Retailers play loyalty card this season

Rewards programs an aggressive part of strategy for most

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After years of watching shoppers flit from store to store in search of the biggest deals, U.S. retailers are hoping their attempts at building some loyalty will finally pay off this holiday season.

Chains have aggressively rolled out rewards programs in recent years, and there are signs that the efforts are beginning to get results. Hollister’s stunning 8 percent same-store sales growth last quarter was credited in part to the teen retailer’s Club Cali perks.

“Competition is very stiff,” said Gabriella Santaniello, founder of retail research firm A Line Partners. “They need to offer something to the customer that keeps them coming back to your store.”

U.S. consumers hold a total of 3.8 billion memberships in customer-loyalty programs, up from 3.3 billion in 2015, according to a report earlier this year from research firm Colloquy. Initiatives come in a variety of forms: Some offer points that can be cashed in for future purchases. Others, like Amazon.com’s Prime, require a membership fee. For $99 a year, Prime subscribers get free two-day shipping, online services and a range of discounts.

Nearly half of the loyalty membership tracked by Colloquy — 1.6 billion — are tied to retail chains. That means there are roughly five different store accounts for every man, woman and child in the U.S.

The sheer number of accounts implies that Americans aren’t being especially loyal to their loyalty programs. But retailers are eager to mimic the success of Prime, whose millions of subscriptions help Amazon lock in customers.

Prime’s influence will only grow over the holiday season as it infiltrates Whole Foods, the grocer that Amazon acquired in August. Whole Foods is turning Prime into the chain’s rewards program, and it gave a peek last week at how it will work. Regular customers can get an organic turkey for $3.49 a pound; Prime customers pay just $2.99.

Sears giving it a shot

Sears also has made a rewards program the linchpin of its turnaround plan — with less success.

CEO Eddie Lampert has adopted a points system called Shop Your Way that straddles the retailer’s online and brick-and-mortar operations. It hasn’t done much to reinvigorate sales, but the company has used insights from its members to make decisions.

Sears decided to bring back its holiday print catalog because of input from members, marketing chief Kelly Cook said last month. It also crafted its holiday promotions based on feedback.

Macy’s, meanwhile, announced a new version of its Star Rewards program in September. The system has platinum, gold and silver tiers, which depend on how much shoppers spend. A customer who shells out at least $500 a year, say, gets free shipping and 25 percent off a day of shopping.

“It’s the beginning of a journey,” CEO Jeff Gennette said in an interview. “We have competitors that did a much better job of their loyalty program than we did. So, we learn from that.”

Children’s Place also overhauled its program, swapping out coupons and using points-based offers, A Line Partners’ Santaniello said.

“They figured out that more loyalty points worked better,” she said.

The good news is there should be a bit more money to go around this holiday season. The National Retail Federation expects sales to increase as much as 4 percent in November and December. The forecast excludes spending on cars, gas and restaurants.

A survey by Deloitte also found that fewer Black Friday shoppers plan to make their purchases online, potentially giving a tailwind to brick-and-mortar chains.