Stay ahead of the curve and future-proof your business with Mintel’s UK Retail Customer Loyalty Market Report 2024. Our full report is packed with consumer-led market intelligence and a market analysis. Get a 360° view of customer loyalty in retail, including a forecast 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.
Our Report Delivers Key Insights On
- Key trends within customer loyalty in retail industry, including member and tiered pricing, , as well as market challenges.
- Customer loyalty schemes in the retail sector, including membership and use of leading food and non-food customer reward schemes, and reasons why consumers use them.
- Sources of information used to find offers for customer loyalty schemes.
- Marketing spend on customer loyalty schemes in the retail sector, and key innovations within the market.
An Overview of Retail Customer Loyalty
While Clubcard Prices were innovative when first launched, now that customer loyalty schemes in the retail sector have become common, there is a threat that the engagement revitalisation through such schemes will ease in the short term.
45% of members think that all loyalty and reward schemes offer the same benefits. With the greater audience and uptick in frequency of use, innovation will be key to ensure high levels of engagement.
Customer Loyalty in Retail Industry: What Consumers Want and Why
- Customer Loyalty in Retail: 80% of UK consumers are members of a customer loyalty or reward scheme, with the majority of members believing that these schemes save them money. Usage and membership of schemes have naturally grown during the cost of living crisis, and the value they offer shoppers has been reinforced by most leading schemes now adopting some form of membership pricing, tapping into the demand for more instant gratification in rewards from such schemes.
- How to Increase Customer Loyalty in Retail: Greater personalisation will be key, moreover, tiered pricing will help to increase engagement. Retailers will need to address the added complexity of schemes, with 33% of members already saying schemes are too confusing. However, by making schemes truly personal, they can move from being simply value-driven to a true shopping companion.
More About This Report
This Report looks at how retailers use reward and customer loyalty schemes in the retail sector to encourage their customers to increase spending and make purchases more regularly. Loyalty schemes are defined as programmes offered by a retailer that offers rewards as an incentive for continued patronage and frequent purchases. Rewards can be in the form of, but are not limited to, special offers, free treats, in-store discounts, special events or advanced access to new or limited-edition products.
Meet The Expert
This report was written by Nick Carroll, Director. Nick manages Mintel’s UK Retail Reports, covering shopper behaviour and retail strategy across channels and a broad range of retail categories. Nick is regularly asked for his opinion on the latest retail trends by the UK media and works with Mintel clients across sectors to understand shoppers’ behaviours and unlock opportunities within the market.
Our market research shows that the use of customer loyalty schemes in the retail sector remains heightened, driven by a continued need for value and a shift towards more instant gratification. To maintain engagement, retailers need to continue to innovate, while keeping personalisation as a key factor.
Nick Carroll
Director – Retail Insight
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Executive Summary
- Opportunities for the loyalty market
- Member pricing no longer a novelty
- Reward attractive behaviours through tiering
- Challenges tap into trends, but a clear line must be walked
- It’s time to get truly personal
- Market dynamics
- Consumer sentiment: wellbeing is up, but recovery has slowed
- Graph 1: the financial wellbeing index, 2016-24
- Significant concern exists in the market around personal details
- Building trust is critical for the more-personalised future of schemes
- What consumers want and why
- Greater propensity to pay for benefits from younger consumers
- Graph 2: membership of free and paid loyalty/reward schemes, 2024
- The vast majority are members of a grocery scheme
- Graph 3: membership of broad type of loyalty/reward schemes, 2024
- Clubcard the largest and most frequently used scheme
- Graph 4: leading loyalty/reward schemes membership and use in the last six months, 2024
- Points and discounts the core draw of schemes
- Graph 5: main reasons for using a loyalty/reward scheme, 2024
- Apps crucial for making consumers clear on available deals
- Graph 6: information sources for offers/discounts offered as part of loyalty/reward scheme, 2024
- The base consumer expectation of a loyalty scheme is that it helps shoppers save
- Graph 7: attitudes towards the benefits of loyalty/reward schemes, 2024
- Retailers need to avoid overcomplicating schemes
- Graph 8: attitudes towards negative aspects of loyalty/reward schemes, 2024
- Retailer activity
- Kith takes tiers to a new level
- Clubcard launches AI-fuelled challenges
- Spending on loyalty scheme advertising ticks up
- Graph 9: total above-th- line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, 2020-23
- Sainsbury’s bets big on Nectar Prices
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Market Dynamics
- Macro-economic factors
- Falling inflation has reduced pressure on household finances
- Graph 10: CPI inflation rate, 2021-24
- Consumer sentiment: wellbeing is up, but recovery has slowed
