In a marked departure from Colloquy's 2008 report on consumer loyalty to US retailers, Walmart dominated the 2010 Colloquy Retail Loyalty Index, with results that reflected the reality of the 'great recession', showing that low prices were a key driver of retail customer loyalty.
This year's index was derived from a December 2009 survey of 3,500 US consumers in five regions (Northeast, Southeast, Midwest, Southwest and Northwest), and across four retail categories (Grocery, Personal Care, Department Stores and Mass Merchants).
The index for 2010 shows that customers claimed the highest loyalty to Walmart in many of the Grocery, Personal Care and Department Store regional categories. Costco had the highest customer loyalty ratings in three out of five Mass Merchant regional categories. In the 2008 index, shoppers claimed the most loyalty to Costco, which ranked first in nine out of twenty regional and retail categories.
"The 2008 index showed that loyalty marketers worked within a significantly different retail landscape, in which customer service, store environment and a wide product selection were the underlying factors for customers' self-professed loyalty," said Colloquy partner Kelly Hlavinka. "But the 2010 index proves that the great recession was actually a great equaliser. Two years later, we've seen a profound change among consumers since the recession hit: low prices have become retail's strongest loyalty lure, according to consumers."
Hlavinka has also written a 17-page white paper entitled 'RetailTALK: What Price Loyalty?' which provides a detailed review and analysis of Colloquy's latest study of US retail consumer loyalty - click here to download the paper (PDF document; no registration neeed).
While Walmart dominated most retail categories, other chains - including Kroger and Walgreens - did climb up the loyalty chart or make their first appearances, edging out 2008 loyalty leaders.
Highlights for each category included:
Kroger, which has adopted a customer-centric focus and used a customer loyalty programme through the recession, was the loyalty leader in the Midwest. In the Southeast, Publix moved up to first place from its second-place showing in 2008. In the Southwest, regional grocer H-E-B ranked first with similar messaging to Walmart and the continuation of a six-store rewards programme in its Waco, Texas, stores. But the highly fragmented Grocery sector, where neither conventional nor discount grocers operate in every state, holds certain advantages for Walmart. Walmart's message of low prices and value resonates with customers - and its ability to deliver on that promise by leveraging its broad distribution network translated to first-place consumer loyalty ratings for Walmart in the Northeast and Northwest, and third-place finishes in the Southeast, Southwest and the Midwest.
- Personal Care
In the highly competitive Southeast region, Walgreens finished in a dead heat with Walmart for the top loyalty ranking, with CVS and Publix tied for second place. In a tight three-way race in the Midwest, Walgreens and CVS edged out Walmart, even though CVS hadn't been among the top five in 2008 Walmart easily won the Northwest, maintained the top spot in the Southwest, and finished ahead of CVS and Rite Aid in the Northeast.
- Mass Merchandisers
The regional chains BJ's Wholesale and Meijer replaced familiar names such as Sears, Sam's Club and Big Lots for top loyalty rankings in the important Northeast and Midwest markets (respectively). Costco continued to rank first in all other U.S. regions Walmart, meanwhile, came in second in all but the Southeast, where it ranked third behind Target, which itself rated third in the rest of the country.
- Department Stores
Several chains that made the top three spots in COLLOQUY's 2008 Retail Loyalty Index for department stores fell off the 2010 top-three list - among them J.C. Penney, Dillard's and Dollar General. As in other retail categories, these names were replaced in large part by Walmart and Target. Walmart ranked first in customer loyalty ratings in the Northeast and Midwest, and tied with Macy's for the top spot in the Southwest. In the Southeast, Walmart took second to Target, and in the Northwest it followed top-spotter Costco.
According to Hlavinka, "One glimmer of hope for retailers is that as jobless rates go down and consumer confidence returns, retailers may very well regain their footing - if they continue to work toward customer-centric solutions and more sustainable strategies, rather than simply combating Walmart with low prices."