Despite the cost-of-living crisis easing, it continues to play a significant role in shifting consumer behaviour, forcing brands to reconsider how they can inspire loyalty in an environment where consumers are looking to reduce their outgoings.
This is according to The State of Loyalty Spend report from advertising platform Cardlytics, which found that despite consumers being increasingly cost-conscious, there is still room for brand loyalty to influence spending behaviour.
In a survey for the study, 69% of UK adults said they viewed trust in a brand as important to them when making a purchase, whilst 59% stated that they have been loyal to brands for “as long as they can remember” – an indication that brand loyalty is well and alive. However, particularly off the back of the cost-of-living crisis, affordability is vital in shaping and influencing purchasing habits. UK adults rank price as the most important factor in the decision-making process, followed by trust in a brand and convenience.
This report examines three specific categories – retail, hospitality and travel – which together demonstrate a trend of customers having to balance commitment to the brands they know and love with limiting financial outgoings. With consumer behaviour in flux, the report includes analysis of some of the factors creating this environment, along with recommendations for business leaders on how they can inspire brand loyalty, whilst also attracting new customers.
The dining sector is, generally, one of the first areas of discretionary spend that consumers cut when times are tough. With overall spending in restaurants down 8% in 2024 (following a 14% rise in 2023) but spending per trip up by almost a fifth (16%), it’s clear to see the challenges that brands and consumers face in the current environment. Price remains the key driver for customers when it comes to eating out, but other factors, including loyalty, quality, and trust remain relevant.
Over half (54%) of adults choose to return to restaurants they have visited before over trying new alternatives, showing that consumers remain risk-averse as economic pressures on households continue to build. Despite this, a similar number (54%) of consumers are more likely to visit a new restaurant if they offer a discount voucher or cash-back rewards system; while 45% of UK households are more likely to visit a restaurant if it offers rewards for returning customers. This is evidence of the potential for data-driven tactics to enable restaurants to drive greater footfall and sustain their existing customer base.
Meanwhile, 64% of respondents named affordability as the most important factor when deciding where to do their food shop, a clear indication of the impact of record levels of inflation on consumers’ disposable income.
Despite consumers being increasingly cost-conscious, 61% said they are more likely to visit a store or supermarket if it offers a loyalty or rewards system – rising to 70% for the 18-34 demographic. In an environment where brand loyalty has come under question, this research shows how solutions such as targeted offers and rewards can inspire commitment to brands.
Indeed, loyalty remains an important factor for many consumers, with over half (54%) choosing to travel to shop at their preferred supermarket, even if other options are closer. This should serve as further encouragement for supermarkets that reward their customers for staying faithful, particularly in times when confidence in spending is low.
“Whilst affordability will always be key for consumers, particularly in tough economic times for consumers and households, building brand loyalty is key. Whether it’s restaurant-goers sticking with what they know, particularly when they’re rewarded for it, or customers travelling further than they need to take advantage of their favourite supermarket’s loyalty card system, consumers are making savvy decisions based on what suits them – and often, which brands treats them best,” said Lucy Whittemore, SVP of UK Advertising at Cardlytics.
“For businesses in hospitality, retail, and travel, where competition is high and interaction with customers is frequent, data will be key. By gleaning insights from customers’ spending data, brands can create tailored, relevant offers for consumers – both new and existing. This can help them build a deeper connection with the customer, fostering loyalty and trust to drive footfall and incremental growth in spend.”
NAM Implications:
- All about justifying brand premia…
- …or reducing the price.
