Credit Crunch - will you stay loyal to your favourite shops?

The sound of consumer purses (and wallets) tightening is being heard around the UK as recession looms.  A survey from Verdict suggests that one casualty of the downturn will be customer loyalty.

According to Verdict, across UK retail as a whole, some 10.8m shoppers (or about 20% of the population of adult shoppers) are disloyal to the stores they use; and, across every retail sector more consumers are saying that they would prefer to use an alternative store to the one they currently use most. 

While the credit crunch, which has made consumers more inclined to shop around for bargains, is partly to blame for the increase in disloyalty - it is not the whole story.

An increase in the choice of where consumers can shop has also driven the long term decline in customer loyalty. The proliferation of new, often international, retailer entrants combined with an extensive selection of internet retailers has made it easier than ever before for shoppers to switch their custom.

Disloyalty seems to be particularly high in the supermarket sector.  We saw in the news a week ago that the discount supermarkets were benefiting from Tesco, Sainsbury’s and Asda customers trading down to shop at the likes of discounters such as Aldi, Netto and Lidl.

In a downturn, a retailer needs to keep every profitable customer they can.  So it will be interesting to see whether there is an increase in loyalty-building activities (e.g. better rewards on loyalty cards, promotional discounts) as well as a clear advertising focus on low prices.

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