Could loyalty help stave off a “retail apocalypse”?


Retail businesses today are caught in a blizzard of challenges. As a loyalty professional and a consumer, it’s not difficult to see – and experience firsthand in some cases - many of the difficulties that today’s retailer faces. Tales of the “retail apocalypse” abound, and many high street retailers themselves wonder if, indeed, brick-and-mortar retail is fading. The recent failure of retail giant Sears in the US is the latest example of formerly mighty companies falling in the 21st century. Here in the UK, brands like Debenhams, House of Fraser and New Look are in administration or seem close to it.

And of course I wonder: could an innovative loyalty strategy have saved any of them?

Perhaps. But as powerful as a strong loyalty strategy and its tactics are, it can’t solve the many issues plaguing retail today. New economic warnings of recession that encourage consumers to hold onto their money a bit tighter are certainly prevalent. Demographics change as new generations gain power as consumers. They lead the adoption charge for new technologies, including those affecting retail and the customer experience, which also present challenges for many retail brands. 

What the hyperbole of “retail apocalypse” often misses is that while some brands are ending their run in retail, other, new brands are entering the fray. In truth, as KPMG notes, “physical retail isn’t actually dead, but boring retail is.” Brand pedigrees – House of Fraser was established in 1849, Sears in 1893 – are no insurance for staid policies or management’s inability to adjust to new market conditions. Instead, retail store survival hinges on the ability of brands to understand their customers and swiftly craft new strategies and implement new tactics. 

Loyalty includes much more than just offering a rewards program or perks to customers. For example, product strategy, marketing strategy, and overall market conditions like the commoditisation of products and market demand, all contribute to loyalty – or lack of it – from consumers. 

Retail loyalty today is at the nexus of all these factors. In fact, it’s that kind of complicated dynamic that makes retail success such a challenge – especially for legacy retailers who may be slow to understand why former tried and true strategies are no longer yielding the kind of victories in customer acquisition and retention experienced in the past. 

As a loyalty professional, I’m not exactly in a position to change some factors like the overall economic climate, or the consumer preferences of a generation (I wish I could!). Instead, I try to help clients focus on the intersections where we can affect the most change and adapt to these rapidly evolving conditions. And there are several areas in which retail trends and loyalty trends dovetail such as innovative use of technology, emotional engagement with customers, personalisation, focus on experience instead of “things,” and customer experience.  

One of the most straightforward ways for retailers to boost loyalty is to properly understand and leverage the data they already have on their customers – and continue to collect more data. The insights their own customers provide can help retailers understand what customers want, the types of products they prefer, how they want to be served and so on. Customer data is the key to customer insight and building loyalty. Customer data is also essential to create the personalised experiences that customers today crave – and that lead to emotional engagement with retailer brands. 

High street retail is not expected to collapse under the pressure of online retailers, but brands that fail to assess and respond to new customer expectations about their entire brand experience will surely be caught out in the cold. 

In future posts, I’ll explore some of the specific ways in which today’s loyalty professionals can help brand loyalty marketers address some of the challenges facing retail.  What is your brand’s most pressing challenge in today’s retail sector?

Written by Steve Grout, Director of Loyalty

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