                                                                                                                                                                                                                      • Membership of Loyalty and Paid Subscription Schemes

                                                                                                                                                                                                                                        • Loyalty schemes still reach 82% of consumers
                                                                                                                                                                                                                                          • Figure 27: Membership of customer loyalty scheme and paid subscription pass, April 2018 vs May 2020
                                                                                                                                                                                                                                        • Membership of paid subscription skewed to under-35s
                                                                                                                                                                                                                                          • Figure 28: Membership of customer loyalty scheme and paid subscription pass, by age group, May 2020
                                                                                                                                                                                                                                      • Membership of Customer Loyalty Schemes

                                                                                                                                                                                                                                        • Tesco Clubcard and Nectar lead in popularity
                                                                                                                                                                                                                                          • Figure 29: Membership of customer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                          • Figure 30: Membership of customer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                        • Recent usage of loyalty schemes
                                                                                                                                                                                                                                          • Figure 31: Usage of customer loyalty/reward schemes in the last six months, May 2020
                                                                                                                                                                                                                                          • Figure 32: Usage of customer loyalty/reward schemes in the last six months, May 2020
                                                                                                                                                                                                                                        • IKEA and Superdrug loyalty members still the youngest
                                                                                                                                                                                                                                          • Figure 33: Active members of loyalty schemes who have used them in the last six months, by age and socio-economic group, May 2020
                                                                                                                                                                                                                                        • Frequency of usage of loyalty schemes
                                                                                                                                                                                                                                          • Figure 34: Frequency of usage of customer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                        • Multiple membership of loyalty cards
                                                                                                                                                                                                                                          • Figure 35: Membership of customer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                          • Figure 36: Repertoire of usage of customer loyalty/reward schemes in the last six months, May 2020
                                                                                                                                                                                                                                      • Satisfaction with Customer Loyalty Schemes

                                                                                                                                                                                                                                        • Dissatisfaction is highest for personalised offers and rewards
                                                                                                                                                                                                                                          • Figure 37: Satisfaction with customer loyalty schemes, May 2020
                                                                                                                                                                                                                                        • Value of loyalty apps versus effective website
                                                                                                                                                                                                                                          • Figure 38: Those satisfied with customer loyalty schemes, by age group, May 2020
                                                                                                                                                                                                                                        • Boots Advantage Card has the highest level of satisfaction
                                                                                                                                                                                                                                          • Figure 39: Satisfaction with customer loyalty schemes, May 2020
                                                                                                                                                                                                                                          • Figure 40: Percentage point differentiation with satisfaction with customer loyalty schemes by main schemes used in the last six months, May 2020
                                                                                                                                                                                                                                      • Factors that Attract Consumers to Loyalty Schemes

                                                                                                                                                                                                                                        • Loyalty scheme members want points to spend in-store
                                                                                                                                                                                                                                            • Figure 41: Factors that most attract consumers to consumer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                          • But younger members favour other benefits
                                                                                                                                                                                                                                              • Figure 42: MyChelle Beauty using social media to launch its ‘Clean Beauty Club’ program, 2020
                                                                                                                                                                                                                                              • Figure 43: Factors that most attract consumers to consumer loyalty/reward schemes, by age, May 2020
                                                                                                                                                                                                                                            • Personalised offers for younger consumers
                                                                                                                                                                                                                                            • Membership of Paid Subscription/Delivery Passes

                                                                                                                                                                                                                                              • Amazon Prime remains the leader among subscription schemes
                                                                                                                                                                                                                                                • Figure 44: Membership of paid subscription/delivery passes, May 2020
                                                                                                                                                                                                                                              • Other subscription models struggling to grow
                                                                                                                                                                                                                                                • Figure 45: Membership of paid subscription/delivery passes, April 2018 vs May 2020
                                                                                                                                                                                                                                              • Loyalty scheme versus subscription/delivery pass
                                                                                                                                                                                                                                                • Loyalty schemes
                                                                                                                                                                                                                                                  • Subscription schemes/delivery passes
                                                                                                                                                                                                                                                    • Figure 46: Membership of paid subscription/delivery passes, by sector, May 2020
                                                                                                                                                                                                                                                  • Most consumers only use one subscription scheme/delivery pass
                                                                                                                                                                                                                                                    • Figure 47: Repertoire of membership of paid subscription/delivery passes, May 2020
                                                                                                                                                                                                                                                • Factors that Attract Consumers to Paid Subscription/ Delivery Passes

                                                                                                                                                                                                                                                  • Delivery remains the most important factor
                                                                                                                                                                                                                                                    • Free returns gain relevance
                                                                                                                                                                                                                                                        • Figure 48: Factors that most attract consumers to paid subscription/delivery passes, May 2020
                                                                                                                                                                                                                                                    • Attitudes to Customer Loyalty/Reward Schemes

                                                                                                                                                                                                                                                      • Support with utility bills is key during COVID-19 times
                                                                                                                                                                                                                                                        • Consumers still concerned about their data
                                                                                                                                                                                                                                                          • Rewards and experiences to enjoy at home
                                                                                                                                                                                                                                                            • Figure 49: Attitudes to customer loyalty/reward schemes, May 2020
                                                                                                                                                                                                                                                          • Experiences are particularly important to the young
                                                                                                                                                                                                                                                            • Figure 50: Those agreeing to statements about customer loyalty/reward schemes, by age, May 2020
                                                                                                                                                                                                                                                          • The young want to donate but find loyalty schemes confusing
                                                                                                                                                                                                                                                              • Figure 51: Those agreeing to statements about customer loyalty/reward schemes, by age, May 2020
                                                                                                                                                                                                                                                            • Attitudes to customer loyalty by scheme
                                                                                                                                                                                                                                                              • Figure 52: Attitudes to customer loyalty/reward schemes, by membership, May 2020
                                                                                                                                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                                                              • Abbreviations
                                                                                                                                                                                                                                                                • Consumer research methodology

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