Will retailers see more rewards from multi-banner loyalty programs?

Discussion
Source: Footlocker
Apr 10, 2019
Tom Ryan

Foot Locker Inc. and Ascena Retail Group are both launching loyalty programs that enable consumers to earn points across retailer banners.

Foot Locker unveiled the planned launch of its FLX program that “flexes with you” at its Investor Meeting in late March. Banners include Foot Locker, Kids Food Locker, Lady Foot Locker, Footaction, Champs and Eastbay.

“We are shifting away from loyalty being by individual banner focusing on discounts and we’re moving to one global program focusing on delivering awesome connected experiences and benefits,” said Jed Berger, Foot Locker’s chief marketing officer, North America, at the event.

The new membership program will run across all banners and “incentive our consumers to earn points across our entire portfolio and then spend those points in a central redemption center.”

FLX will also offer experiential benefits with its points, including early access to sneaker releases, banner gift cards, chances to enter sweepstakes to win prizes such as autographed shoes and donations to causes. Members in the tiered program also earn free shipping and access to events. The program will roll out globally in 2019.

Ascena Retail Group on April 2 launched ALL Rewards, which enables members to earn and redeem perks across its five banners: AnnTaylor, LOFT, Lou & Grey, Ann Taylor Factory and LOFT Outlet. The group likewise called out the flexibility the program will offer customers.

“We have a great ongoing dialogue with clients and associates and we know our client wants choices, convenience, fashion and the freedom to define her style, her way,” said Laura Jacobs, chief marketing officer, premium fashion segment, in a statement.

Gap over the last year has been testing its Bright program in California, Atlanta and Dallas-Fort Worth that enables members to earn points across its banners, although it recently announced plans to spin off Old Navy. TJX Cos. also has a rewards program extending across banners and Williams-Sonoma introduced a multi-banner program in 2016.

Generally, companies owning multiple banners — including Macy’s, Hudson’s Bay, Abercrombie & Fitch, L. Brands, Urban Outfitters, Ascena Retail Group and Walmart — have separate rewards programs for each banner.

DISCUSSION QUESTIONS: Do you see more pros than cons for retailers in running a unified rewards program that serves multiple banners? Is the move more applicable to Foot Locker and Ascena Retail Group than others?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is a win for the consumer and for the retailers. "
"If you have wide-spread brands and you’re fighting for your life in retail, YES you should have cross-banner loyalty."
"Consolidating consumer data under one account ID to get an overall view of spend behavior is a big upside for retailers, if they leverage correctly."

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15 Comments on "Will retailers see more rewards from multi-banner loyalty programs?"


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Bethany Allee
BrainTrust

PROS! We live in an era of consolidation. If you have wide-spread brands and you’re fighting for your life in retail, YES you should have cross-banner loyalty. The benefit from cross-promotion/foot-fall drivers alone outweighs any cons I’ve heard discussed (like diminished brand clarity…).

Georganne Bender
BrainTrust

Additional places to earn and use points, early access to releases and events, sweepstakes, and free shipping. It’s a loyalty program aimed at giving consumers more – what’s not to like?

Brandon Rael
BrainTrust

This is all about winning, and together these brands could take advantage of offering consumers multi-banner loyalty programs. Similar to what the airlines have done with the Star Alliance, retailers could really drive some outstanding cross-promotion across brands.

Loyalty gamification is a real thing, and a robust and cross-brand program could really drive some additional traffic both in the physical and digital commerce sites. Any way that retailers and brands could excite, engage and build connections with consumers is only going to benefit their bottom line profitability and overall sustainability.

Art Suriano
BrainTrust

I not only think that multi-banner loyalty programs are smart; I feel these companies should have been doing this a long time ago. Competition creates the need to try anything imaginable to build traffic and establish customer loyalty. Offering incentives between a company’s multiple brands is wise and make customers happy. People usually know the brands a business owns, and it’s silly to penalize them for attempting to keep everything separate when in reality there is a greater chance for a customer to shop the multi-brands thereby giving the company more business. Van Heusen has been doing multi-brand promotions for a long time because they work, and their customers use the opportunities. I would expect more multi-brand retailers to incorporate this concept.

Shep Hyken
BrainTrust

Take a look at the hotel industry. I can earn my “Marriott Points” from all types/brands of Marriott hotels, Starwood hotels and Ritz-Carlton hotels. I can use them anywhere. I can fly on American Air and British Air, earning points through their “code share” program. This is no different and it is a winner for both the retailer and the customer.

