Convenience Store Loyalty on the Skids?

Report shows program participation down 34% from 2006

Steve Holtz, Editor in Chief, CSP Daily News

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CINCINNATI -- Search "loyalty" on this website and the results suggest most every retailer in the convenience store industry is upping the ante with new programs and new partnerships. The truth, however, is the number of consumers taking part in c-store loyalty programs is on the decline, according to a new report from Colloquy.

The number of consumers taking part in c-store retailer loyalty programs in 2012 was 25.3 million, down 21% from 2010 and 34% from 2006, according to the report. And, fuel and convenience is the only retail channel showing a significant decline in participation over the seven years Colloquy has conducted its Loyalty Census.

"Membership is declining significantly," the report said about c-store and fueling programs. "Fuel programs are generally focused on either a private-label credit card or a co-brand card as the core of the value proposition, appealing to a narrower market (often fleet owners rather than individuals and families). Programs are beginning to include discounts at convenience stores, along with fuel discounts. But active membership rates remained relatively flat, suggesting some staleness in the value propositions."

Other channels of retail, meanwhile, are seeing flat to significant growth:

  • Specialty stores are up 26% from 2010 on the largest membership base to 306.5 million members in 2012.
  • Department store participation is up a whopping 70% over 2010 to 193.9 million consumers.
  • Grocery retail is down 1% from 2010 to 172.4 million members.
  • Drug stores saw participation grow 45% from 2010 to include 142.4 million consumers.
  • Mass merchants are up 8% from 2010 to 140.6 million participants.
  • Fuel & convenience is down 21% from 2010 to 25.3 million members.

Overall, total consumer participation in retail loyalty programs grew 24% from 2010 to 2012 and 115% from 2006 to 2012.

"Despite growth in program memberships, activation rates remained relatively flat, suggesting some staleness in the value propositions of retail loyalty programs," Colloquy wrote. "Private-label credit cards have been foundational in establishing loyalty programs and data sources, and now there is more opportunity for increasing member engagement and expanding the reward strategy with complementary benefits that are outside the store card."

The research company predicted: "Retail program memberships will experience continued growth, though we're seeing the need for an injection of innovation [see related story]. For example, the moderate growth in the mass-merchant category has been driven more by store expansion than by fundamental program changes or innovative value propositions. Everyday spend categories would do well to blend soft benefits (either internally or via carefully selected partners) into their foundational earn-and-burn programs in order to drive member engagement with the program, as well as the sponsoring brand."

Colloquy, Cincinnati, is a collection of publishing, education and research resources devoted to the global loyalty marketing industry.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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