The results show that lower prices win greater loyalty from today’s conditional consumer.
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GLOPerhaps it is difficult for parents to choose favorites among their children, but when it comes to consumers, it’s a simple task. At least, that’s what has always been assumed. However, today’s consumers are increasingly empowered and have high expectations. Their loyalty is continuously shaped by the experiential features provided by merchants.
A study conducted by PYMNTS in collaboration with Toshiba, called “Decoding Consumer Affinity: The Customer Loyalty To Merchants Survey,” reveals that more than one-third of “loyal” shoppers are willing to switch from their preferred grocery and pharmacy products to those offered by another retailer if they find better customer experience, lower prices, rewards, or convenience elsewhere.
Interestingly, many pharmacy and grocery shoppers are loyal not to the retail brand itself, but to the digital features that enhance their customer experience. As the saying goes, everything has its price. When all other factors are equal, consumers primarily base their loyalty on low prices, with over 70% stating that cost influences their loyalty to grocery stores (77%) and pharmacies (70%). Promotions and discounts come second as influential loyalty drivers, while the availability of desired items in stock ranks third for both grocery (51%) and pharmacy (47%).
In the current challenging economic climate, consumers are focused on cutting back on expenses and often cannot afford to remain loyal to their favorite brands if they come across better deals elsewhere. Retailers may struggle to offer the cost-savings that shoppers desire due to factors like inflation, rising interest rates, and ongoing supply chain disruptions.
As bargain hunting becomes the prevailing shopping behavior, grocers, pharmacies, and retailers in general must identify digital features and loyalty promotions that can enhance customer stickiness and drive retention. According to PYMNTS, all consumers claim that factors beyond pricing play a role in their ongoing loyalty. However, it’s worth noting that deal-chasing consumers, despite their conditional spending, may not be the most profitable customer segment in terms of lifetime value.
Even in challenging times, building brand loyalty remains a critical strategy for customer retention. To learn more about how today’s business environment and consumer sentiment can impact your business, you can download the free PYMNTS report, “Decoding Consumer Affinity: The Customer Loyalty To Merchants Survey,” conducted in collaboration with Toshiba.
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