2023
9
UK Customer Loyalty in Retailing Market Report 2023
2023-06-10T04:03:24+01:00
OX1156501
2195
164075
[{"name":"Retail","url":"https:\/\/store.mintel.com\/industries\/retail"}]
Report
en_GB
“There has been a drastic shift in the landscape of loyalty schemes since even before the pandemic, with loyalty and rewards schemes now a prerequisite for retailers. Digital disruption and…

UK Customer Loyalty in Retailing Market Report 2023

£ 2,195 (Excl.Tax)

Description

Stay ahead of the curve and future-proof your business with Mintel’s Customer Loyalty in Retail Market Report 2023. Our full report is packed with consumer-led market intelligence, the latest trends and consumer behaviours affecting your industry. Get a 360° view of the current conditions for consumer loyalty in retail to help you align your business strategy with the needs of your audience.

Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.

Key Topics Analysed in this Report

  • The impact of the cost-of-living crisis on retailer’s reward scheme offerings and customer behaviour toward loyalty programmes.
  • The loyalty schemes consumers use and attitudes towards them.
  • Important factors in a loyalty scheme.
  • How consumers define retailer/brand loyalty.
  • Factors that would dissuade consumers from being loyal to a brand/retailer.

Customer Loyalty in the Retail Industry – Overview

The popularity of retail loyalty schemes has stayed consistently high, with four fifths of consumers being members of such programmes. The pandemic only served to increase loyalty between consumers and brands, but price increases threaten to derail this trend. The cost-of-living crisis means consumers are looking for value now more than ever, and more than half of UK consumers agree that they would switch retailers if they found lower prices elsewhere. Consumers will continue to use loyalty schemes, although the actual nature of ‘loyalty’ is changing.

  • The majority of shoppers hold memberships with between two to five different loyalty schemes, with 14% holding six or more.
  • Tesco clubcard and nectar are the most popular customer loyalty schemes in the retail sector.
  • Points and discounts are currently the most important factors in loyalty schemes. Retailers should highlight the features most important to consumers in order to drive affinity towards their brand.

Customer Loyalty in Retail – What’s Next?

A fifth of UK consumers would stop shopping with a retailer if they disagreed with the brand’s values. So brands should look to build an emotional connection and use enhanced personalisation across every interaction with the consumer to help highlight what they stand for, as well as highlight extra value points and how these can help the consumer during difficult economic times. 

Ultimately, consumers are looking for value, but this can cover many bases. It is not just about price. If retailers can update their loyalty schemes to offer rewards for sustainable practices, such as donating unwanted clothes, or recycling packaging (something that would interest 80% of UK consumers), they can demonstrate the value of their loyalty scheme and encourage consumers not to switch retailers.

Loyalty Schemes Discussed in this Report

Tesco Clubcard, Nectar Card, Morrisons More, myWaitrose, Asda Rewards, M&S Sparks Card, H&M Membership, Lidl Plus, Superdrug’s Health and Beauty Card, Shein VIP, Boots Advantage Card, Urban Outfitters Rewards, TK Maxx Treasure Card, Waterstones Plus, and more.

Additional Features Included with Your Purchase

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To learn how to connect with your audience, purchase our full Customer Loyalty in Retail Market Report 2023. Discover lucrative innovation opportunities to help your business grow during times of financial uncertainty.

Expert Insights from a Retail Industry Analyst

This report, written by Fiona McDonald, a leading retail analyst, delivers in-depth commentary and analysis to highlight current trends in customer loyalty and add expert context to the numbers.

There has been a drastic shift in the landscape of loyalty schemes since even before the pandemic, with loyalty and rewards schemes now a prerequisite for retailers. Digital disruption and new generational influences mean the nature of loyalty is changing. Ubiquity of loyalty schemes means engagement is high, but with more demand for personalisation, loyalty programmes will need to move beyond those fundamentals and create more ways to engage with customers. Highlighting value whilst creating that personal connection is critical for retailers to keep customers from switching, in a time where the focus on value is at its peak.

Fiona McDonald
Retail Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for customer loyalty
      • Figure 1: Category outlook, 2023-28
    • The market
    • Mintel’s Consumer Confidence Tracker
      • Figure 2: Mintel’s Consumer Confidence Tracker, June 2022-April 2023
    • High engagement for loyalty schemes
      • Figure 3: Membership of customer loyalty scheme and paid subscription pass, May 2020 and March 2023
    • Multiple membership of loyalty cards
      • Figure 4: Membership of customer loyalty/reward schemes, 2023
      • Figure 5: Usage of loyalty/rewards schemes, 2023
    • Companies and brands
    • Tesco and Nectar the most popular reward schemes
      • Figure 6: Membership of customer loyalty/reward schemes, 2023
    • The consumer
    • Cost-of-living crisis driving consumers to loyalty schemes
      • Figure 7: Attitudes towards customer loyalty behaviours, 2023
    • Points and discounts most valued in loyalty schemes
      • Figure 8: Important factors in a loyalty scheme, any rank, 2022
    • Most define loyalty by regular use of products and services
      • Figure 9: Definitions of loyalty behaviour towards a retailer/brand, 2023
    • Brand affinity easily swayed by a change in price
      • Figure 10: Factors that would cause consumers to stop shopping at a retailer/brand, 2023
  3. Issues and Insights

    • Cost of living highlights the importance of customer loyalty
    • What’s next for customer loyalty?
    • More targeted loyalty touchpoints across the customer journey
    • Making personalisation a priority
  4. Market Drivers

