The rise of loyalty apps
How people shop in the UK has fundamentally changed. Whilst there was an acceleration of online shopping during the pandemic, since the restrictions were lifted, shoppers in the UK fell back in love with in-store shopping.
Online only eCommerce players have struggled to grapple with this shift. Many have faced logistical challenges, competition from ultra-cheap rivals, and soaring costs. The change in sentiment has been reflected on the stock market. Asos shares peaked at over £57 in 2021 but now change hands for around £3.96. Boohoo shares are less than a tenth what they were at their peak.
The best of both worlds
Conversely, retailers that are predominantly store based have generally bounced back. Marks and Spencer, which for so long seemed like it was being left out in the cold, has capitalised on the shift back to in-store shopping by growing its click and collect offering and developing its app to work seamlessly within their in-store environment.
Now, it is best to be in both worlds. Brands want to be seen as being available at all times online, but also have a physical presence to garner greater consumer experience. Technology is transforming what is possible and eliminating friction by joining up the online and offline world more than ever before. Through its app, Zara customers can book changing rooms, see where something from their wish list resides on the shop floor, or order items for click-and-collect in-store. Many brands are also using geolocational in-app messages and push notifications, or using augmented reality to create experiences, especially beauty and furniture retailers.
A new era of retailing
Increased choice and a consumer more price sensitive than ever before, has made customers far more likely to shop around for the best deals. Price is now the number one factor in brand consideration. In an effort to bag a bargain, loyalty programs have become increasingly popular with consumers, with nine out of ten in the UK now signed up for at least one.
In fact, during the recent Black Friday, Asda’s Rewards app, JD Sports’ loyalty app ‘JD STATUS’ and Sainsbury’s Nectar rewards app were all among the top ten downloads. Consumers today expect to be rewarded for their loyalty. Retailers are generally happy to oblige. The MyPoundland app, which only launched in October, was the most popular. It offered customers up to 100 exclusive member deals, the chance to collect points on their purchases, and earn prizes through a ‘spin to win’ wheel.
The amount of loyalty apps downloaded during Black Friday was unsurprising. After all, their use has now become ubiquitous. And for good reason. They are highly intuitive and convenient to use to earn and redeem rewards at a time when money is tight. Loyalty apps are helping bring in a new era of retailing by encouraging multi-channel shopping. Whilst the grocery sector is leading the way, with 82% of consumers now signed up for a supermarket loyalty scheme, other sectors such as food and drink (i.e. restaurants, cafes, and bars) and beauty brands are gathering momentum.
Do not gatekeep
It is clear that loyalty programmes should be a cornerstone strategy for any business seeking to foster customer retention and brand allegiance today. Brands should think of apps as the bridge between the in-store and online environment. Sephora is one such brand that is doing it right. Whether in Dubai, London or Paris, a shop assistant is trained to always ask a customer whether they are part of its loyalty scheme. This has led to 80% of all transactions now being made by users enrolled in its loyalty scheme.
Yet, for a loyalty app to be successful it is important to offer the right incentives. Special pricing and monetary rewards are most likely to impact brand consideration, especially among younger demographics. However, subscription fees and irrelevant rewards are barriers that can dissuade consumers from signing up to a loyalty programme in the first place. Do not gatekeep.
The new frontier
One way of garnering loyalty is gamification. In many ways, it is the new frontier for branding and monetisation. In the past couple of years, we have seen brands increasingly capitalise on the immersive nature of mobile gaming. They are integrating their products directly into the gaming experience through seamless in-game advertising and virtual pop-up shops. Plus, they are gamifying the shopping experience itself, and exploring strategic collaborations.
Central to this phenomenon is the exploration of platforms such as Roblox. Its pioneering use of user-generated content (UGC) provides a great starting point for brands wanting to connect with their audience within a game. Through seamlessly embedding their stores within virtual worlds, brands can offer users new and exciting experiences while organically promoting their products. Already, we have seen Walmart launch its own, very successful games through the platform. There have also been virtual worlds built for luxury brands Hugo Boss and Gucci.
Loyalty is everything
Today, loyalty schemes have become so ubiquitous that a brand will lose market share if it does not have one. There is a danger, though, that with so many schemes being so similar that consumers may suffer loyalty fatigue. Because of this, I expect to see more elements like gamification coming in within apps to maintain interest.
What is clear is that the retail landscape is morphing towards a hybrid future with technology at its core. Because of this, brands are rightly focusing more on brand ambassadors than influencers. Today, loyalty is everything.
