Post-Covid Retail: How to Build Customer Loyalty?

Since the pandemic crisis, consumer habits have been completely disrupted.

New health measures, social distancing requirements, random store openings... The retail sector is facing a completely unprecedented situation.

For many retailers, the term "loyalty" is often synonymous with programs that reward frequent purchases with points and vouchers.

However, over the past few years, customers have moved away from these traditional loyalty programs. This has forced retailers to dig deeper into what truly drives greater loyalty.

The impact of the Covid-19 health crisis has undermined traditional loyalty programs that are no longer sufficient to ensure brand loyalty.

How can retailers reinvent post-Covid loyalty?

A Sudden Shift in Consumer Habits

It's a completely unprecedented situation for retailers to see consumer behavior evolve this rapidly.

The health crisis related to the pandemic has triggered significant changes in purchasing habits that threaten to disrupt usual loyalty.

In a context of social distancing and lockdown, e-commerce has skyrocketed, attracting new consumers who were previously devoted to more traditional commerce.

This isn't just a temporary trend, as these new habits are likely to persist.

Impact in France:

• 63% of consumers declare having made online purchases more frequently during the pandemic
• 87% of respondents affirm wanting to prioritize online purchases more after lockdown *
• Out of 41 million buyers in France in Q2 2020 (1 million additional internet users compared to Q2 2019)
• 71% made purchases on e-commerce sites with physical stores **

In this new context, usual loyalty is completely disrupted.

The Rise of Subscription Models

Companies commercializing subscription models already had strong growth before the pandemic (+17.3% compound annual growth rate over 5 years)***.

The change in purchasing habits linked to the health crisis has given a strong acceleration to subscription models.

In June 2020, the growth of subscription services was on average +37.5%, across all sectors ****.

For companies commercializing subscriptions, it's a way to build long-term relationships with customers and ensure revenue stability.

In the UK, 80% of retailers believe that subscription loyalty programs have gained popularity during the lockdown period.

Many consider this evolution as an opportunity to provide a stable and reliable revenue source during a difficult period of store closures.

Sustainability of the Subscription Model:

Here again, what was the result of changing purchasing habits is set to last.

• Nearly 20% of consumers subscribed to a subscription service during a lockdown period this year
• 83% of them kept this service once lockdown ended *****

Advantages of the Subscription Model:

For the Consumer	For the Business
More economical than unit purchases	Recurring and predictable revenue
Ease of use	Long-term customer relationship
Service personalization	Financial stability in uncertain times

Strategic use of customer data and relationship personalization through tailored customer programs, based on an omnichannel marketing approach, prove essential for building loyalty and engaging consumers long-term.

Subscription is deeply transforming the entire retail sector.

How to Reinvent Loyalty?

In an uncertain economic and health context, how can retail loyalty be reinvented?

Good old loyalty programs may no longer be sufficient to ensure customer loyalty to a brand.

Retailers will need to be more creative.

Social Engagement: New Pillar of Loyalty

Over recent years, consumers have become increasingly sensitive to the values embodied by brands.

This trend has intensified in the context of the health crisis, with strong ecological and social awareness.

This new conscious consumer is no longer satisfied with displayed values - they expect brands to make genuine commitments, with concrete social and environmental impact.

This partly explains the attraction and stronger consumer loyalty to companies that have adopted a circular model, actively engaging in favor of resource preservation.

Ethics and social impact are taking increasing weight in long-term loyalty.

Levers of Reinvented Loyalty:

To reinvent loyalty in the retail sector, companies must adapt to evolving consumer expectations, accentuated by the health crisis.

• Point-of-sale digitization and implementation of personalized marketing strategies
• Deep customer knowledge through CRM systems and Big Data
• Personalized loyalty programs aligned with ethical and environmental values
• Customer experience personalization via websites and mobile applications
• Adapted promotional levers and innovative relationship programs
• Respect for personal data protection

Subscription models, offering recurring and personalized service, prove particularly relevant for engaging customers long-term.

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Sources:

(*) DS Smith Survey, July 2020

(**) Quarterly e-commerce audience barometer in France, Médiamétrie, September 15, 2020

(***) SUBTA Annual Report, 2019

(****) Recurly Research, September 30, 2020

(*****) Bazaarvoice, October 2020