United Kingdom loyalty and rewards program industry outlook in 2023

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Britons are increasingly facing the pressure of rising costs of living and inflation. This has severely impacted offline and online retail sales in the country. Amid the current macroeconomic environment, supermarkets are offering added benefits and value to their loyalty program members.

While this is reducing the burden of rising product prices for consumers, it is also driving sales for businesses in the United Kingdom. The Bank of England is expected to further increase interest rates, which will also have an impact on consumer spending. Consequently, PayNXT360 expects more businesses to revamp their loyalty program from the short to medium-term perspective, to better accommodate consumer demands.

Luxury retailers are launching rewards programs for shoppers in the United Kingdom

Loyalty programs are no longer just limited to mainstream retail. With the ever-increasing demand among consumers, even luxury retailers are innovating in the space and launching their own solutions. For instance,

• In September 2022, Harrods, one of the leading luxury retailers and home to over 5,000 brands, announced the launch of a loyalty and rewards program, MyBeauty from Harrods Rewards. The program has been specifically curated for beauty customers in the United Kingdom. Notably, the program is an extension of the existing rewards program. Members can earn points across all beauty purchases and receive a host of other benefits, including exclusive offers.

From the short to medium-term perspective, PayNXT360 expects more luxury retailers in the country to revamp their existing loyalty and rewards programs to better cater to the changing demands of shoppers.

Supermarkets are making a major change to their loyalty program to help shoppers with rising inflation

Supermarket retailers in the United Kingdom are making a major change to their loyalty and rewards programs just before the year-end shopping and Christmas season. The changes are also in line to assist shoppers that are struggling with rising inflation and the cost of living in the country.

• In December 2022, Tesco, one of the leading British supermarket retailers, announced a major change to its loyalty program, just before the Christmas holiday season. As part of the revamped program, the firm will be offering consumers a personalized coupon every two weeks. Before this, Clubcard members were eligible for a maximum of eight coupons per year. With these coupons selected based on past purchases, consumers are projected to benefit from the revamped program significantly.
• In November 2022, Asda, another leading supermarket retailer in the country, announced changes to its loyalty program. In the past, shoppers were able to convert their loyalty points from the cash pot into £10 vouchers. With the revamped program, shoppers can convert points into vouchers up to £100. However, shoppers cannot use the voucher more than once, and also has an expiry period of 30 days.

With these loyalty programs offering more benefits compared to the previous versions, more shoppers are projected to sign up for the loyalty schemes, at least from the short-term perspective, as the macroeconomic environment continues to affect their monthly budget.

Firms are expanding their digital footprint allowing shoppers to use the loyalty points and schemes at more places in the process

More and more businesses, especially traditional retailers, are expanding their online presence in the United Kingdom. In their effort to create an omnichannel retail experience, the loyalty programs market is also benefitting. For instance,

• In September 2022, Boots, the Walgreens-owned health and beauty retailer, announced that the firm is launching an online marketplace, thereby allowing third-party brands to sell on the e-commerce marketplace. Being part of the Boots ecosystem, shoppers will be able to use their existing loyalty membership on the online marketplace, thereby allowing them to collect and use their existing points for purchases on the platform.

The expansion of the business ecosystem, which assists members to use loyalty schemes across different sales channels, is projected to further drive the adoption of loyalty programs among consumers from the short to medium-term perspective. This will keep supporting the growth of the overall industry over the next three to four years, as more and more brits register for such loyalty and rewards programs.

To know more and gain a deeper understanding of the loyalty programs market in the United Kingdom, click here.