Brand owners must take advantage of supermarkets’ failure to win the customer loyalty battle by engaging directly with consumers through their own loyalty schemes.
That is the view of Chris Newbery, a director at shopper marketing company Shopitize, following Tesco’s announcement that it plans to offload DunnHumby, despite its insistence that the Clubcard scheme is still a vital part of its strategy.
Newbery cites Shopitize insights, which show that only 40% of shopping is currently done using a loyalty card, despite five of the “big six” supermarkets (the exception being Asda) now having a rewards scheme.
He added: “Tesco, like many others, is focusing more on in-store and fuel price cut promotions as part of the ‘race to the bottom’, with the sale of DunnHumby a reflection of this trend.
“The possible sale reflects an evolving strategy, leaving an opportunity for brands to greater engage with their customers directly. Until recently, through schemes like Clubcard, it has been the retailers that have held most of the power when it comes to loyalty.
“However, with growing price competition altering retailer focus, and new technologies becoming available, space is now opening up for brands to encourage purchases across multiple retailers and increase their direct engagement with their customers.”
But any move to wrest control from the supermarkets will mean brand owners will have to sharpen up their own acts. A recent study by the Grass Roots Group, showed 56% of loyalty club members are not happy with the rewards they receive, despite the fact that half of them cite loyalty programmes as a factor when choosing who to buy from.
Meanwhile a GI Insight report showed the vast majority of brands which run loyalty schemes are failing to use the insight gleaned from their data.
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