What Are The Factors Driving Consumer Loyalty?
The competition for the consumer wallet is more intense than ever as consumers are setting the agenda for retailers and brands. The International Council of Shopping Centers’ (ICSC) survey on brand loyalty found that the majority of U.S. adults are loyal to both product-brands (82 percent) and retailers (84 percent).
Driving loyalty to specific retailers in 2017 are price and value with nine out of 10 (92 percent) loyal customers ranking this the top reason, followed by product/quality (79 percent) and variety/selection (71 percent). Technology has enabled consumers to be better informed about pricing and availability.
The importance of the retail experience continues to be significant, as 62 percent of consumers are willing to spend more if their shopping experience is customized to their personal interests. Additionally, slightly more than eight out of ten respondents cited the ability to see, touch, try on and interact with products as a loyalty increasing factor. However, a negative experience comes at a price with 82 percent of consumers saying that they will buy elsewhere if they experience poor customer service or rude employees.
“Retail is a highly competitive industry and the well-informed consumer has more influence on retailers and brands than ever before,” said Tom McGee, president and CEO of ICSC. “A physical retail space is vital for brands and retailers to have a competitive advantage and connect with consumers. Consumers want the best experience and the best value, in turn rewarding brands and retailers with their loyalty.”
Consumers of all generations are most loyal to food and beverage retailers, with 95 percent of GenXers, 94 percent of Baby Boomers and 90 percent of Millennials selecting these based upon product brand.
When asked which type of brand they prefer buying, respondents were clear in their choice – 90 percent of consumers prefer national brands to store or local brands. What's more, 79 percent of consumers are loyal to national brands when it comes to electronic devices (such as mobile phones, televisions, etc.) followed by apparel and footwear with 65 percent and health and beauty products with 59 percent.
The Millennial mindset
Millennials are less affected by negative customer experiences with 74 percent saying they would switch to buying from a different retailer if they received poor customer service. This compares to 86 percent of GenXers and 85 percent of Baby Boomers who would switch immediately if customer service is poor.
Millennials show the greatest brand loyalty with 58 percent stating that they will buy the same brand of products no matter what. And 80 percent say that they like to buy exclusive store-branded products because they get good value for their money, which is more than GenXers (76 percent) and Baby Boomers (66 percent). The greater the variety of brands a store offers, the more likely Millennials are to frequent the store, with 80 percent of them citing variety as a driving force in visiting a store.
“As Millennials enter their prime spending years we are going to see a shift in the way they engage with brands and retailers,” added McGee. “It’s crucial for brands and retailers to understand the shopping habits of this demographic so they win their loyalty for the years to come.”