emerging
Declining Brand Loyalty
Brand loyalty is decreasing due to price sensitivity, but loyalty program usage is increasing as consumers seek value.
Timeframe
near-term
Subcategories
Impact areas
Detailed Analysis
Rising prices and economic uncertainty are making consumers more price-conscious, leading to increased brand switching. As the report notes, "Price sensitivity breeds brand switching." However, this doesn't mean the end of loyalty. Instead, consumers are shifting their loyalty towards programs that offer tangible value. "Loyalty members lock in value through 'instant discounts’ and ‘loyalty currency,'" making these programs increasingly attractive in a challenging economic environment.
Context Signals
Rising inflation and economic uncertainty
Increased competition from discount brands like SHEIN and Temu
Growing importance of value-based loyalty programs
Edge
Brands will need to rethink their loyalty strategies, focusing on delivering personalized value and exclusive benefits.
Gamification and experiential rewards will become increasingly important for engaging loyalty program members.
The use of data and AI will be crucial for predicting churn and proactively addressing customer needs.
