#United States #Retail Strategies #San Mateo #Rakuten #shopper loyalty

Understanding the Gap Between Shopper Loyalty and Retailer Expectations

In a recent study conducted by Rakuten in partnership with The Harris Poll, significant findings have emerged regarding shopper behavior and retailer perceptions. The report underscores a growing dissonance between what consumers are doing in response to economic pressures and what retailers believe about consumer loyalty.

The Price Sensitivity of Consumers

A striking 55% of shoppers are now prioritizing the lowest prices as they revisit their purchasing habits, indicating a shift in focus driven primarily by budget constraints. Conversely, only a mere 5% of retailers seem to recognize this trend, believing instead that their customers will not sacrifice loyalty towards their preferred brands even when faced with cheaper alternatives.

This gap exposes a critical area where retailers may be misjudging the current market dynamics. Many believe that brand loyalty remains intact, with 33% suggesting that shoppers are looking for ways to save while remaining loyal. Another 32% think consumers will migrate to discount retailers while still opting for familiar brands.

Julie Van Ullen, Chief Revenue Officer at Rakuten Rewards, highlights the complex landscape—retailers are caught between the escalating costs of doing business and the need to act on this shifting consumer mindset.

Consumer Financial Pressures

The implications of financial constraints extend beyond mere price sensitivity. The study found that 19% of respondents are struggling to pay household bills, while 17% report they can't afford essentials such as food and gas. Furthermore, only 36% indicated they can cover their daily expenses, including non-essential items, marking a significant decline in consumer spending capacity.

Moreover, consumer habits are visibly changing; about 41% plan to shop less than in previous years. Retailers are aware of these financial strains; 74% recognize that consumers are more focused on affordability than they were last year. Yet, 73% of these retailers remain optimistic about meeting sales goals in the first half of 2025, supported by increased marketing budgets for two-thirds of them.

Economic and Political Influences

Inflation is a prominent concern for consumers—39% indicated its significant impact on their shopping habits. With 77% foreseeing continued price increases throughout the year, shoppers are reevaluating their spending, especially in the grocery sector. Consequently, 57% reported cutting back on non-essential purchases due to rising grocery costs. Opinions vary: 41% continue to invest in their usual brands, while 39% explore less expensive options. Some—13%—have stopped purchasing certain items altogether.

Van Ullen acknowledges that for retailers to achieve their sales objectives, they must capture a greater share of consumers' increasingly squeezed budgets. With tightening wallets and growing marketing budgets, a strategic recalibration in promotional efforts is necessary.

Shifts in Marketing Strategies

Despite acknowledging shopper sentiment, retailers are still banking on consumer loyalty. Their marketing strategies for 2025 reflect this belief: 83% prioritize spending on social media, followed by search (65%) and display ads (50%). Performance marketing channels, particularly affiliate marketing, currently take a backseat, although 30% plan to shift some funds from brand awareness to sales-driven performance strategies.

Around 48% of retailers are considering increased investment in incentive-driven marketing approaches, such as Cash Back and loyalty rewards, that can drive sales without drastically reducing prices.

Van Ullen emphasizes a need for retailers to embrace effective marketing strategies—namely Cash Back—to motivate purchases and enable consumers to buy without the need for direct discounts.

Conclusion

As the retail landscape continues to evolve amidst economic challenges, understanding the disconnect between consumer behavior and retailer perspectives is crucial. The Rakuten study highlights the urgent need for strategic alignment to ensure retailers can adapt to shifting consumer priorities. By focusing on value-driven marketing tactics, retailers may enhance consumer engagement and ultimately secure their sales objectives in an uncertain economic environment.