Loyalty programmes in retail shopping set to undergo changes

Last month when Shoppers' Stop announced that customers could redeem fewer points collected as part of its loyalty card programme, it was the first step towards the rationalisation of its First Citizen programme.

And now a host of retail companies are innovating their reward points programme by rationalising it for the maximum benefit of customers.

Currently, a very low proportion of card members end up redeeming their points, as a result of which the benefits of having such a programme are almost negligible (about 80 per cent of the points are never redeemed), says industry sources.

Vijay Bobba, co-founder and managing director, Loyalty Solution Corporation, which tailors loyalty programmes for various industries, feels it is important for loyalty programmes to move from being single brand centric to being more widespread so that members get some real benefits out of them.

Shoppers' Stop, for one is taking a step towards it and will soon be announcing a new co-branded card with Citibank, where points gained in the store can be redeemed at a range of restaurants and conversely, points gained by spending at select eateries can be redeemed at the store.

Govind Shrikhande, chief executive officer, Shoppers' Stop said, "We realised that unless you are a big spender, points are not a substantial value add. If the customer can get instant gratification, he values it higher than the points."

It is based on this same principle that Big Bazaar rolled out a co-branded card with ICICI Bank, especially for women, which allowed shoppers to avail of special discounts and offers on their purchases.

While they may strictly not fall into the loyalty cards purview as they are essentially also debit cards, they are a step towards providing added benefits to their card members.

Bobba says that at this point, the loyalty programmes in India are still maturing unlike the west, which is a very matured market.

For a programme to be successful in India he says, a store would need to work in coalition with other outlets, which is how it is in most parts of Europe. Not only would this provide variety and more options to consumers, it would also provide retailers with access to a large number of people.

"Chains are still very small and these programmes cannot work very well if they are confined to redeeming points only within that chain," he explains.

Piramyd for one, is in the process of restructuring its programme, while Shoppers' has introduced a new offer where customers get tickets for the latest movie if they spend a certain amount.

While the new offering from Shoppers' Stop may be a step closer towards it, till modern retail does not become more widespread, it will take a while for the loyalty programs to reach their maturity level.

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