Gen Z and Millennial shoppers are continuing to prioritise retailers’ reputation and brand credentials when choosing where to spend, in spite of the challenging economic and high inflation environment. However, their parents’ generation is far more price motivated when it comes to loyalty, according to new research from American Express.
The study of 2,000 UK shoppers explored the current drivers of brand loyalty and how retailers can attract and keep customers in the current landscape. One third (33%) of 18-34-year-olds (which include the Gen Z and Millennial age cohort) said they are more loyal to brands with a positive corporate reputation and values which align with their own, compared to just one in seven shoppers aged over 55.
As further evidence of their commitment to purposeful shopping, Gen Z and Millennial shoppers were also the most likely group to donate their points or cashback earned from loyalty programmes to charitable causes.
The research reveals a distinct ‘loyalty divide’, with starkly contrasting generational attitudes on what increases loyalty towards a retailer. While an attractive price tag was cited as a loyalty driver for the vast majority (86%) of those aged over 55, Gen Z and Millennial shoppers were the least likely generational group to consider price as a loyalty driver (49%).
The older generation were revealed to be less tolerant of poor customer service too, with almost two thirds (63%) of shopped aged over 55 confirming a poor in-store experience would make them less loyal, compared to under one third (29%) of younger shoppers.
Building a loyal customer base is the holy grail for any retail brand, but the current economic environment means that’s tougher than ever as shoppers prioritise and flex their spending. Our research reveals a stark divide among different generations, meaning retailers need a range of strategies across areas such as price, purpose and service to keep customers coming back and spending.– Dan Edelman, Vice President and UK General Manager, Merchant Services, American Express
The research did reveal some common ground between younger and older generations. A similar proportion of 18-34-year-olds and over 55’s (64% and 54% respectively) said cost of living pressures meant they are now considering using a loyalty scheme for the first time to help save money. Shoppers in both of these groups are signed up to an average of four loyalty schemes, the data revealed.
In the current environment, it’s natural for people to feel uncertainty meaning an increased desire to control their life, including where they spend money. Consumers are seeking reassurance from retailers, and want services that make their lives easier, while also feeling valued by the brands they choose to support. It’s clear that alongside price, both purpose and authenticity are important factors that build trust and support long-term loyalty.– Kate Nightingale, consumer psychologist and Chief Behavioural Officer, Humanising Brands