Building Shopper Loyalty in the Customer-Centric Age

Building meaningful, long-term relationships with shoppers is more vital than ever in today’s ultra-competitive, need-it-now environment. To establish significant customer loyalty and ensure shoppers have no reason to try the competition smart retailers are implementing strategies, tactics, and technologies designed to create meaningful interactions and seamless experiences. Read on to discover your retail peers’ approach to loyalty building and the technology they depend on to turn casual shoppers into long-term fans of the brand. Consumer sentiment is a moving target — evolving with the culture at large. Today, sustainability and environmental concerns are top of mind for consumers and retailers alike, and leading brands have embraced the cause and are making significant changes to their operations to lessen their eco impact. With sustainability and eco-consciousness hot issues with consumers, it is not surprising that 51% of retailer respondents say that sustainability and ethically sourced materials are important to their customer base. Just 15% say that it is not important to their consumers, and 34% believe their shoppers are neutral on the issue (Figure 1). Interestingly, while 49% of retailers believe their customers are neutral or indifferent to sustainability and sourcing issues, nearly 9 in 10 (88%) report that customers will choose organic/sustainable options over traditional products when available. In fact, 34% of those surveyed report that 31% or more of their customers will choose the sustainable option, and 12% report that more than half of their shoppers will (Figure 2). To capture the hearts and minds of these sustainability minded shoppers, retailers are beginning to offer services that give products and materials new life. A third (32%) of retailers report that they have a recycle service, 22% offer resale, 15% repair damaged materials, and 5% are in the rental game (Figure 3). This universal fact has been driven into the minds of every marketing executive since the dawn time: It takes much more to gain a new customer than it takes to retain a current customer. The exact figure depends on which expert or research you cite, but anywhere from 3x to 5x is the accepted ratio. Nearly 7 in 10 (67%) customers are returning shoppers according to those retailers surveyed for this report (Figure 4). While 67% is a large percentage, it still means that a third of a retailers’ consumers are new to the retailer — presenting a great opportunity to turn new shoppers into profitable fans of the brand. Experience is the difference between a one-time shopper and a loyal brand evangelist. We asked retailers what they believe are the most important aspects of the shopping experience to their consumers, and not surprisingly great choice/range of products (49%) and original or unique products (20%) were top vote getters (Figure 5). Nothing sours a retailer/customer relationship like a bad assortment. While an ideal merchandising mix is the sure-fire way to consumers hearts and wallets, the current economic environment means that even the perfect assortment can fail to deliver. When asked how rising inflation is affecting consumer behavior 71% of survey takers say shoppers are buying less, 61% report deals and discounts are more sought after, and 34% say consumers are shopping more online and opting for generic versus branded goods (Figure 6). When shopping online, retailers report 60% of consumers opt for home delivery, 20% prefer to pick up in store, 16% choose curbside fulfillment, and a sliver (1%) go with a delivery locker (Figure 7). A third of retailers report that their customers are shopping more online. That increase in digital shopping brings with it a host of operational challenges, including increased omnichannel fulfillment requirements. According to survey takers, 64% of consumers still prefer the traditional path to purchase centered around the store (Figure 8). While store-only transactions are giving ground to digital purchases, another 11% of consumers leverage the store to pick up their digital order — 6% in-store, 5% at the curb. One in four shoppers (25%) opt for a low-lift digital experience, placing their order online and having it delivered straight to their home. The key to success in today’s ultra-competitive, inflation challenged marketplace is to build meaningful relationships with shoppers that result in long-term loyalty. Nurturing and retaining mutually beneficial connections with consumers requires a host of technologies designed to identify customers, streamline the shopping experience, personalize the path to purchase, and much more. We asked retailers to access their tech maturity across a group of solutions vital to building and maintaining consumer loyalty. More than half report that they are up to date on foundational capabilities like their commerce platform/website (56%) and POS platform (51%), with a third reporting that their CRM (34%), live chat (34%), and product information management (34%) solutions are up to date. When asked where they are currently allocating investment dollars survey respondents point to personalized offers (29%), commerce platform/website (27%), CRM (20%), loyalty tracking (20%), and clienteling/mobile POS (20%). For future investment plans, greater than 1 in 10 retailers plan to upgrade their AI recommendation engines (15%), loyalty tracking (13%), CRM (12%), and clienteling/mobile POS (12%) within the next 12 months. When the investment window is stretched to 12-24 months, we see interactive digital signage (24%), product information management (17%), clienteling/mobile POS (15%), loyalty tracking (15%), and chat bots (15%) top the list. Methodology This research was conducted in May 2022. The survey was sent to retail executives at both large-scale and small regional chains. More than a third (37%) of respondents are employed at retailers with revenue in excess of $500 million, with nearly 1 in 5 (17%) reporting annual sales of more than $5 billion. Seventy-eight percent of those surveyed report sales have increased over the past 12 months, with an eye-opening 32% enjoying sales increases of more than 10% during that time. Specialty (37%), grocery/convenience/drug (32%), and apparel retailers (24%) make up more than 90% of the respondent pool. Nearly a third (32%) of survey takers work in store operations, while 26% hold IT/technology roles and 18% are devoted to marketing. Fifty-nine percent of those surveyed hold VP titles or higher, with 37% hailing from the c-suite. Conclusion Building meaningful consumer loyalty has never been more important, and leading retailers are devoting themselves to new business tactics and technologies to ensure long-term relationships are developed and nurtured. Smart and nimble retailers are adopting sustainable and eco-conscious initiatives in a significant and authentic way to not only meet shopper demand, but also position their organizations as leaders in the space. Key Findings 51% of retailers say that sustainability and ethically sourced materials are important to their customer base. 88% of retailers report that customers will choose organic/sustainable options over traditional products when available. 32% of retailers offer some sort of recycle service/initiative. Retailers report that 67% of their customers are returning shoppers. 49% of retailers say great choice/range of products is one of the most important aspects of the shopping experience. 71% of retailers say shoppers are buying less because of ongoing inflation. When shopping online, 60% of consumers opt for home delivery.