Luxury Retail’s Loyalty Programs Give Big Box Retailers an In-Store Roadmap

For success in retail, innovation can stem from — if not outright imitation — then keen observation.

And applying the proven success of others to one’s own business model, with a bit of advanced technology included, can help keep consumers spending at the point of (online and offline) checkout.

To that end, and as detailed by PYMNTS here, luxury retailers’ successes are helping fashion a playbook, of sorts, for other retailers — including the marquee names of everyday commerce such as Walmart.

It must be noted that the luxury market has traditionally been associated with a customer base that earns at least $100,000 annually.

But big box merchants have been seeing an influx of higher-income shoppers, as per commentary from management on earnings calls. And these consumers — just as can be seen with everyone else — are keen on finding convenience and value no matter where the commerce and the transactions are taking place.

Finding Value in Personalization

As for the cues to be taken from the luxury brands: Data, and specifically transaction-level data, can help inform the retailer to target their recommendations not just on an individual’s behavior, but on their own demographic peers.

Loyalty programs can also incentivize continued spending — especially in the actual, physical aisles. We noted in our August report on luxury that loyal customers have a conversion rate of up to 24%, compared to new customers at 6%.

If more higher-income shoppers are flocking to the mass retailers, and the higher-income shoppers have traditionally been patrons of the luxury brands, then it follows that what luxury shoppers have come to expect will wind up coloring their expectations of wherever they shop. And as the data show, 67% of luxury shoppers say that stores should feature higher levels of digital integration. Additionally, 80% of luxury shoppers say that brick-and-mortar retail is part of a continuum of shopping points of engagement.

The increased digital engagement with these larger retailers, of course, gives the companies the data — and delivery systems they need — to engage with customers in real time, and in personalized ways.

Walmart, for example, reported recently that during its most recent quarter, weekly active digital users grew by more than 20%. And management has pointed repeatedly to data as a key ingredient, along with large language models, meant to help foster customer and member engagement.

Elsewhere, firms like Lowe’s have been adding to their loyalty offerings, and PYMNTS’ own data, in collaboration with Banyan, finds that as many as 88% of firms say that they are “highly interested” in using receipt data to provide loyalty and shopping offerings. And 72% of companies surveyed that believe consumers would be at least “somewhat likely” to switch to firms that innovate based on item level receipt data.