As inflation has run rampant and customer confidence plummets, retailers have increasingly turned to loyalty schemes to drive sales. Retail Week takes a look at how six retailers have adapted their programmes to appeal to cash-strapped customers
Once the preserve of big grocers and department stores, an increasingly diverse mix of retailers of all sizes and across categories tapped into the rise of loyalty schemes. Whether newly created, retooled, rebranded or relaunched after years lying dormant, a membership scheme has become retail’s must-have accessory in 2023.
As the cost-of-living crisis has dragged on, the purpose of these loyalty schemes has also changed. Tesco Clubcard is a prime example.
When Clubcard launched in 1994, it was predominantly focused on rewarding customers with points per purchase. However, earlier this year, Tesco made the decision to cut the points offered per £1 spent, in favour of offering a greater range of promotions for customers.
Retail Week data and insights director Lisa Byfield-Green says the changes to Clubcard typify how the cost-of-living crisis has shifted priorities for retailers and customers when it comes to membership schemes.
“Amazon Prime and Tesco Clubcard are the gold standard in terms of loyalty ecosystems, both of them locking consumers in with member-only rewards across an integrated set of products and services. Seeing their success, it is no surprise that other retailers now want in,” she says.
“Tesco has enjoyed nine successive quarters of switching gains, winning customers from other retailers with its three-pronged strategy of Aldi Price Match, Low Everyday Prices and Clubcard Prices. It makes complete sense in the current environment to give regular, loyal shoppers exclusive access to discounts that make them feel valued.”
Consumer survey data from Walnut Unlimited, commissioned by Retail Week, found 33% of customers have made more use of grocery loyalty schemes in the last 12 months to save money. While this is category-specific, it illustrates the broader trend across retail.
While customers benefit from instant rewards and better value, the real reward for retailers is the wealth of consumer data that loyalty schemes generate.
Byfield-Green explains: “The value of having these in the first place is that it gives retailers a wealth of data about customers and their spending habits. As soon as customer needs begin to change, savvy retailers will make sure that they are changing the rewards on offer to remain relevant.”
Sainsbury’s Nectar Card
As food inflation peaks, Sainsbury’s extended Nectar Prices into new categories including dairy, bakery, fresh fruits and vegetables to take on rival prices offered by Tesco and match prices to discounters Aldi and Lidl.
Nectar now includes over 900 products with offers such as Nescafé Gold Blend instant coffee costing £4 for cardholders rather than £8.10 and Tanqueray gin for £19 instead of £27.50.
Members also earn points on purchases they make, which can be redeemed with other brands such as Argos, Caffè Nero and British Airways.
Ikea Family Card
As the home and furniture giant’s website says: “Ikea Family is for everyone – whether you’re a newlywed or newly single, a pet parent or a family of 1 or 100.”
Ikea Family was launched in the Linköping store in Sweden in 1984, evolving from the first Ikea customer club, Silverklubben, set up by founder Ingvar Kamprad in 1952 to better understand customers’ needs and wants and create a direct channel of communication.
Today, Ikea Family has grown to be one of the largest customer loyalty schemes in the world of home and furniture retail offering Family cardholders exclusive discounts on products, free just-in-case protection for up to 90 days and free hot drinks in-store on weekdays.
Waterstones Plus
Launched in 2018, the Waterstones Plus membership is a successor of the Waterstones Loyalty Card and Stamp and Save paper, where members earn a “Plus stamp” on every £10 spent in the bookseller’s shops, cafes and online.
Ten stamps amount to £10 known as a “Plus Balance”, which customers can redeem to spend in-store and online.
Members can also reserve upcoming book releases along with early access to exclusive offers and discounts, and personalised recommendations according to reading interests.
Boots Advantage Card
With over 15 million active users, including 85% of women in the UK over the age of 15, the Boots Advantage Card has dominated the health and beauty sector in the country since its launch in 1997.
In March, Boots announced a revamp of the Advantage Card that gives shoppers access to an instant 10% discount on over 6,000 of its own-brand products as well as offering lower prices and instant discounts on more than 1,000 products.
In its latest financial results, Boots noted that it saw a 65% increase in sign-ups and volume sales growth of 40% year on year of its Everyday Essentials label since the revamp, reflecting an increase in customers shopping own-brand ranges.
H&M Membership
With over 120 million active members in 26 markets, H&M’s Membership plan is one of the fastest-growing and most lucrative loyalty schemes in the fashion retail sector.
H&M members get a 10% one-off discount upon joining and free delivery on a minimum spend of £30 along with free returns.
Members collect one point for every pound spent with H&M and get a £3 off voucher on every £100 points collected. Other benefits include early access to sales, 25% off on one item on their birthday and invitations to events.
The Original Factory Shop
The Original Factory Shop is one of the latest retailers to invest in a loyalty scheme by relaunching its physical club card in stores.
The discount retailer updated its loyalty scheme so physical club card holders can benefit from the same exclusive member prices available to TOFS Club+ app holders when they shop in-store.
These include exclusive member-only savings on selected products, TOFS scratchcards offering prizes of up to £250 to spend in-store, and the ability to support local charities when customers swipe their card in-store.
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