    • Mintel’s Consumer Confidence Tracker
      • Figure 11: Mintel’s Consumer Confidence Tracker, June 2022-April 2023
    • Inflation will continue to eat into consumer spending power over the course of 2023
    • Further interest rate increases will hit mortgage-holders
    • High inflation and rising interest rates will compound the impact of the slowing recovery
    • Consumer spending power will be curbed
    • Low unemployment is helping underpin
    • Consumers’ financial wellbeing has fallen from the highs of 2021…
      • Figure 12: Household financial wellbeing index, 2016-23
    • …and most people are feeling the effects of price rises
  5. Loyalty and Reward Schemes

    • Supermarkets
    • Tesco to cut Clubcard points value from June 2023
    • Sainsbury’s begins offering lower prices to Nectar cardholders
    • M&S offer premium tier to its Sparks card members
    • Morrisons relaunches loyalty scheme Morrisons More
    • Asda Rewards now available nationwide
    • Waitrose offer instant rewards rather than points
    • Lidl remains digitally focused with Lidl Plus app
    • Co-op rewards card joins supermarkets offering lower prices to members
    • Health and beauty retailers
    • Boots to make cuts to Advantage Card points
    • Superdrug’s Health and Beauty Card allows for part-payment
    • Harrods launches rewards programme for H Beauty customers
    • Clothing retailers
    • Shein VIP members can gain points without purchasing
    • Two-tiered loyalty scheme with H&M Membership
    • Fixed points regardless of purchase with Urban Outfitters Rewards
    • TK Maxx Treasure card earns customers ‘keys’
    • Matalan overhauls loyalty scheme with more personalised benefits
    • Other retailer schemes
    • Very Important Pets at Pets at Home
    • Free Oops-assurance with IKEA Family
    • Waterstones Plus earns customers stamps per purchase
    • B&Q Club gives vouchers rather than points
  6. Launch Activity and Innovation

    • Morrisons launches discounted prices trial for loyalty scheme members
    • Klarna launches loyalty card feature
      • Figure 13: Klarna’s loyalty and in-store payment features, 2023
    • Schuh launches its first customer loyalty programme
    • Marks and Spencer trials paid-for loyalty subscription
    • OnBuy to become first marketplace to offer customers a rewards scheme
    • John Lewis set to shake up loyalty scheme working with Tesco and Eagle Eye
    • Pandora rolls out rewards scheme in the UK
  7. Advertising and Marketing Activity

    • Advertising spend on loyalty/rewards card exceeds pre-pandemic spend
      • Figure 14: Total above-the line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, 2019-22
    • Leading retailers advertising spend on loyalty/rewards cards
      • Figure 15: Total above-the line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, 2019-22
    • Brand Campaign Highlights
    • Morrisons bring back ‘More Reasons’ campaign
    • Asda’s gamified campaign to promote new Rewards programme
    • Boots releases first TV spot for Advantage Card
      • Figure 16: Total above-the line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, by brand, 2019-22
    • Nielsen Ad Intel coverage
  8. Loyalty Scheme Memberships

    • High engagement for loyalty schemes
      • Figure 17: Membership of customer loyalty scheme and paid subscription pass, May 2020 and March 2023
    • Older generations favour loyalty schemes…
      • Figure 18: Membership of customer loyalty schemes and paid subscription passes, by age group, 2023
    • …while paid subscriptions hold a younger demographic
    • Tesco and Nectar the most popular reward schemes
      • Figure 19: Membership of customer loyalty/reward schemes, 2023
      • Figure 20: Membership of customer loyalty/reward schemes, march 2023
    • Recent usage of loyalty schemes
      • Figure 21: Membership and usage of customer loyalty/reward schemes in the last six months, 2023
    • Multiple membership of loyalty cards
      • Figure 22: Membership of customer loyalty/reward schemes, 2023
      • Figure 23: Usage of loyalty/rewards schemes, 2023
    • Frequent use remains low for most schemes
      • Figure 24: Usage of customer loyalty/reward schemes in the last six months, 2023
  9. Customer Loyalty Behaviours

    • Cost-of-living crisis driving consumers to loyalty schemes
      • Figure 25: Attitudes towards customer loyalty behaviours, 2023
    • Young women most interested in rewards for sustainable habits
      • Figure 26: Attitudes towards customer loyalty, 2023
    • Digitally-led schemes the way forward
      • Figure 27: Attitudes towards customer loyalty, 2023
  10. Important Factors in a Loyalty/Rewards Scheme

    • Points and discounts most valued in loyalty schemes
      • Figure 28: Important factors in a loyalty scheme, any rank, 2022
    • Variety keeps consumers engaged
      • Figure 29: Important factors in a loyalty scheme, any rank, 2022
    • Exclusive products low down on consumer preferences
  11. Defining Loyalty to a Retailer/Brand

    • Most define loyalty by regular use…
      • Figure 30: Definitions of loyalty behaviour towards a retailer/brand, 2023
    • …with over half showing loyalty by using rewards schemes
    • Females more likely to define loyal behaviour as repeat purchasing
      • Figure 31: Definitions of loyalty behaviour towards a retailer/brand, by gender, 2023
    • Younger consumers show loyalty through words rather than actions
      • Figure 32: Definitions of loyalty behaviour towards a retailer/brand, by age group, 2023
  12. Factors Which Discourage Shopping with a Retailer/Brand

    • Brand affinity easily swayed by a change in price
      • Figure 32: Factors that would cause consumers to stop shopping at a retailer/brand, 2023
    • Poor customer service encourages switching
      • Figure 33: Factors that would cause consumers to stop shopping at a retailer/brand, by age group, 2023
    • Balance between communication and oversaturation
    • Change in values enough to switch retailers
  13. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology

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