According to the 2015 COLLOQUY Loyalty Census, drug store loyalty program memberships rose 88% to 268 million versus a year ago, the highest growth rate of any channel. However, Kantar Retail ShopperScape data shows that these loyalty programs have little effect on where shoppers actually shop, suggesting that drug loyalty programs have become a by-product of routine.
Retailers achieve true loyalty only when shoppers get their functional needs met and when shoppers sense an emotional connection to a retailer. Retailers such as Whole Foods Market Inc., Publix Super Markets Inc., Amazon.com Inc. and H-E-B are examples of retailers winning the hearts and minds of their shoppers. These retailers are successful because they create enjoyable shopping environments and consistently meet the needs of their shoppers.
As drug stores look to convert their routine shoppers into truly loyal ones, retailers should take note of Rite Aid’s wellness+ with Plenti strategy to accomplish just that. We think the program is going after hearts and minds in three key ways: by offering true choice, meaningful rewards and greater access.
Shoppers want to shop at retailers that understand their needs and make them feel valued. Wellness+ with Plenti is designed to address these needs, giving shoppers choices to earn and redeem points at all Plenti partners.
“Choice” is the act of selecting or making a decision when faced with two or more possibilities. Traditional drug loyalty programs restrict the choice to earn and redeem rewards to the respective retailer. This restriction can cause shoppers to become disloyal and promotionally driven.
Early results from the wellness+ with Plenti program demonstrate that shoppers are eager for true choice. “Rite Aid has achieved nearly 50% of its goal with Plenti just one month into the program with respect to the number of net new customers with no history with Rite Aid,” said Craig Riner, Rite Aid’s vice president of marketing for wellness+ with Plenti. “We believe our customers are seeing the value, and the program is working.”
Riner credits the early success of wellness+ with Plenti to the partnerships with ExxonMobil, Macy’s, AT&T, Nationwide, Direct Energy and Hulu, as well as the flexibility Plenti provides shoppers to earn and redeem rewards within the coalition.
According to ShopperScape, about one-third of each drug retailer’s loyalty program members cross-shop at another key competitor within the channel. The futility of these loyalty programs is why Rite Aid is attempting to provide more meaningful options to its less-engaged shoppers.
Plenti points are more meaningful than CVS ExtraCare points and Walgreens Balance Rewards because shoppers can earn them at other retailers and redeem them at Rite Aid (or vice versa).
“Consumers today are busy and smart,” said Martine Reardon, Macy’s chief marketing officer. “They know good value, and they want to be rewarded for the dollars they spend day-in and day-out at their favorite stores.”
Shoppers want to shop at retailers that “get them” better than any other retailer. Drug stores struggle at consistently “getting” their shoppers because their loyalty databases are often flawed with inaccurate or limited shopper data. Wellness+ with Plenti will now enable Rite Aid broader access to shopper data through American Express than the other drug retailer loyalty programs. (US Loyalty, an American Express division, will issue the Plenti rewards and oversee centralized marketing in collaboration with the founding companies.)
Therefore, the combination of the Plenti coalition loyalty data and wellness+ legacy data should provide greater access to insights into what Rite Aid shoppers value in everyday life.
Given that Rite Aid is a distant third when it comes to channel sales, stores and shoppers, Plenti’s success is critical to helping the chain remain relevant. Rite Aid wants to reinvent loyalty so it can attract new shoppers and build baskets with more loyal ones. Attracting new shoppers with flexible choice and meaningful rewards is Rite Aid’s goal, but the greater access to lifestyle data is the potential game changer.
However, many looming questions remain:
• Will Plenti shoppers actually redeem their points at Rite Aid?
• Will drug shoppers see the coalition as a benefit (or more complex)?
• How hard will it be to personalize offers?
Plenti will not solve all of Rite Aid’s problems, but it will help the retailer remain competitive in a dynamic channel where true loyalty is a problem.
Brian Owens ([email protected]) is director of retail insights at Kantar Retail (www.kantarretailiq.com).