How people shop in the UK continues to morph. Whilst there was an acceleration of online shopping during the pandemic, shoppers fell back in love with in-store shopping once restrictions lifted.
Online-only eCommerce players have struggled with this shift. Many have faced logistical challenges, competition from ultra-cheap rivals, and soaring costs. The change in sentiment has been reflected in the stock market. Asos shares peaked at over £57 in 2021 but now change hands for around £4. Boohoo shares are less than a tenth of what they were at their peak.
Transformational technology
Conversely, retailers that have always been predominantly store-based have generally bounced back. Marks and Spencer is one example of a brand that has capitalised most on the shift back to in-store shopping by growing its click-and-collect offering and developing its app to work seamlessly within its in-store environment.
To be successful today, a retailer needs to occupy both worlds. They need to be seen as being available at all times online but also need a physical presence to help garner memorable consumer experiences. Technology is transforming what is possible. It is eliminating friction by joining up the online and offline worlds better than ever before. Through its app, Zara customers can book changing rooms, see where something from their wish list is on the shop floor, or order items for collection in-store. Brands are also using augmented reality, or geolocational in-app messaging and push notifications to good effect.
A new era of retailing
Increased choice and a consumer more price-sensitive than ever before, has led to consumers being far more likely to shop around for the best deals. With price now the number one factor in brand consideration, loyalty programs have become highly popular. In fact, nine out of ten consumers in the UK have now signed up for at least one.
During Black Friday last year, Asda’s Rewards app, JD Sports’ loyalty app ‘JD STATUS’ and Sainsbury’s Nectar rewards app were all among the top ten downloaded apps. Consumers today expect to be rewarded for their loyalty. Retailers are generally happy to oblige.
The number of loyalty apps downloaded during Black Friday was unsurprising. They are highly intuitive and convenient to use to earn and redeem rewards at a time when money is tight. Loyalty apps are helping bring in a new era of retailing by encouraging multi-channel shopping. Whilst the grocery sector is leading the way, with 82% of consumers now signed up for a supermarket loyalty scheme, other sectors such as food and drink (i.e. restaurants, cafes, and bars) and beauty brands are gathering momentum.
A cornerstone strategy
In my view, loyalty programmes should be a cornerstone strategy for any business seeking to foster customer retention and brand allegiance today. Brands should think of apps as the bridge between the in-store and online environment. At Sephora, a shop assistant in any of its stores from Dubai to Paris is trained to always ask a customer whether they are part of its loyalty scheme. This has led to 80% of all transactions now being made by users enrolled in it.
For a loyalty app to be successful, it is important to offer the right incentives. Special pricing and monetary rewards are most likely to impact brand consideration, especially among younger demographics. Subscription fees and irrelevant rewards, though, can be barriers that dissuade consumers from signing up in the first place. It is, therefore, important not to gatekeep.
Garnering loyalty through gamification
Gamification is the new frontier for branding and monetisation. In the past couple of years, we have seen brands increasingly capitalising on the immersive nature of mobile gaming. They have integrated their products directly into the gaming experience through seamless in-game advertising and virtual pop-up shops. Plus, they have looked to gamify the shopping experience itself.
Central to this phenomenon is the exploration of platforms such as Roblox. Its pioneering use of user-generated content (UGC) provides a great starting point for brands wanting to connect with their audience within a game. By seamlessly embedding their stores within virtual worlds, brands can offer users innovative experiences that organically promote their products. Already, we have seen everyone from Walmart to Gucci using the technology.
A hybrid future
Today, loyalty schemes have become so ubiquitous that a brand will often lose market share if it does not have one. There is a danger, though, that with so many schemes being similar consumers could suffer loyalty fatigue. Because of this, I expect to see more elements like gamification being included in the apps this year to help maintain interest. What is clear, though, is that the retail landscape is morphing towards a hybrid future with technology at its core. And that is exciting.