Aping Amazon, retailers play loyalty card in holiday season

Bloomberg

After years of watching shoppers flit from store to store in search of the biggest deals, US retailers are hoping their attempts at building some loyalty will finally pay off this holiday season.
Chains have aggressively rolled out rewards programmes in recent years, and there are signs that the efforts are beginning to get results. Hollister’s stunning 8 percent same-store sales growth last quarter was credited in part to the teen retailer’s Club Cali perks.
“Competition is very stiff,” said Gabriella Santaniello, founder of retail research firm A Line Partners. “They need to offer something to the customer that keeps them coming back to your store.”
US consumers hold a total of 3.8 billion memberships in customer-loyalty programmes, up from 3.3 billion in 2015, according to a report earlier this year from research firm Colloquy. Initiatives come in a variety of forms: Some offer points that can be cashed in for future purchases. Others, like Amazon.com Inc.’s Prime, require a membership fee. For $99 a year, Prime subscribers get free two-day shipping, online services and a range of discounts.
Nearly half of the loyalty membership tracked by Colloquy—1.6 billion—are tied to retail chains. That means there are roughly five different store accounts for every man, woman and child in the US.
The sheer number of accounts implies that Americans aren’t being loyal to their loyalty programmes. But retailers are eager to mimic the success of Prime, whose millions of subscriptions help Amazon lock in customers.
Prime’s influence will only grow over the holiday season as it infiltrates Whole Foods, the grocer that Amazon acquired in August. Whole Foods is turning Prime into the chain’s rewards programme. Regular customers can get an organic turkey for $3.49 a pound; Prime customers pay just $2.99.
At Hollister, a chain owned by Abercrombie & Fitch Co., the Club Cali programme now has 8 million subscribers. The effort has led members to spend more money, and more often, at the retailer, said Chief Executive Officer Fran Horowitz. It’s also a way to glean data on what shoppers want. “Our loyalty club continues to provide a wealth of insight,” she said.
Sears Holdings Corp. also has made a rewards programme the linchpin of its turnaround plan—with less success.
CEO Eddie Lampert has adopted a points system called Shop Your Way that straddles the retailer’s online and brick-and-mortar operations. It hasn’t done much to reinvigorate sales, but the company has used insights from its members to make decisions.
Sears decided to bring back its holiday print catalog because of input from members, marketing chief Kelly Cook said. It also crafted its holiday promotions based on feedback.
Macy’s Inc., meanwhile, announced a new version of its Star Rewards programme in September. The system has platinum, gold and silver tiers, which depend on how much shoppers spend. A customer who shells out at least $500 a year, say, gets free shipping and 25 percent off a day of shopping.
“It’s the beginning of a journey,” CEO Jeff Gennette said.