- Graph 11: the financial wellbeing index, 2016-24
- Consumer confidence continues to trend upwards
- Graph 12: the financial confidence index, 2016-24
- In a value-centric market, the importance of schemes grows
- Almost half are still concerned about how food & drink prices will impact finances
- Graph 13: extent of concern around the impact of factors on household finances in the next two months, 2024
- Consumers are still acting defensively
- Graph 14: expected behaviour changes as a result of rising prices, by household income, 2024
- Social, environmental and legal factors
- Significant concern exists in the market around personal details
- Transparency and trust critical on AI
- Graph 15: attitudes towards online life, 2024
- Building trust is critical for the more personalised future of schemes
- Member prices come under pressure from regulators…
- …with early concern shown over loyalty challenges
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What Consumers Want and Why
- Customer loyalty membership
- The majority of consumers are members of schemes
- Greater propensity to pay for benefits from younger consumers
- Graph 16: overall membership of free and paid loyalty/reward schemes, 2024
- Paid schemes over-index among those more able to afford the cost
- Graph 17: overall membership of free and paid loyalty/reward schemes, by household income, 2024
- The vast majority are members of multiple schemes…
- …however, most have used three of fewer schemes in the last six months
- Graph 18: repertoire of membership and regularly used loyalty/reward schemes, 2024
- The role of customer loyalty/reward schemes
- The base consumer expectation of a loyalty scheme is that it helps shoppers save…
- …and for retailers is that it increases frequency of shop
- The majority say schemes make them feel values
- Graph 19: agreement that “loyalty/reward schemes make me feel valued”, 2024
- Shift to member pricing drives demand for instant gratification
- Graph 20: agreement that “I think that instant rewards are better than longer-term rewards”, 2024
- With member prices no longer a novelty, shoppers are looking for ‘whats next’
- Graph 21: attitudes to loyalty/reward schemes, 2024
- Challenges are a logical way to tap into this immediacy demand
- Scheme membership and regular use
- The vast majority are members of a grocery loyalty/reward scheme
- Grocery schemes show highest membership and level of recent use
- Nectar use grows as Nectar Prices launch
- Graph 22: grocery loyalty/reward schemes used in the last six months, 2023-24
- Graph 23: grocery loyalty/reward scheme membership, 2023-24
- Boots Advantage Card has the third largest overall membership
- Graph 24: membership and usage of beauty and personal care loyalty/reward schemes, 2024
- Non-FMCG schemes have a naturally lower incidence of use…
- …however, more can be done to ensure schemes are ‘remembered’
- Graph 25: leading non-food loyalty/reward scheme usage in the last six months, 2023-2024
- Graph 26: leading non-food loyalty/reward scheme members, 2023-2024
- H&M Club membership skews significantly younger
- Graph 27: demographic profile of loyalty/reward scheme members, by age and household income, 2024
- Reasons for using loyalty schemes
- Points still important, despite shift to member pricing
- The appeal of points building weaker for under-35
- Discounts important across all demographics
- Graph 28: main reasons for using a loyalty/reward scheme, by age, 2024
- Making the expected personal will hold significant interest
- Free is always the best price point
- Use loyalty to incentivise better behaviour
- Add convenience to payment linking
- Sources of information for loyalty/reward schemes
- Adding more retailers risks adding friction
- The majority of awareness of benefits comes from digital channels
- Apps crucial for highlighting deals
- Direct reminders hold more weight with older users
- Graph 29: information sources for offers/discounts offered as part of loyalty/reward scheme, 2024
- Brand loyalty
- Schemes just one aspect of loyalty
- The majority have brands that they are loyal to in food and drink
- Graph 30: “I have brands that I consider myself ‘loyal’ to when buying…”, 2024
- Younger shoppers more brand-loyal in fashion
- Graph 31: “I have brands that I consider myself ‘loyal’ to when buying… “, 2024
- Rise in D2C both a threat…
- …and an opportunity for retailers
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Retailer activity
- Launch activity and innovation
- A host of new schemes hit the market
- Kith takes tiers to a new level
- Clubcard launches AI-fuelled challenges
- Sainsbury’s becomes the first to introduce points for charging
- Opportunity exists for brands to help customers meet their goals
- Advertising and marketing activity
- Spending on loyalty scheme advertisement ticks up
- Graph 32: total above-the-line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, 2020-23
- Sainsbury’s invests heavily in the launch of Nectar Prices
- Sainsbury’s bets big on Nectar Prices
- Outdoor spending grows significantly in 2023
- Graph 33: total above-the-line, online display and direct mail advertising expenditure on loyalty/rewards schemes by leading UK retailers, by media type share of total spending, 2020-23
- Tesco promotes its trifecta of value initiatives
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Appendix
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Methodology
- Consumer research methodology
- Nielsen Ad Intel coverage
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