Commentary

Retailing Evolutions

A new study from Juniper finds that one of the key marketing evolutionary steps revolves around the integration of couponing into loyalty programs, which are themselves evolving to keep pace with consumer behavioral shifts. In the US, several retailers, including Walmart, Kroger, Target and Costco, each have tens of millions of loyalty card holders.

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And, according to Colloquy, US consumers collectively hold 2.7 billion loyalty cards, equivalent to nearly 22 per household. Surveys conducted by both Colloquy and Capgemini suggest that activity rates in the US are less than 50%.The surveys found that in many cases, the range of offers and benefits provided by the schemes were not perceived as relevant.

In the UK, 92% of adults belong to one or more loyalty/reward schemes as of mid 2015, a figure that has remained broadly constant for the past 2 years. However, the number of cards per household is significantly lower in the UK. Juniper estimates that the total number of cards in the UK is approximately 100 million, equating to 3.8 per household.

The beauty of the loyalty card program is that it obviates the need for paper couponing, says the report. The consumer loads promotions onto the loyalty card, and those points can then be applied/redeemed at the offline/online Point Of Sale.

Increasingly, there is is demand among consumers for loyalty schemes to be integrated into the smartphone app. A survey of more than 3,000 US loyalty scheme users by Technology Advice found that 59% would be more likely to join a loyalty program that offered a smartphone app,and a survey by Bond Brand Loyalty found that 48% of consumers want to engage with programs via mobile.

There is a pronounced trend from brands and retailers to offer coupons based around location-aware delivery mechanisms, be it Near Field Communication, Wi-Fi or GPS, says the report. From their initial forays into the space, brands have recognized that coupons with a location element typically enjoy far higher redemption rates than those without, particularly in the form of impulse purchases.

Beacon technology defines the location of a smart device using Bluetooth Low Energy, or Bluetooth Smart signals. Thus, if a consumer with an enabled smart device, with Bluetooth switched on, is in the proximity of a beacon transmitter, the transmitter will recognize the device and can push pertinent content and information to that device. The range of the beacons can be adjusted so that some messages are pushed to apps/devices whenever a customer enters a store, whereas others will only appear when a consumer is in a particular aisle or in front of a particular display.

As the number of consumer mobile connections has grown, so has mobile advertising. Increases in mobile browsing and in the number of applications downloaded per smartphone have led to more opportunities for publishers to place adverts in viewable positions.

Advertising on mobile has been prevalent since the advent of SMS services. Bulk SMS services became ubiquitous with advertisers who wanted to get their message across to customers, a method seen as intrusive and a nuisance by most mobile users.

Online ad blockers have been a source of contention since their inception, essentially taking sources of revenues from both advertisers and publishers by blocking potential views of both display and video advertisements. Juniper Research believes that one of the main drivers to ad blocker adoption is the avoidance of advertisements that are annoying, repetitive or intrusive. As such, genuine advertisers have come to suffer with many adopters of ad blocking software blanketing all advertisements.

Research forecasts that digital retail marketing spend will more than double by 2020 to $362.1 billion, up from $174.3 billion in 2015.

  • Several leading US retailers have now deployed beacon networks, with Macy’s having installed more than 4,000 in its stores. Significant opportunities exist: Juniper forecasts that almost 1.6 billion coupons will be delivered annually to consumers via beacon technology by 2020. This is up from just 11 million this year, as retailers seek to develop proximity marketing campaigns in and around their stores.
  • Successful brands will be those who capitalize on the wealth of data available on consumer habits and interests, leading to the implementation of targeted advertising. Taking this one step further, Juniper observes a shift to hyper-personalization: where companies effectively create bespoke, individualized engagement across all brand offers, thereby reinforcing the scale of customer loyalty. A number of retailers already utilize this method, concludes the report. Netflix stated that recommendations made via hyper-personalization data accounted for 60% of its rentals in 2014, says the report.

For more information from Juniper Research, please visit here.

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