Retailers Hold Lion’s Share of U.S. Loyalty Program Memberships

The U.S. retail sector, headed by specialty retailers, grocers, mass merchants and department stores, now accounts for the largest collective market for U.S. loyalty reward program memberships, outpacing travel/hospitality and financial services aggregate memberships, according to the 2009 Colloquy Loyalty Census.

Colloquy’s research found that across-the-board retail loyalty program memberships now number 701 million, making up 39 percent of the U.S. loyalty market. By comparison, there are 556 million in travel/hospitality, including airline, hotel, gaming, car rental and cruise programs, representing 31 percent of the market, and financial services credit card programs number 422 million, accounting for 23 percent of the market. The Loyalty Census measured the scope of U.S. loyalty marketing in 2007 and 2008 across 13 industry sectors. According to the research, total membership in U.S. loyalty reward programs is 1.8 billion.

Based on the Loyalty Census, retail sector reward program membership numbers included specialty retail at 191.3 million, grocery at 153.3 million; mass merchants at 124.8 million; department stores at 92.8 million; and drug stores 73.9 million.

“In our 2007 Loyalty Census white paper, we predicted the next loyalty battleground would be in retail, and we were right,” said Colloquy partner Kelly Hlavinka, who co-authored the report with Colloquy editorial director Rick Ferguson. “With the travel category in maturity and the financial services category likely to contract, we expect retailers to be at the forefront of innovative loyalty marketing for years to come.”

Added Ferguson: “Using multi-tender vehicles, private label or co-branded credit cards, specialty retailers are fighting back against Wal-Mart and other mass merchant discounters by using loyalty offerings to build emotional bonds with their best customers.”

Other key retail sector findings included:

• Grocery’s 153.3 million-strong membership represents a 23 percent increase since the 2007 Loyalty Census, as the shift away from two-tiered pricing and toward promotional currency continues. Wal-Mart is still the top U.S. grocer, though grocers big and small are fighting back with a renewed emphasis on shopper data and customer centricity. Colloquy forecasts a spike in loyalty program activity.

• While most retailers have seen double-digit sales declines, retail pharmacy sales grew 1.5 percent last year. Drug store operators have consolidated and now realize that the loyalty program is the best method of tracking individual behavior.

Nielsen Business Media