Lauren Goldberg
BrainTrust

This is a win for the consumer and for the retailers. As consumers move through their lifecycle, there will be a reason to stay within the program if they can “earn and burn” at multiple banners. Using Foot Locker as an example – this program can help with customer retention among all members of a household. Think adults (Foot Locker) and parents and kids (Kids Foot Locker) and teenagers (Champs/Eastbay). For the retailer, there are also MAJOR economies of scale in creating one technical platform and branding campaign as opposed to multiple.

Ryan Mathews
BrainTrust

So … that whole multiple banner thing worked out well for Toys “R” Us …

Seriously, a banner should only exist if it has unique brand values that appeal to a sustainable and profitable cohort of shoppers. Yes, multiple banners work well for hotels, but it works because the brand benefits — including location — are distinct. In the hotel example a shared reward program makes sense. I’m not so sure it works as well for what I call “clone brands” that probably shouldn’t be distinct brands in the first place.

David Naumann
BrainTrust
David Naumann
Vice President, Retail Marketing, enVista
7 months 5 days ago

From a consumer’s perspective, there are only positives with combining multiple banners into a unified rewards program. Hotels and airlines have been doing this for years and, as a consumer, I expect it and when multiple banner brands don’t have a unified program I am disappointed. While there are some complexities for brands to maintain a unified rewards program, it goes a long way in increasing loyalty across a brand’s multiple banners.

Doug Garnett
BrainTrust

When will retailers learn that loyalty programs are valuable, but shouldn’t be over-done? Experience and solid research shows that loyalty programs mostly reward shoppers for purchases they would have made anyway — except they make them at lower prices.

Is this smart? Yes. But it also shows, perhaps, too much focus on loyalty and not enough on building good reasons to shop in their stores.

Evan Snively
BrainTrust

Consolidating consumer data under one account ID to get an overall view of spend behavior is a big upside for retailers, if they leverage correctly. Overall it’s an upside to the customer, but brands need to make sure they design the unified program in a manner that allows their customers who only participate in one swim lane (and want to keep it that way) happy with the relevant content instead of being bombarded with cross-promotions and offers for brands that they don’t care about right now (i.e. a single male who starts receiving Kids and Lady Foot Locker content instead of OG Foot Locker.)

Ricardo Belmar
BrainTrust

What’s interesting in this multi-banner approach to loyalty programs is that there must be an inherent assumption that if a customer of one of your brands is loyal, they will be loyal to your other brands. That’s true only if the brand value of each banner resonates with the same customer. So if you have three banners in apparel, the retailer needs to ask themselves, does the same customer shop at all three banners? If the answer is “yes” then absolutely they should have a unified loyalty program. If the answer isn’t a resounding “yes” then what would the combined loyalty program accomplish? The risk, of course, is that once you create the unified program, the individual brand value of each banner becomes diminished. I’d say for Foot Locker, the risk is minimal, and this makes perfect sense. For Ascena retail, this is mostly true, but I’m not 100 percent sure the same customer shops at all of their banners, so what will the perceived value be for those customers?

Martin Mehalchin
BrainTrust

I advised Foot Locker on the design of FLX and advocated for the multi-banner approach. The huge benefit to the retailer is the improvement in consumer data and insight that comes from having a consolidated view of not only the member’s spend, but also their engagement with the program and the banners and their redemption choices when they have rewards. For the multi-banner shopper (believe me, they are out there) the feeling of being recognized and rewarded for your overall loyalty to a family of banners contributes to emotional loyalty over time.

Mohamed Amer
BrainTrust

It’s time for companies to unlock more of the potential synergies that exist across their portfolio of banners.

This latest cross-banner approach takes the usual play on back office consolidation and efficiency to the front office without jeopardizing the unique branding of each banner. Consumers will find it of value if they do cross the existing banners as in the natural Footlocker family, rather than in the case of where the combined banners may dilute each brand’s unique value. The latter situation may result from prior M&A activities but is certainly addressable via sound corporate and marketing strategies.

Ralph Jacobson
BrainTrust

The simpler you keep it for shoppers, the more likely they are to become loyal to your brand(s). Fewer programs for shoppers to manage is a good thing.

Steve Dennis
BrainTrust

First, at the risk of being overly focused on semantics, these really aren’t loyalty programs, but frequency rewards programs. Loyalty is an emotion and to the extent these programs were about brand building it would make little sense to lump them together. But since they are primarily data grabs and promotional tools it makes sense, particularly as more proprietary data should improve the ability to deliver more relevant, targeted offers. Moreover, many single brand rewards programs suffer from getting enough engagement given that customers may feel they’ll never spend enough at one logo to make it worthwhile.

wpDiscuz
Braintrust
"This is a win for the consumer and for the retailers. "
"If you have wide-spread brands and you’re fighting for your life in retail, YES you should have cross-banner loyalty."
"Consolidating consumer data under one account ID to get an overall view of spend behavior is a big upside for retailers, if they leverage correctly."

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