Consumers Turn to Retail Rewards

When the economy gets tough, the tough get rewards programs. According to Colloquy Research, which surveyed over 2,100 U.S. consumers in April 2009, almost one-third (32.3 percent) reported that retail rewards programs have become “more important” in their budgeting strategies.

Young adults between the ages of 18 and 25 (46.4 percent) and women between the ages of 26 and 59 (44.4 percent) attributed more importance to rewards programs during the recession.

Similarly, 39.8 percent of emerging Hispanics (those over 21 years old of Hispanic origin earning $40,000 or less annually), 33 percent of affluents (male and females earning $125,000 or more annually) and 23 percent of seniors age 60 or older said the economy made rewards programs more important.

Four in 10 (42.7 percent) consumers said that the economy made “no difference” to their the importance of their rewards, while 25 percent rated the programs as less important.

“The good news is that consumers are clearly tell us they recognize the value that loyalty programs can deliver as they try to stretch their budgets further in this tough economy.” said Kelly Hlavinka, study co-author and partner at Blue Ash, Ohio-based Colloquy. “Savvy retailers will double their efforts to enroll and activate women and young adults in their loyalty program to lock in more return visits. When consumer spending patterns improve, those same retailers will be in a much stronger position to grow revenues among the customers engaged in their loyalty programs.”

In terms of participation levels, consumers tended to favor department stores and other retail programs, averaging participation in 2.3 programs and 2.1 programs respectively. Grocery (1.7 programs), fuel (1.5 programs) and drug store (1.3 programs) were also popular rewards categories. Participation among women was greatest in the other retail (2.1 programs), grocery (2.0 programs), and department store (2.0 programs) categories, while young adults favored department stores and other retail. Both categories’ average participation was 2.3 programs.

Overall retail rewards program enrollment increased by 19 percent from Colloquy’s previous study in 2007. Again, young adults (57.9 percent) and women (77 percent) saw significant growth, up 32 percent and 29 percent, respectively, from 2007. Affluent consumers saw the greatest participation, at 87.4 percent (up 10 percent). Participation among emerging Hispanics (47 percent) grew 14 percent, and senior participation (60.8 percent) increased 12 percent.

But will the growth in rewards programs continue once the economy rebounds? According to Hlavinka, there’s a risk that customers will once again spread their loyalty among various competing retailers, but the situation does offer some potential lessons.

“This is where retailers can take a lesson from the pioneers in travel loyalty programs. Companies like Delta and Marriott are taking steps now to make it more attractive for customers to lock in their business with them,” Hlavinka said. Delta’s Skymiles offers new rollover benefits that allow members to keep their miles from year to year, and Marriott’s Elite rollover nights allo Elite status members the ability to carry over their additional nights to 2010.

Hlavinka continued, “By adding strategically savvy benefits now, retail customers will continue to see the benefits in remaining loyal to their favorite retailers — even when they are able to loosen their purse strings again.”

Nielsen Business Media

Publish date: October 5, 2009 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT