Retailer loyalty cards – nothing to do with loyalty, all to do with ‘Big Data’
The enduring relevance of loyalty cards, Easter footfall figures, Q1 supermarket growth and market share figures, latest shop price inflation indicators and interims from Topps Tiles.
5 minutes to read
- As predicted, only very tentative early reads on Easter trading, with the weather as bad as originally predicted. Footfall figures from Springboard were mixed, rather than universally grim as reported in the media. High street footfall was down 9.6% year-on-year on Good Friday, down 6.9% on Saturday and down 6.4% on Easter Monday. However, retail parks and shopping centres both saw increases in shopper numbers of ca. 5% year-on-year on Good Friday and Saturday. Footfall remains a rather one-dimensional indicator of wider performance.
- The supermarket sector continues to defy the elements, with grocery sales climbing 2.5% in the 12 weeks to 25 March, according to data from Kantar Worldpanel. Predictably, discount duo Aldi and Lidl were again the fastest-growing grocery retailers, recording sales gains of 10.7% and 10.3% respectively. Of the Big Four, Tesco and Morrisons (both +2.4%) grew faster than Asda (+1.8%) and Sainsbury’s (+0.6%). Separately, the BRC reported that food inflation fell to a 12 month low (+0.4%) in March. Overall shop prices as a whole actually deflated by 1.0%, fuelled by the 1.9% deflation experienced by non-foods. What consumer squeeze, I say again?
- Solid, if unspectacular, figures from Topps Tiles. The business reported a 0.6% increase in like-for-likes for the half year ended 31 March. However, it was very much a period of two quarters, with like-for-likes up 3.4% in Q1, but down 2.2% in Q2. Not helped by a seemingly never-ending Winter, DIY specialists have had a very challenging few months, with the ONS showing that DIY spend in the three months to Feb was down 6.1%.
Stephen Springham, Head of Retail Research:
Many in the property industry could be accused of having a rather singular view of the retail sector. There is much more to retailing than where occupiers (by the way, we’re the only industry to call them that) open their shops, how much rent they pay and what those assets might be worth.
Perhaps it takes a period of pain as we are currently experiencing to raise awareness of wider retail issues and for us to acknowledge the world outside our property window. Hence this week’s seemingly leftfield theme of retailer loyalty cards, which has been rendered all the more topical by the recent Facebook/Cambridge Analytica data ‘scandal’.
To put it mildly, I am not a fan of buzzwords as they tend to be trotted out as lazy catch-alls to far more complex issues. ‘Disruption’ is definitely a no-no in my book, as is ‘Big Data’. The irony of buzzwords like these is that those that use them do so in support of positive connotations, yet the moment they manifest themselves in real life, they cause outrage.
Is Brexit not the most ‘disruptive’ thing to happen to the UK in generations, yet how many people that speak glowingly of ‘disruption’ in retail actually welcome leaving the EU? Likewise, ‘Big Data’. This has to be mined from somewhere, it’s not self-generating, so why the outrage at supposed invasions of privacy from Facebook / Cambridge Analytica?
The link here is that retailer loyalty cards are actually key conduits to ‘Big Data’. More naïve retail commentators take loyalty cards at face value and assume that they are vain and anachronistic attempts by retailers to win customer loyalty by offering a few points-based discounts here and there. Some are predicting the imminent demise of points-based loyalty schemes on this basis.
That is simply not going to happen. In its darkest days a few years ago, Tesco was forced to dismantle much of its precious international business, but the one thing it clung to with all its might was the crown jewels that is its Clubcard. More recently, Sainsbury’s splashed out £60m on buying out Nectar and has this week unveiled trials of a revamp – it clearly has grand plans for its loyalty business.
The end game for retailers is not to win over the odd customer with the promise of a few money-off vouchers, but to forge as deep an understanding of an individual’s shopping patterns as possible. To know where they live, which stores they frequent, how often they visit, how much they spend and each individual item they buy and how their online / offline behavious interrelate.
All this from just a simple loyalty card. The only thing that is arguably lacking from the card in its most basic form is a sense of ‘real time’ tracking i.e the customer’s exact location at any given point in time. But this is other ‘Big Data’ that any of the mobile phone operators would have access to and linking the two is surely beyond the wit of man/woman.
‘Personalisation’ is another annoying retail buzzword. Loyalty cards provide the ultimate means and intelligence towards achieving this. Away from the buzzwords, the fact remains that the most successful retailers are those that best understand their customers, are able to communicate with them and consistently correspond to their wants, needs and aspirations. With current retail market conditions as tight as they are, this is more true than ever.
To bring things back into the property sphere, amongst many things loyalty card data is also a fundamental tool in determining retailers’ location planning decisions and monitoring long-term trading performance. So yes, absolutely key in where ‘occupiers’ open shops, how much rent they pay and therefore, in turn, what those assets might be worth.