Customers are “less brand loyal than they’ve really ever been historically,” Best Buy CEO Corie Barry told investors over the summer. The comment, tucked into the Q&A section of an earnings call, marked a high-level acknowledgement of a well-documented problem for retailers: Customer loyalty is becoming a scarce commodity.
According to Emarsys, an omnichannel customer engagement platform, 79% of US consumers in 2022 said they were loyal to specific brands, retailers, and stores. But that number dropped 14% and 13% in 2023 and 2024, respectively.
What’s behind the drop-off? Sara Richter, chief marketing officer of Emarsys, told Retail Brew that the culprit is an “ever more empowered consumer” who is shopping across multiple channels and is “expecting the experience to flow across those channels.”
Meeting this expectation requires more than offering promotions and other financial incentives—as a number of retailers have already started doing as of the second week of October. To gain loyalty, she added, stores must invest in improving the overall experience for customers or risk losing out to their competitors. According to the latest version of Emarsys’s loyalty index, 53% of customers reported switching from a brand because of a bad shopping experience.
“The experience has to be something that is meaningful to me and makes me come back to you. Otherwise, I’m simply a transactional customer, and that’s not loyalty, right?” Richter said.
Bringing online benefits in-store: For brick-and-mortar stores, one challenge is figuring out how to translate the convenience of online shopping into stores.
“I think the big…challenge [for retailers] is to try to leverage their online channel and how to convert their online channel customers into their stores,” Xiaojing Dong, associate professor of marketing at Santa Clara University, told Retail Brew. She added, however, that there has been a relative dearth of new ideas to make this happen in recent years.
Richter made a similar point about the need to bring online and in-store together, but noted that innovations are happening. One of Emarsys’s clients, Reformation, an apparel outlet specializing in sustainably sourced women’s clothes, recently put digital displays into stores that give customers access to its entire catalog as well as log into their online profiles and even gain access to any saved preferences.
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“I think where, unfortunately, so many brands fall over is they’re not able to recognize that when I walk in the store that I am the same customer,” she said. “I’m one customer on the website and I’m another customer on the app and I’m another customer in store.”
Best Buy’s response to this problem is to personalize its shopping experiences across both in-store and digital. In July, the company announced that it was introducing more “experiential spaces” to showcase new technology and upgrading its app.
The right product at the right time: Sam Vise, co-founder and CEO of Optimum Retailing, a management platform for big-box retailers, agreed that customer loyalty is waning, but said the problem begins at the planning and allocation phase.
Speaking with retailers at a recent conference, Vise said one problem they consistently identified is a mismatch between inventory and consumer demand. Some stores don’t have the products they need when customers want them, while others have too much.
As a customer, “I want to make sure that if I do make that trip all the way down to the store, that it actually has the inventory that it says it does online, and that I’m not wasting a trip to get down there,” he said. He added that many stores don’t review their allocations after the season and instead just repeat the same allocations year after year, repeating the same mistakes.