Many retailers might think that their customers are loyal to them because they spend “a lot” of money each year. But what if these customers who spend “a lot” with one retailer, also spend “a lot” with another?
We examined the share of wallet for each category, to understand true loyalty patterns at a category level.
Figure 1: The share of wallet given to a retailer in a specific category averaged across 2019, 2020, and 2021. For example, for “Clothing and Accessories” 38% of customers are “not loyal” to retailers within that category, 23% are “loyal”, 20% are VIP, and 19% are VVIP.
We found that department stores have the most loyal customers - over 66% of customers are VVIP and will give one department store over 75% of their wallet in that category.
The huge percentage of loyal customers in the Department Store category could be a result of fewer options in addition to the range of products that can be purchased (clothing, accessories, specialty foods, homeware, furniture), which could drive an increase in spend.
The customers of supermarkets and fast food retailers are the least loyal, with 47% and 40%, of consumers giving less than 25% of their category wallet to one individual retailer, respectively. Health and beauty retailers and coffee shops are the most polarising - they have almost equal numbers of not loyal and VVIP customers.
When we asked for his thoughts on these findings, Pete Markey, Chief Marketing Officer at Boots UK noted that the data showing 33% VVIPs for Health and Beauty is in line with what he would expect. He also noted that consumers are very loyal to brands, not just retailers. As an example, a customer might be loyal to MAC Cosmetics and will purchase it simply from the most convenient retailer.