A new report from Power Retail – the number one resource for Australian e-commerce news, content, data, and insights – in partnership with the Australian Loyalty Association (ALA) has exposed a significant challenge for the retail sector: nearly 50% of Aussies are unwilling to share their data with retailers, signalling a general distrust in the handling of their personal data.

Drawn from a survey of over 2,800 engaged shoppers, and exploring 44 retail-specific loyalty programs, the 40 page Loyalty Insights Report, released on Wednesday 19th June 2024, highlights what Australian consumers want most from loyalty programs and what retailers need to do to gain and maintain the trust and loyalty of their customers.

The report not only explores consumer rewards program preferences, but also highlights the challenges facing brands, namely, that even with incentives of all description, majority of shoppers are uncomfortable sharing their data with retailers. This demonstrates a pressing need for retailers to rebuild consumer trust in handling personal data safely. Increased consumer awareness around data security, following multiple recent data breaches from prominent Australian companies, has undoubtedly driven this sentiment.

Editor of Power Retail, Rosalea Catterson says, “Whilst data security is a major concern for consumers, it offers a key opportunity for retailers to adapt and re-build trust with their customers. An up-front approach that communicates clearly with consumers about where and how they use their data and the measures they take to protect customer data, can go a long way to building consumer trust and create opportunities for more personalisation, enhancing loyalty programs in ways that most benefit their customers.”

The report has also found that consumers overwhelmingly prefer email communications from retailers (81%), while SMS marketing has fallen out of favour with shoppers, again, likely due to heightened concerns around data scams.

Unsurprisingly, loyalty programs that helped Aussies to lighten the load on their wallets such as Woolworths Everyday Rewards and Coles Flybuys, were the most popular loyalty programs with all shoppers surveyed. Both of these specific programs offer discounts on spending, full payment of reward items using points, and cashback on spending, which are the most well-liked incentives for shoppers.

With spending on everyday essentials increasing by 5.4% last year, shoppers are on the lookout for any opportunity to save money, with one respondent saying, “Groceries are a big expense and being rewarded for buying products that are a basic need is helpful,” and another stating “All I care about is cash back or discount incentives, not special offers or exclusive deals.” (Corina, 43, Burleigh Waters).

The report also revealed that there is a huge opportunity for retailers to reward customer loyalty and invest in long-term customer relationships by understanding and being adaptable to their ever-changing needs. Failure by retailers and their rewards programs risk the same fate as the Flybuys program in New Zealand, which closed down in 2023, due to its lack of ability to keep up with rapidly changing demands of consumers.

When it came to generational preferences, surprisingly, the report found that 67% of Gen Z respondents believed that loyalty programs provided a high level of value. This generation also had the highest engagement with loyalty programs out of any generation surveyed. Respondents in this age bracket demonstrated a greater liking for tiered benefit programs, based on spending, such as the MECCA Beauty Loop, indicating that gamification can be an influencing factor in consumers of that age engaging with a brand loyalty program. Said one shopper, “These types of programs “give great value for money, both in discounts, points earned, and special offers and have unique offers that reward you for consistent purchases.”

Across all retail categories surveyed, the top ranked loyalty programs included:

· FMCG: Woolworths Everyday Rewards; Coles Flybuys; My Dan’s Dan Murphy’s and IGA Rewards.

· Homewares: MYER One; Amazon Prime; Cash Rewards; and IKEA Family.

· Beauty: Priceline Sister Club; MECCA Beauty Loop; and Sephora Beauty Pass.

· Fashion & Department Stores: MYER One; Cotton On, Rebel Active; David Jones Rewards Points; Bonds and Country Road.

· Other Retail: Amazon Prime; Bakers Delight Dough Getters; Supercheap Auto Club and Petbarn Friends for Life.

Factors such as the prioritisation of building trust with their customers, and offering long-term value, have allowed these retailers to achieve top rankings with their loyalty programs. CEO and Founder of Power Retail, Grant Arnott says, “Retailers that help shoppers easily earn, access and use rewards incentives to ease financial strains stand themselves in a strong place to gain favour with shoppers and achieve long-term loyalty. To achieve this, retailers need to focus on the most reported satisfaction drivers: easy-to-understand schemes, easy-to-use apps and website tools, as well as strong clear customer communication, all of which help to build trust and brand loyalty.

“Loyalty is a game-changer for retail, a means to create substantially and more value for customers. These insights show that while the appetite for loyalty from consumers is strong, there is substantial opportunity for growth and improvement for retailers who are prepared to invest in the right strategies and technology to deliver loyalty excellence,” said Arnott.

For more data from Power Retail and to review the full report, please visit: https://powerretail.com.au/resources/loyalty-insights-report/