In a highly competitive retail market, that is saturated with endless brand choices and few barriers to entry, retailers are constantly vying for the attention of consumers.
Retailers are now under immense pressure to meet the ever-changing demands of consumers in all aspects, whether it be price, product, or experience. Otherwise, they risk losing their customers’ interest, and ultimately their money.
Changes in consumer behaviour – which are being shaped by a number of forces, such as the rapid drive towards digitisation, omni-channel commerce, and the global pandemic – have become more difficult to gauge.
Brand loyalty is no longer a stand-alone element in the retail sector, but is rather a continuation and reflection of the brand’s ability to meet consumer demands.
Brands are required to demonstrate their loyalty to customers, rather than vice versa, and loyalty programs have become a tool for creating meaningful interactions throughout the customer journey.
Changes in consumer preferences
In the past, customer expectations were limited to basic wants, such as quality service and fair pricing. However, today’s customers anticipate and want much more, such as proactive service, personalised interactions, and seamless experiences across physical branches and digital channels.
In addition, having continuous access to information and digital resources has made them more educated, knowledgeable, and self-reliant in deciding which products and services to choose or brands to support.
“Today’s consumers are highly opinionated and well informed,” Maria Gedeon, chief customer and marketing officer at Chalhoub, told Arabian Business.
“Long gone are the days where you assume that when people come to your store, or website, they have just found out about your product – they’ve already done a lot of research in advance and are very knowledgeable about the brand.”
Maria Gedeon, chief customer and marketing officer at Chalhoub.
The pandemic has also given today’s ‘always on, always connected’ customers the time to pause and reflect on their own consumption, and with that sense of renewed purpose, they are striving to shop locally, mindfully and sustainably.
“I think they feel responsible to support small business owners and buy local,” added Jaya Maru, co-founder of Rewardz, a UAE-based rewards aggregator.
Customers also place great emphasis on the experience they receive throughout the journey, expecting consistent interactions and personalisation from brands at all times.
“If I can feel consistency in the product, in the packaging, and in the service, then I know that this is a brand that will make me feel happy and one that I’ll be recommending to my friends,” said Maru.
Speaking on the importance of personalisation for establishing strong customer-brand relationships, Gedeon said: “Content is very important for customer engagement, so if you don’t have the right content on your ecommerce platforms and on your social media platforms, then it is a big missed opportunity.
“Understanding customers and learning about them has never been more important. We don’t want to alienate any segments, on the contrary, we want to make sure that our communication is tailored and personalised towards them all.”
Commenting on the harms of untargeted e-marketing, she added: “It will have a rippling effect. You will be completely disengaged, and perhaps unsubscribe or unfollow my communications.”
Jaya Maru, co-founder of Rewardz.
As new brands continue to emerge, consumers will invariably gravitate towards the ones that they can relate to and trust, and most importantly, to those providing seamless customer experiences, a vital element for engaging Gen Z.
“We’re seeing a shift in audiences and increased spending from the younger generations, millennials and Gen Z,” said Gedeon.
“This demographic is just like a very new animal that brands are having to deal with, and they’re very quality driven as well. So, alongside what their peers are saying, they are expecting value from a brand and high quality,” added Maru.
Gen Z consumers have expectations for value, choice, and quality in retail, as well as the necessary integration of digitisation to enhance their shopping experience.
How brands are coping with the changes
Nowadays, brands are having to keep a real-time pulse on changing customer preferences and rapidly innovating to redesign journeys that accommodate their needs.
“In the last 20 years, companies have realised that brand loyalty matters. Data proved over and over again that a loyal customer base is what makes businesses thrive,” said Bernardo Perloiro (pictured below), chief operating officer at Majid Al Futtaim Retail.
“On average, it is also interesting to note that loyal customers spend 2.5 times more than the regular customers.
“Brands were obsessed with products and product launches, and I think if you don’t obsess about customers you will really become obsolete – the customer needs to be at the center of everything,” said Gedeon.
In the past year, as consumer spending shifted toward e-commerce, questions were raised around the enhanced role of omni-channel for retailers.
While the concept of omni-channel retail has been top of mind in the industry for nearly a decade, the past year has forced retailers to invest much more rapidly in their omnichannel capabilities.
“You need to make your consumers believe that they can trust you online, and irrespective of what channel they are buying from, it’s going to be the same seamless and frictionless experience when they are engaging with your brand,” said Maru.
The Rewardz co-founder also highlighted the importance of having different approaches when engaging with various customer segments.
“I think brands need to take a very holistic approach towards defining what drives loyalty amongst their customers, as well as identifying their different segmentations to make sure that they have a different strategy to engage with them,” Maru said.
Brands have begun building out different customer personas and user segments, working out what motivates their different customers in order to tailor their messaging, offers and rewards.
Loyalty programs
At the heart of changing expectations remains a constant – customer interactions with loyalty programs are value driven.
However, the classification of that value has evolved from the traditional “spend and get” programs to earning for every interaction with the brand.
The magnitude of quantitative and qualitative data available has also made it easier for brands to identify trends and capture meaningful behavioral data, helping them gain a deeper understanding of their clientele.
“The biggest evolution in loyalty programs now is the fact that we have so much data available. It is now almost expected of brands to do their homework and study the data, and in turn, keep customising and refining their loyalty programs,” said Maru.
Talking about Carrefour’s loyalty program, Perloiro said: “Through advanced technology and data analytics within our stores and on our mobile app, we can now understand exactly what it is that our customers want and need, and how exactly we can deliver this at Carrefour.
“In line with international data protection standards, our loyalty program can offer us these insights across numerous demographics and channels. We look to our shoppers before making any decision to ensure customer retention and create new experiences and firsts for the region in terms of retail.”
Chalhoub’s chief customer and marketing officer also stressed the importance of the experience that the consumer receives as a value differentiator between effective and ineffective loyalty programs.
“I think loyalty programs have evolved from being extremely transactional to being more experiential and providing more value. A program can give you points or discounts, but not every program can give you an experience or exclusive access,” Gedeon said.
“The retail landscape is always evolving, as is the consumer mindset. This has caused loyalty programs to transition from transactional to interactional, with brands now being able to positively impact and influence customers’ lifestyles across the world,” added Perloiro.
Today, customers want to be able to earn points for every single purchase they make, no matter the magnitude of the transaction, from sharing their personal information with a brand to engaging with them. They no longer want a free item for their purchases, but rather have access to rewards money can’t buy.
“Previously, brands just gave the consumer what they can kind of spare, but the expectation from customers has changed. Brands need to analyse the data to really figure out what their consumers want and offer them that,” explained Maru.
The classification of that value has evolved from the traditional “spend and get” programs to earning for every interaction with the brand.
“I think we’re seeing a shift in brands moving towards a more point-based loyalty program, something which is omni-channel, irrespective of if you’re buying online or in store.”
The move towards an omni-channel loyalty approach aims to deliver convenience, relevance and value for customers across all channels.
A successful omni-channel loyalty program goes beyond one-dimensional discounts and facilitates the seamless connection between customers and brand across all touchpoints. By offering deeply personal and authentic customer experiences, they aim to yield stronger engagement and higher spend among customers.
Perloiro explained how Majed Al Futtaim’s SHARE loyalty program embraces the omni-channel approach, stating that: “It allows us as a community to transact differently through various channels and brands.
“This affords more choice and greater flexibility by enabling shoppers to earn and spend their points at multiple brands from buying groceries, to browsing the mall, to booking leisure, entertainment or cinema experiences.”
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