Loyalty schemes more popular but still not essential?

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By: Wise Marketer Staff |

Posted on September 19, 2005

A study by ACNielsen Canada shows that loyalty programme participation is on the increase with 97% of consumers being a member of at least one loyalty scheme, but that they still aren't the main reason for consumers' choice of shops.

According to the study, entitled 'PanelTrack Loyalty Card Study 2005', nearly all Canadians (97%) participate in at least one loyalty programme (including airline frequent flyer programmes). However, when it comes to the retail industry, most shoppers cite factors other than the availability of a loyalty programme as their main reasons for choosing where to shop.

As evident from in Table 1, household participation in loyalty programmes grew within every retail sector in the period from 2003 to 2004:

Retail channel 2004 2003 Pt. change
Mass, dept. stores, general merch., warehouse clubs 95% 91% +4
Grocery store, supermarket 76% 75% +1
Drug store 62% 61% +1
Fuel retail 62% 60% +2

Table 1: Households participating in loyalty schemes
Source: ACNielsen PanelTrack Loyalty Card Study 2005

Card usage up
Card usage among loyalty card holders was also found to be very high, with the majority of programme members across all four sectors using their cards "most of the time" or "every time" they shop.

According to Brad Hodgins, product manager for ACNielsen, "The study results show that retailers have been extremely successful in registering shoppers in their loyalty programmes, and that shoppers have become accustomed to using their membership cards to get the best prices."

Importance of loyalty cards
But while most shoppers willingly sign up for the loyalty programmes offered, a relatively low (but increasing) number of participating households said frequent shopper programmes are either "extremely important" or "very important". Similar results were found when the same households were asked whether they are more likely to shop at a store that offers such a programme.

  % saying it's very or extremely important that stores offer a loyalty scheme % who are more likely to shop at stores offering a loyalty scheme
Retail channel 2004 2003 2004 2003
Mass, dept. stores, general merch., warehouse clubs 22% 20% 26% 27%
Grocery store, supermarket 25% 20% 34% 33%
Drug store 24% 18% 33% 29%
Fuel retail 36% 28% 42% 35%

Table 2: Importance of loyalty schemes in choice of store
Source: ACNielsen PanelTrack Loyalty Card Study 2005

The study found particularly great improvements in shoppers' attitudes toward loyalty programmes offered by fuel retailers. With the current high price of petrol, ACNielsen was not surprised to find that loyalty schemes are gaining significant ground within the fuel retail sector.

Why stores are favoured
The following results show the top three reasons why shoppers in each of the four retail sectors choose the stores where they use their frequent shopper cards:

Mass, dept. stores, general merch., warehouse clubs...
1. 64% Wide variety of merchandise
2. 49% Everyday low prices (EDLP)
3. 41% Convenient location
Grocery store, supermarket...
1. 62% Convenient location
2. 47% Wide variety of merchandise
3. 37% Everyday low prices (EDLP)
Drug store...
1. 66% Convenient location
2. 32% Wide variety of merchandise
3. 29% Knowledgeable pharmacist
Fuel retail...
1. 68% Convenient location
2. 33% Self-serve fuel pumps
3. 24% Pay-at-the-pump

Table 3: Top reasons for shopping where loyalty cards are used
Source: ACNielsen PanelTrack Loyalty Card Study 2005

"Frequent shopper programmes have become so common that many consumers just expect their store to have one," warned Hodgins. "Now it's time for more retailers to take their programmes to the next level and move from offering every card holder the same discount to using the programmes for improved targeted marketing."

The latest edition of the annual study was based on nearly 9,000 survey responses from members of the ACNielsen Homescan consumer panel, and aims to highlight the attitudes and behaviours of consumers where loyalty programmes are concerned. The full study can be obtained directly from ACNielsen Canada.

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