THE CLARUS Blog

Retail Recap Q1 2020: 7 Brands Show How Loyalty Can Serve As a Competitive Differentiator

Loyalty as a competitive differentiator is a key strategy for retailers.

So, how do brands go about achieving this?

Some very familiar names (Foot Locker, Macy’s, Panera, Chipotle, Publix, Walmart, and GameStop) answered that question for us during the first quarter.

In our first edition of Retail Recap for 2020, we saw several amazing things happen in the customer loyalty industry.

Let’s take a closer look:

 

Foot Locker Sprinted Toward Enhanced Customer Engagement

Foot Locker officials wanted to cater to their customers in a big way.

And they achieved that by announcing its new loyalty program known as FLX, which will launch in the near future.

FLX will provide access and attractive benefits that will positively impact customer behavior.

The program focuses on what customers want and expect–includes instant gratification, customer-centricity, brand unification, and an enhanced experience.

FLX has three tiers (based on consumer spend) and customers earn 100 points for each dollar spent.

Points are redeemable in one central reward center that can be accessed through the app of any banner. They can also be earned for online activities such as completing surveys and connecting social media accounts.

Our CEO, Tom Caporaso, believes FLX is a promising program.

“Unlike traditional programs that offer points for purchases, Foot Locker is catering to their consumers’ lifestyles that demand convenience and versatility, offering free shipping and exclusive access to shoe releases,” he explained to Chain Store Age. “And when perks go beyond expected price discounts and cashbacks, shoppers will be persuaded to engage with the brand on a regular basis, without thinking twice about price tags from nearby competitors.”

 

Macy’s Went All-in on Customer Loyalty

To spark positive customer behavior, Macy’s upgraded its Star Rewards loyalty program which rolled out in February. The revamped program now allows every Star Rewards member to earn on every purchase, regardless of how they pay.

Prior to the changes, only Macy’s members on the top tier or platinum level earned a percentage of their purchases back as rewards.

Based on annual spend, Macy’s cardholders are automatically enrolled in Star Rewards (which has nearly 30 million members) at one of three levels: Silver, Gold or Platinum.

Company officials believe the Star Rewards program, which runs through Macy’s mobile app, will magnify customer engagement.

Macy’s officials are showing their loyalty to their customers.

Rich Lennox, Macy’s Chief Customer Officer, said the revamped Star Rewards program shows “how we love our customers back.”

 

Something Special was Brewing at Panera with a New Coffee Subscription Program

Panera launched a most valuable coffee subscription program in late February.

The MyPanera+Coffee program value is apparent: Customers pay $8.99 per month for unlimited coffee or tea, which is expected to boost breakfast traffic and membership in the MyPanera loyalty program.

The MyPanera loyalty program currently has 38 million members and company officials believe that number can rise to 50 million in the future.

Known as MyPanera+Coffee, Panera’s monthly coffee subscription program shows that customers are eager to sign up for a better experience and pay for it as well.

Clarus CEO Tom believes MyPanera+Coffee should be a highly engaging program.

“By offering unlimited coffee and tea for a monthly fee of $8.99, customers will start to see savings after only a few cups – a huge leg up against competitor menus that cost the same amount (or more) every single week,” he told Chain Store Age. “Even better, the subscription will encourage more frequent stops at Panera restaurants, with a higher likelihood that enrollees will try a breakfast or lunch item to pair with their daily coffee reward.”

Over time, Tom added: “It will rake in an abundance of helpful customer data, allowing the brand to uncover exactly what customers like the most. Because of these insights, Panera will be able to tailor its next loyalty program updates based on real customer feedback, strengthening current and future loyalty in the process.”

 

Customer-centric Publix Launched its First-Ever Loyalty Program

One of the largest supermarket chains in the country, Publix has always been focused on its customers.

As the largest employee-owned company in the U.S. with more than 200,000 associates, Publix currently operates 1,243 stores in Florida, Georgia, Alabama, Tennessee, South Carolina, North Carolina, and Virginia.

That personal touch Publix has always touted has now transformed into its first-ever loyalty program called Club Publix.

Club Publix is a free program that offers various digital features, including early notifications of BOGOs and other sales, the ability to pay with a simple scan of the Publix app, and the option to receive e-receipts.

Officials at the 90-year-old company believe every customer is entitled to the same superior service and savings. They are catering to more than five generations of shoppers, each representing different perspectives and expectations.

The driving factors behind Club Publix are convenience, a seamless experience, and personalization.

 

GameStop “Powered Up” its Rewards Program

GameStop’s PowerUp Rewards program has been a key factor behind the brand’s loyal customer bases for more than a decade.

Now, GameStop upgraded its PowerUp Rewards program to attract and engage more customers.

With more than 55 million members, PowerUp Rewards is a highly successful loyalty program.

One of the main reasons behind that success if because GameStop officials strive to meet customer expectations, including more instant benefits with more choices and flexibility.

Program enhancements allow PowerUp Rewards Pro members to join GameStop Gives in supporting charitable organizations. Members can choose to Game for Good by donating points to Make-A-Wish and Extra Life.

GameStop schedules PRO Days at various times of year to celebrate its Pro members with exclusive savings on games, consoles, accessories, and collectibles.

This helps form a larger and loyal GameStop community.

 

Chipotle Turned up the Heat with its Personalized Approach to Loyalty

Although Chipotle launched its Chipotle Rewards loyalty program last year, it already has more than 8.5 million members.

For Chipotle officials, this year is all about leveraging their digital tools to impact engagement and grow program membership.

Chipotle’s loyalty strategy focuses on personalization and CEO Brian Niccol is excited about 2020.

“The thing that’s great is we have 8.5 million customers and the personalization really is just getting started,” Niccol explained. “So, I’m already seeing some of our tactics going to the marketplace.”

 

Walmart Stepped up to Amazon Prime

For 15 years, Prime has led the pack of premium loyalty programs, but Walmart+ could pose formidable opposition. But it has to offer a different experience than Prime that could include gas and grocery.

Walmart’s new premium loyalty program, Walmart+, is significant since the company receives nearly 57% of its revenue from grocery.

Walmart is planning on testing multiple price points for Walmart+, which is expected to launch as a rebrand of Walmart’s existing Delivery Unlimited service.

Walmart’s Delivery Unlimited service charges customers $98 a year for unlimited, same-day delivery of fresh groceries from one of the 1,600-plus Walmart stores in the U.S. where the program is available.

Can Walmart+ challenge Prime?

Clarus CEO Tom thinks so.

“Many modern consumers are comfortable paying for multiple loyalty programs that save them money with immediate rewards, especially as they continue to provide unique experiences that make their daily lives easier,” Tom explained to Retail Info Systems. “According to our recent data study, 65% of consumers said that they would join another premium program even if they were enrolled in another, meaning that several consumers may end up using both Prime and Walmart+.”

 

Takeaways from Q1

The first quarter saw a flurry of retail activity that centered on new or revamped loyalty programs designed to spark increased engagement and spend.

These seven brands have shown a desire to listen to customer needs and desires, tailor their respective loyalty programs to meet those expectations, and gained a competitive advantage.

These are exactly the types of loyalty actions brands must take to elevate engagement and strengthen customer relationships.

How are you strengthening your customer relationships?

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